Michael Ring (Mayo, Fine Gael)
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Question 82: To ask the Minister for Enterprise, Trade and Employment his views on the assessment by a person (details supplied) in a report Productivity; Ireland's Economic Imperative that the trend in GNP based productivity has been deteriorating since 2000; and if he will make a statement on the matter. [17874/06]

Micheál Martin (Cork South Central, Fianna Fail)
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Ireland has enjoyed substantial economic growth since the 1980s. In particular, the period since the mid-1990s saw a surge in Irish economic growth, as a result of both improved productivity and increased employment. While Ireland's productivity growth as measured by GNP per worker has been strong relative to other countries, between 2000 and 2005 it slowed down significantly. This was in large part due to the general economic slowdown in the early years of the new millennium, the consequences of which was felt globally. Generally speaking, Ireland's productivity performance since 2000 compares well with most other developed countries and above the EU average. While productivity growth in Eastern Europe was much stronger in this period, this was from a much lower base.

Productivity is one of the key determinants of competitiveness and growth. Radically improving productivity across all business sectors is a competitive imperative we cannot ignore if we are to maintain and improve our living standards. There is a range of factors that impact on productivity levels. For developed economies, knowledge and its development and use, through investment in skills, education, research and development plays a vital role in the drive towards higher levels of productivity. Investments in infrastructure and technology, particularly ICT, are also critical in raising productivity levels. Productivity growth at the firm level can be achieved through better management practices increased innovation and organisational design.

The report to which the Deputy refers concludes that there are three ways to improve productivity — further investment in physical capital, investing in education and training and thirdly by making better use of ICT. Over the last few years our policies have been directed towards achieving improvements in all of these areas.

The report highlights the significant discrepancies in the productivity performance between different sectors of the economy, which was also raised in the Annual Competitiveness Report 2005. Superior productivity growth has been concentrated in a small number of sectors (Pharmaceuticals, ICT) with evidence of much weaker productivity growth in sectors of the economy less exposed to international competition such as retail, construction, general services and in some sectors of indigenous manufacturing.

The enterprise agencies of my Department have been mandated to adjust their support strategies to the needs of their clients in the modern global economy. To assist the drive towards competitiveness and increased productivity the enterprise development agencies are working with companies to

∙provide mentoring and developmental supports,

∙enhance management capabilities and critical workforce skills,

∙support the creation and implementation of strategies for market entry, development and growth,

∙build productivity, and

∙provide support for innovation and for research and development.

In 2005, Enterprise Ireland launched a €20 million Productivity Improvement Fund, which will greatly assist Irish firms in their drive for higher efficiency and international competitiveness.