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Thursday 18 July 2019

US-led FDI driving pay and growth in Ireland

From 2012 to 2017, jobs at multinationals in Ireland grew by 7pc to 318,000, representing 14.3pc of all employment. Stock image
From 2012 to 2017, jobs at multinationals in Ireland grew by 7pc to 318,000, representing 14.3pc of all employment. Stock image

Shawn Pogatchnik

Multinationals in Ireland employed 318,000 people in 2017 on wages averaging €50,000 - a third better than their domestic peers - as the role of FDI in fuelling Irish fortunes keeps growing, the CSO found in a report published yesterday.

The study, which analysed FDI growth from 2012 to 2017, found that investment by US-headquartered companies played a dominant role, surging by 188pc over the period and injecting investment of €519.5bn in 2017.

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Bermuda-based companies contributed €38bn, the UK €20.1bn, Germany €11.9bn, Spain €8.8bn, France €8.3bn, and Canada and the Netherlands both €4.8bn.

Somewhat complicating that picture, the CSO found that multinationals based in Ireland itself represented the second biggest source for investment in 2017, at €92.5bn.

That figure reflected so-called corporate inversion activity over the period, when previously American and Bermudan companies switched their HQs to Ireland.

For 2017, the CSO study found Ireland outperforming most European peers in attracting foreign direct investment relative to gross domestic product.

While most European countries' inward FDI flow was much smaller than their GDP, Ireland's stood at 253pc of GDP that year, second only to Luxembourg.

While this investment has helped drive growth in Ireland's workforce, the report found that FDI was creating proportionately fewer positions than its less well-paid domestic peers.

From 2012 to 2017, jobs at multinationals in Ireland grew by 7pc to 318,000, representing 14.3pc of all employment and what the CSO called "modest growth on a significant base".

Five years before, at the peak of crisis-era joblessness in Ireland, multinationals had contributed 15.7pc of employment.

In 2017, the report found, US multinationals provided 121,000 jobs in Ireland, the UK 81,000, Germany 25,000, France 14,000, the Netherlands 13,000 and Switzerland 11,000. It noted that US-driven employment rose 10.9pc over the period, while UK-derived jobs declined 2pc - the only major national source trimming employment here.

On the wages front, the CSO found interesting distinctions in average salary levels, even among multinationals.

Over the five-year period, US companies offered the highest average pay versus European and Asian sources, although the latter closely followed American pay patterns.

In 2017 the average US multinational-sourced salary was €64,000, Asia €61,000 and Europe €41,000.

Overall, pay at any multinational was liable to be better than at a domestic employer.

While foreign multinationals paid €50k and Irish-domiciled multinationals €57k, domestic firms paid €33k.

Irish Independent

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