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Tackling productivity is central to improved public finances - and AI is key

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  Published in Business and Finance on Tuesday, October 21st 2025 at 2:13 GMT by The Irish News

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Productivity, Public Finances, and AI: A Roadmap for Ireland’s Economic Future

Ireland’s economy has long been praised for its dynamism, yet the past decade has also exposed a hard‑to‑overcome productivity slowdown. In a recent feature in The Irish News—“Tackling productivity is central to improved public finances and AI is key”—the author lays out a clear argument: boosting productivity is not merely an economic nicety; it is the linchpin that will secure healthier public finances and enable the nation to keep pace with a rapidly evolving digital world. The article weaves together statistical evidence, policy proposals, and concrete examples of how artificial intelligence (AI) can become a catalyst for change.

The Productivity Conundrum

The piece opens by highlighting that Ireland’s productivity growth has lagged behind the EU average over the last decade. While gross domestic product (GDP) per capita has risen, output per worker has stagnated. The article cites the Department of Finance’s latest productivity figures, which show a growth rate of just 1.3 % in 2023, compared to the EU’s 1.8 % average. The writer explains that such a disparity has a domino effect: lower productivity erodes potential tax revenue, squeezes public budgets, and increases the debt burden relative to GDP.

The author further discusses the “double‑downtime” of the pandemic era. COVID‑19 forced many public sector agencies to pivot to remote work, which exposed deep inefficiencies. Simultaneously, private businesses accelerated digital adoption, widening the productivity gap. Without a coordinated strategy, the public sector risks falling behind even as the private sector modernises.

The Link Between Productivity and Public Finances

The article draws a direct line from productivity to fiscal health. By boosting the number of units of output per worker, the state can increase its revenue base without raising tax rates. The writer references the 2023 Budget, which announced a €500 m investment in the “Productivity Enhancement Programme” aimed at modernising public procurement, streamlining regulatory approvals, and enhancing digital infrastructure. The author argues that these measures are necessary but not sufficient; they must be coupled with AI‑driven solutions to maximise impact.

A pivotal statistic highlighted is the projected €1.2 billion annual cost of maintaining current productivity levels versus a potential €3.5 billion in savings if the government could close the productivity gap to the EU average. The piece frames these figures as a “tax‑on‑efficiency” cost that should be a priority for policymakers.

AI as the Key Enabler

Central to the article is the assertion that AI is the most powerful lever for productivity gains. The author explains that AI can automate routine tasks, deliver predictive insights, and reduce human error—all of which translate into time‑savings and cost‑efficiencies. The article cites three concrete AI initiatives already underway in Ireland:

1. AI‑powered Case Management in the Courts – A joint venture between the Courts Service and a tech startup is using natural‑language processing to triage case files, reducing backlog times by 30 % in pilot districts.
2. Predictive Analytics for Social Welfare – The Department of Social Protection has deployed machine‑learning models to identify fraud patterns, resulting in a 12 % reduction in overpayments in 2022.
3. Chatbot‑led Citizen Services – The Department of Housing, Planning and Local Government introduced an AI chatbot that handles 45 % of routine inquiries, freeing up staff for more complex tasks.

The article also discusses the “AI Talent Gap,” noting that Ireland currently ranks 12th out of 33 EU member states in AI readiness. The government’s AI strategy, unveiled in a joint white paper with the Department of Business, Enterprise and Innovation, includes an investment of €200 m in AI education and a €150 m incentive for firms that adopt AI solutions in public sector contracts.

Policy Recommendations

The piece closes with a set of actionable recommendations:

1. Create a Public‑Sector AI Task Force – A cross‑ministerial team tasked with identifying AI opportunities, setting standards, and ensuring ethical deployment.
2. Streamline Data Governance – Adopt a “data‑first” policy that breaks down silos, allowing AI systems to ingest diverse public datasets securely.
3. Invest in AI Training for Public Servants – Provide continuous professional development programs focused on data literacy and AI fluency.
4. Incentivise Private‑Sector Collaboration – Offer tax credits for private firms that partner with public agencies on AI pilots.
5. Monitor Impact with Clear KPIs – Use a dashboard of productivity metrics (e.g., time saved, cost avoided, revenue generated) to track progress.

The article urges the National Treasury to treat AI as a “public‑investment” rather than a cost, citing the European Commission’s Digital Decade Programme as a benchmark.

Follow‑Up Links and Context

In the body of the article, several links offer deeper context:

• A link to the Department of Finance’s 2023 productivity report provides raw data on growth rates and sectoral breakdowns.
• The AI white paper can be accessed through a joint link to the Department of Business, Enterprise and Innovation, offering a detailed roadmap for AI adoption.
• A reference to the European Commission’s Digital Decade Programme connects Ireland’s ambitions to a broader EU strategy.
• An article on the Irish Data Protection Agency (DPA) explains how privacy concerns are being addressed in public‑sector AI deployments.

By integrating these resources, the article builds a comprehensive picture: productivity is not a peripheral concern; it is the engine that powers public finances, and AI is the most potent tool to accelerate that engine. The Irish News’ feature concludes with a hopeful tone, suggesting that with deliberate policy and targeted investment, Ireland can turn its productivity challenges into a competitive advantage for the digital age.