Irish firms will have to boost their productivity in order meet the challenges of automation, climate change and Brexit, Minister for Finance, Public Expenditure and Reform Paschal Donohoe has warned.

Addressing the conference of the European Public Service Union in Dublin, he warned that as the role of automation increases, the best way to mitigate risks was to improve the resilience of the economy through higher productivity.

He said that productivity - output per worker - was widely regarded as one of the most important economic indicators of a country's ability to improve living standards, but the most recent Organisation for Economic Co-operation and Development (OECD) economic survey of Ireland had warned that in order to further raise living standards here, the productivity levels of Irish firms must rise.

He noted that last year's Central Statistics Office data showing that between 2000 and 2016, foreign dominated sectors in Ireland experienced productivity growth more than four times greater than sectors dominated by domestically owned enterprises, adding that while such divergence is not uncommon in developed countries, it is more pronounced in Ireland.

He told delegates productivity was one of the key pillars of the Future Jobs Ireland strategy, which sought to ensure the Irish labour market could offer high quality jobs, that people were incentivised to seek employment, and where wages were good, and where barriers to participation were minimised.

On Brexit, he also warned that it the UK left the European Union without a deal on 31 October, the biggest losers would be the UK, but the second biggest losers would be Ireland given the level of interconnectivity between the two islands.

He cited Department of Finance projections for a disorderly hard Brexit indicating that years after, the real output of the Irish economy would be 5% lower - impacting on domestic demand, employment levels and the public finances.

Apart from Brexit and lagging productivity, the Minister said other factors that could impact on the future of work included a challenging international trading environment, an accelerating pace of technological change, climate action requiring the accelerated decarbonisation of the economy and demographics.

The minister also outlined the indicators of Ireland's economic recovery including the rise in employment by almost a quarter to 2.3 million since the lowest ebb of the recession, as well as the fall in unemployment from 15.9% to 4.4%.

He also told delegates that wages were now rising - with average weekly wages up by nearly €100 or 14% since the third quarter of 2014, while income inequality had consistently reduced here since the mid-2000s.

He said a stable collective public service pay agreement gives greater certainty on both expenditure and wages, enabling the Government to make progress on the societal priorities such as health and housing.

He said the recruitment of a further 45,000 public servants over the last 4 years would not have been possible without the certainty delivered by the PSSA, and a level of "sensible wage restraint". 

He urged that fair negotiation of improved terms and conditions was preferable to strike action, adding that he did not believe that pay increases should be given solely to the public service workers who have the capacity to shout the loudest.

He said a strategy to improve the economy and the labour market would include fiscal and budgetary policy, labour laws to strike the balance between security for those in work and flexibility to respond to a changing labour market.

He also stressed the importance of active labour market policies providing a safety net to help people re-enter the workforce, better matching of job search to job vacancies, and enhanced skills and education across the population.