Third of wages in 2021 came from multinationals – ESRI
A new study from the Economic and Social Research Institute (ESRI) shows that a third of the wages paid in the Irish economy in 2021 came from Multinational Enterprises (MNEs).
The research by economist John Fitzgerald is entitled ‘Understanding the Irish Economy’.
It shows that rapid growth in highly paid employment and corporate tax income have driven the contribution of the MNE sector to the Irish economy.
Using CSO data, the study finds that the share of Net National Product arising from the MNE sector in 2021 amounted to 29%, up from 22% in 2013.
“About half of this increased contribution was due to the rapid growth in highly paid employment in the sector, and the other half to the rise in corporation tax”, according to the ESRI.
“By 2021 a third of the wages paid in the Irish economy came from MNEs”, the study states.
The research shows that the real income growth rate is much higher in Ireland than in other EU countries.
It also found that compared to other EU countries and the UK, Ireland has a below-average standard of living on the basis of household and public consumption.
“This is partly because of the high rate of saving in Ireland, but it also reflects difficulties in comparing the value of housing enjoyed by the population in different countries”, the report found.
Speaking on Morning Ireland, John Fitzgerald said the contribution from the multinational sector in terms of employment is really important.
“They employ highly skilled people, pay above the average and those people in turn pay a significant part of the income tax. So, the economy is in a pretty strong position with those firms,” Mr Fitzgerald said.
While the corporation tax paid involves very few firms and is insecure, he said the jobs in these companies are pretty secure.
He said about half of the growth in the economy over the last eight years has come from the multinational sector but over half of that has come from the wage bill from employing people.
“The corporation tax revenue has been a real bonanza for the Government and that is less secure but the growth in employment is not going to suddenly disappear overnight whereas something could happen unforeseeable which could really affect corporation tax,” he stated.
In terms of the standard of living in Ireland, Mr Fitzgerald said that in the long-term, Ireland is better off than much of the rest of Europe “and we are saving a lot of it which will in future turn into investment”.
However, when it comes to spending in shops and Government services, he said the data suggests that Ireland is below-average in terms of standard of living, but it is being driven by the measure of housing services and the fact that house prices are high.