Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
THIS WEEK’S RULING by the European Commission that Ireland must recover €13 billion in back taxes from Apple has once again thrust our controversial relationship with foreign multinational companies under the spotlight.
On Tuesday’s Drivetime on RTE Radio One, Public Expenditure Minister Paschal Donohoe set out what he sees as the stakes in deciding whether or not to appeal against the EC’s decision, claiming:
One in five workers in the private sector work for companies that are located here in Ireland due to foreign direct investment.
20% of all private sector workers. Is that true?
(Remember, if you hear a politician making a big claim in an important debate, email factcheck@thejournal.ie or tweet @TJ_FactCheck).
Claim: One in five private sector workers work for companies brought to Ireland through foreign direct investment
Verdict: FALSE
What was said:
You can listen to Minister Donohoe’s interview in full here, and hear the relevant snippet above.
Here’s the claim we’re interested in:
One in five workers in the private sector work for companies that are located here in Ireland due to Foreign Direct Investment.
On Wednesday’s Today With Seán O’Rourke, Education Minister Richard Bruton (who until recently held the Jobs portfolio) weighed in on this point, repeatedly referring to “350,000 jobs” in the multinational sector.
And on the same show, Labour leader and Donohoe’s predecessor at Public Expenditure, Brendan Howlin said: “We’ve an enormous dependency on inward investment – 360,000 jobs…”
What’s going on here? While there were several similar claims made on this subject in the past 48 hours, we’re taking Donohoe’s statement on Drivetime as the main claim, simply because it was the first one we came across.
The IDA, the state agency responsible for attracting foreign direct investment (FDI), and bringing foreign companies into Ireland, revealed in January that 187,056 people are now employed by foreign companies who are clients of IDA.
They added:
IDA estimates that for every 10 jobs generated by Foreign Direct Investment (FDI), another 7 are generated in the wider economy (translating into 318,000 jobs or one in five private sectors jobs).
The first thing to note here is that the number of people actually employed by IDA client companies is 187,056. That estimated “indirect” employment is mainly among the many Irish-owned companies operating in the economy at large.
But IDA clients are not the only foreign-owned companies in Ireland.
The Department of Jobs, Enterprise and Innovation publishes annual figures for employment among companies helped to set up by all government agencies – IDA, Enterprise Ireland and Ùdarás na Gaeltachta.
According to the most recent data (July-September 2015), there were 196,853 employees at foreign-owned, “agency-assisted” companies.
Unfortunately, the CSO does not have a single, comprehensive statistic on this, so there are a few methods of reaching a rough calculation, all of them flawed. Apart from the final calculations, all the figures come from the CSO and relate to the third quarter of 2015.
Estimate 1
Subtract the number of public sector workers (376,300) from the total number of people in employment (1,983,000) – leaving 1,606,700 private sector workers.
The weakness of this estimate is that the source of the number of public sector workers is the Earnings, Hours and Employment Costs Survey (a survey of employers) but the source of the total number in employment is the Quarterly National Household Survey (a door-to-door survey of workers).
Estimate 2
This is the one presented by the IDA in response to FactCheck. Take the total number in employment (1,983,000) and subtract those employed in three economic sectors: public administration, education and health and social services (501,300).
That would leave 1,481,700. However, as the CSO itself points out, not all workers in those sectors are public sector workers – think, for example, of the private healthcare industry.
So this estimate has its own significant flaw.
Estimate 3
Take the CSO’s estimate for private sector workers (which leaves out self-employed workers and is 1,243,300) and add the number of self-employed workers (323,000). That gives us a rough estimate of 1,566,300 private sector workers.
But again, the first figure comes from the employer survey, and the second comes from the household survey, which makes comparison and aggregation tricky.
However, we need a rough estimate of the total number of private sector workers in Ireland, so we’ll have to make do with these three flawed figures.
Remember that the number of employees in foreign-owned, agency-assisted companies in Ireland in the third quarter of 2015 was 196,853. That’s…
So the best estimate (however rough and flawed) is that between 12.3% and 13.3% of private sector workers are employed by foreign-owned, FDI companies.
Therefore Paschal Donohoe’s claim, as stated on Drivetime, that one in five private sector workers work for “companies that are located here in Ireland due to Foreign Direct Investment” is false.
FactCheck asked Fine Gael and the Department of Public Expenditure for evidence to support Donohoe’s claim.
In response, the department clarified that:
The Minister was referring to all employment, direct and indirect, stemming from companies here as a result of FDI. [Emphasis added]
This is obviously different from what he said on Drivetime on Tuesday. In its response, the department cited the figures presented by the IDA – 187,056 employees at IDA clients, and 318,000 total “indirect roles” in the wider economy.
Let’s look at that.
The IDA told FactCheck its estimation that “for every 10 jobs generated by FDI, another seven are generated in the wider economy” came from an analysis performed by the economic consultants Indecon.
Their research, conducted in 2010, concluded that the “multiplier effect” of FDI in Ireland (essentially the ripple effect of new jobs throughout the economy) was 1.72.
This means that for every 100 jobs added to the economy through FDI, 72 more should ripple out from that, in the form of subcontracters, suppliers and so on, and also through the extra spending done by those 100 employees of foreign-owned companies.
This is where the figure of “one in five” ultimately comes from. If you apply the multiplier (1.72) to those 187,056 jobs in IDA companies, you get 321,736.
That’s 21.7% of 1,481,700, the figure cited by the IDA (Estimate 2, above) for total private sector workers – roughly one in five.
And if we apply the 1.72 employment multiplier to the 196,853 jobs at all foreign-owned, agency-assisted companies, we get 338,587. As a share of all private workers, that’s…
However, it’s very important to be specific and careful in how you describe these numbers.
Even the IDA has stretched the language somewhat. For example, in a statement on Tuesday, its CEO Martin Shanahan claimed:
Over 300,000 people are employed directly or indirectly in FDI companies in Ireland. [Emphasis added].
But as we’ve seen, the multiplier effect involves, for example, jobs created through the increased demand for products and services resulting from new jobs at FDI companies.
Say, for example, an American tech company sets up in a town in Ireland, employing 100 people.
That’s a lot more salaries, and a good bit more spending, around the town.
Let’s say a good chunk of these employees start going to the same supermarket. Queues begin to develop, so the manager hires an extra cashier.
According to the logic of that IDA statement, this cashier – who is actually an employee of the supermarket – is now “employed indirectly” in the tech company.
So it’s important to be specific and careful in how you describe these numbers.
Similarly, when Richard Bruton describes FDI firms as “companies who have 350,000 jobs in Ireland”, he’s demonstrably wrong, not least because the figure of 350,000 is an exaggeration even of the IDA’s multiplier estimation.
But when he says, as he did at the start of the debate: “350,000 jobs, direct and indirect, depend on foreign companies who’ve invested here”, he’s getting closer to the truth.
Here’s how the department told us he got that number:
In July, the IDA said FDI jobs growth in 2016 was “on a par” with that of last year. Since 12,000 jobs were added last year, that would suggest IDA-backed employment might be expected to reach 201,000 by the end of 2016 (only if you round up the current total from 187,056 to 189,000).
If you apply a multiplier of 1.7 to that, you get 341,700, and the minister rounded up to 350,000.
In fact – the net job gain was 11,833. Added to 187,056, that’s 198,889. But if you apply the correct multiplier of 1.72, you get 342,089.
So the best you could fairly say is this:
If trends continue, by the end of this year we expect almost 199,000 people to be employed by IDA-assisted foreign companies, and based on one model, it has been estimated that this will have rippled out into a further 143,200 jobs elsewhere in the economy.
Paschal Donohoe, in an interview on Wednesday’s Morning Ireland, mentioned “the over 360,000 people who either work for a large employer or are dependent on a large employer for their work”.
His department told us that figure was taken from comments made on Tuesday by Finance Minister Michael Noonan.
Similarly, we asked Labour and Brendan Howlin’s office about his reference to 360,000 jobs, and they said it was based on Paschal Donohoe’s claim on Wednesday’s Morning Ireland.
A spokesperson told FactCheck “Deputy Howlin assumed that figure to be correct in subsequent interviews”.
We know those claims to be false, since they involve an exaggeration of the actual estimate, and misleadingly present predicted employment at the end of 2016 as current levels of employment.
Paschal Donohoe’s claim was:
One in five workers in the private sector work for companies that are located here in Ireland due to Foreign Direct Investment.
That’s wrong. In reality, between 12.3% and 13.3% (roughly one in eight) private sector workers are employed by FDI firms (i.e. “companies that are located here in Ireland due to FDI”).
As noted, his department told FactCheck he was actually referring also to “indirect” employment, a term which, as we’ve shown, somewhat generously describes the knock-on benefits of FDI in other companies, mostly indigenous Irish companies.
According to one model, it has been estimated that FDI has stimulated the employment of 141,734 workers elsewhere in the economy, on top of the 196,853 actually employed by FDI companies, as of September 2015.
This total level of employment, 58% of which is in FDI companies themselves, equates to between 21% and 22.9% of private sector workers in Ireland – slightly more than one in five.
Irish politicians should be more careful than they have been in the last 48 hours, when describing the benefits of FDI in Ireland, and should clearly distinguish between actual, counted employment at FDI companies, and employment elsewhere in the economy, which has been estimated based on one model.
We rate Paschal Donohoe’s claim, as stated on Drivetime, FALSE.
Send your FactCheck requests to factcheck@thejournal.ie
To embed this post, copy the code below on your site
Indirect jobs are just as important
Exactly. Look what happened in Limerick when dell left. It was more than just dell jobs that went
These articles are always well researched and clear.
But then they have bizzare conclusions.
Surely this claim was at least partly true, and fully true if you allow the clarification and quite reasonably include the indirect jobs?
And if you include foreign companies (retail especially) that don’t get IDA assistance.
But they all make a profit from being here (((jason)))
I hope they do. Profit = jobs.
you`re missing your Danish show on your Dutch TV (((jason))) – stop answering me :-)
It’s disgraceful that we depend on so many foreign companies. Aren’t we a brilliantly educated population? Can’t we create our own companies?
@Peter
Do you realise Dell never left Ireland.They recently merged with EMC in Cork who employ almost 2,000 staff.The new company will be Dell Technologies.
http://www.irishtimes.com/business/technology/michael-dell-visits-cork-staff-after-emc-merger-1.2655226#.V0RmTxvU_Lo.twitter
Enda does, he works for EU or Goldman Sachs, their CEO.
Right. Indirects. Contractors. Suppliers. So 40% or more. Clear to everyone id say. And im engaged in a brawl to stop one such co. Move all currently irish based operations to east eu and am putting in 12hr days to prevent it. Our irish guys are great but boxing up against east eu salaries-avg wage €450/month f koe soap and €1500/month f highly qualified specialists. 250 direct and multiples of that indirect jobs on the line in a unemployment blackspot in the midlands. Sometimes I think Eu expansion East was all about low wages/MNC’s cutting cost like Dell and many others. Took time for them2learn English but new generation East Eu speak English so big problem f Eire.
Why did the power-houses lose quality manufacturing jobs? Think Uk, Italy etc. Well Unaccountable Eu Bureaucrats gave unfettered access to CHINA and Asia on slave wages while upping costs on Eu firms w vigourous Environmental & Safety Directives to Eu companies. Now u go try and sell into China-good luck won’t happen. Enormous bureaucratic obstacles.
Are jobs from the likes of Tesco, Aldi and Lidl include in those numbers?
Yes this is a ridiculous question. So if the CEO of a company is not Irish is it a foreign company, if some of the company is based overseas, if the HQ is here but most operations elsewhere, if the company is owned by another parent company like Debenhams Ireland etc. The business world has moved on from national borders
We can but only fdi jobs have that nice ripple effect… I think
Some foreign companies set up without assistance from the IDA. Aldi and Lidl are foreign companies; I doubt they got IDA assistance. Tesco are also a foreign company, as are Boots, Harvey Norman and lots of other retail companies thus employ thousands also; are these included in your figures?
Very well said
They also all make a profit from being here, they are not here for the good of our health.
Services cannot survive w/o manufacturing. Japan, Germany, manufacturing powerhouses and both punch way above their weight.
And every single job in the public sector is dependent on private sector workers to pay their wages and pensions.
well you DO use the hospitals, roads, and rely on the protection of the Gardaí like everyone else , (((Jason))), whats the craic? – do you want these privatised too?
I do. I didn’t say anything about privatisation cowardly troll with no name.
Yes. The more of these things privatised, the quicker we pay off our EU loan and the less tax we all pay. We would all be happier.
Way to miss the point
Cowardly troll with no name, LMAO!! first name jason, last name jason strikes again – you were banging on about public jobs being paid for by private workers, i just reminded you that you avail of the services of “public workers” Capiche?
That private sector workers pay for, capiche cowardly troll with no name.
The more of these things privatised, the lower the standard of service is provided and thr higher the cost. Privatisation never works out well for the consumer; the government get to shrug off its responsibilities, the private service providers make out like bandits..
ah, now first name jason, last name jason, stop having a hissy fit
I’m grand nameless troll, having a Polish beer here in wet Wexford, a beer I bought in a German store, watching my Dutch Tv, via my British satellite provider, enjoying the Danish language TV show! Hope your late shift in shinner HQ goes well, wish comrade Jamming all the worst.
not doing much watching of your danish TV show on your dutch television if you keep answering me every 2 minutes, lol, stop lying mate,
You`re hunched over a keyboard in a basement in Dublin city centre with the rest of the government shills hammering away feverishly at your keyboard, come on – Man up!
There’s about 100,000 people in the county Ray. I work in Dublin, commute daily from Enniscorthy, if you’re so concerned.
Jason. I am not in the least bit concerned.
Your first point is not fully true Jason. Many public sector jobs salaries are funded by direct payments. For instance if you pay your rent to the council, or you pay a fine for parking or for late return of a library book or you pay for a planning application those monies ultimately go to funding some wages.
Jason, what about the vast swathes of private sector jobs dependent on the public sector? The likes of the HSE and local councils contract out millions of euros worth of services every year to the private sector. How does that get accounted?
Eir (formerly eircom) is a foreign registered entity (Jersey). How would they fit into the FDI/domestic debate?
A government minister lying through their teeth? Well there’s a surprise…
Lying Paschal , tut…
FACT CHECK:… how many pate workers pay the appropriate rate of taxation? All.
Paye. …not pate.
0.005%
That includes apple workers and employees of other multinationals who pay more than all social welfare recipients added together!
Ya just the workers not the shareholders
LOL after this article being up 10 minutes all the green thumbs are where there is a positive comment in the governments favour, and all the red thumbs are where there is a negative,
The Government fraperoom is in overdrive tonight – will probably cost us €13 Billion in overtime for the next few weeks – well done lads, ye are playing a blinder
Bring on the red thumbs :)
There’s been 1,800 views since the article went up and there are about 40thumbs either way so far. The auld paranoia must cause headaches .
how`re ye First name jason, last name jason – see you are doing overtime tonight too, what toppings do you want on your pizza?
Yep. Nothing to see here. It’s the long game. 5 years of courts and possibly a very unstable government. Ironically because people have become short sighted.
Do you make pizza in the Sinn Fein office these days, cowardly troll with no name? Just cause your paranoid doesn’t mean their not out to get you though…
thats at least twice you have mentioned paranoia first name jason, last name jason, you suffering from it?? and BTW i am not Sinn Féin, but i AM anti FF/FG and Labour, seeing as they have sold out our country and thrown us to the wolves – don`t choke on your garlic bread when you read this :-)
What time are you finished at? – I`ll meet you in town for a pint and we`ll discuss politics :-)
Must be the work of the FG multi million euro media manipulation team! Seriously it exists, and they need it because the party’s a joke in terms of running the country.
Yeah Adrian it’s called the independent/news talk or anything owned by FG/Dinny
Plus they have their own dedicated team working on this. Paid multi millions of euro every year of fg party expenses money, main aim to manipulate the media. And they’re still a disastrous, calamitous wreck!
I guess their problem is that their politicians are so bad, they’re pretty much indefensible. Tough job.
Operation fear.
The people in the UK saw through it as they were pontificated to by a privileged elite.
Did they see through it though
I think when Geldof got on the yacht a lot of people realised.
Regardless of factcheck, our totally inept politicians (mostly FG, FF and labour politicians because unfortunately they’ve been running the country) knew this corporation tax issue was ready to explode for years now, and along with everything else, the failed to prepare for this, in fact they’ve failed to prepare for almost everything, ie: the financial crisis (the PIGS country’s suffered the most). It’s these guys that continuously gets the country into trouble. They’re appealing now because they simply can’t think of any other option because they ain’t capable of thinking of any other option. Ireland needs to get rid of these overpaid clueless morons, then the country might stop from continuously getting into a mess.
FF FG cannot be believed no matter what they say
How many of the employees of MNCs are Irish, in full time employment, with reasonable income levels.
How many employees are foreign nationals putting extra demand pressure on our limited housing stock?
Have the Irish employees equality of opportunity?
How many MNCs are definitely here for the longer term?
How many non local senior executives of MNCs in Ireland have special tax exemptions as non -residents?
Let’s properly kick the tyres on the real cost/benefit of foreign MNCs in Ireland.
Micheál, always better to provide answers than questions.
Questions first and then answers if the data is available. The data is not currently available.
If mnc employees are putting pressure on our housing stock we should build more social housing to home the unemployed Irish. That makes sense, free homes for scroungers, huge mortgages for hard workers
All a bunch of corrupt liars.it is catching up on them.
YFG is in overdrive on theJournal and social media.
I don’t know if he is a liar. …..I think he’s just a wipping boy ,that actually belives what he’s told before he’s put in front of the camara.
I’d say it’s more that he knows not to ask too many questions or that he actually wants to know the truth. Plausible deniability and all that. He just reads from the script and pockets the check.
*doesn’t actually want to know the truth
Pascal Donohue lied. Well I never. Tut tut. Don’t they realise you can check everything that’s said these days.
Excellent research Dan MacGuill, you really deserve a better job than here on the Journal.
5 year plan lol
Im sick of this argument, it simple we have a great educated workforce that should be multiplied to product innovated products and services that are used worldwide from a free third level educational system pre bust. At least these companies should pay enough tax to cover these costs and research because they are the biggest benefactors from this. They should also pay enough tax to cover infrastructure that facilitates the sale of their products i.e. Broadband, ports, airports and roads
How can they not know the figures? I deffo listed my company and its address in the census also my husbands, so it’s not hard maths to see that’s 2 jobs from foreign invested companies. Run a program to analyse the census data! This stuff is important to get facts right on.
Heard the latest Gift Grub…..Because they’re Apple.
Paschal’s harmonies ….hahaha!
http://www.todayfm.com/player/podcasts/The_Ian_Dempsey_Breakfast_Show/The_Ian_Dempsey_Breakfast_Show/59693/2/Gift_Because_It39s_Apple
so put another way?
If the multinationals pulled out 20% of the private sector workforce would loose their jobs –
One way or anther 300,000 jobs is a lot of employees.
Apple paid Tax on profits made in Ireland – they also paid their employees and the Income Tax and PRSI generated by their Irish based and taxed employees. Did they also pay rent and other levies, including water charges?
This decision appears to me to indicate that Ireland should tax profits made in Germany?
Oh yeah – cause the Germans and the rest forgot to tax them there?
On balance we are better off with these multinationals based here on the basis of employment, both direct and indirect, and the taxes paid by the employees.
13 billion might look attractive but if all the multi nationals pulled out to another country prepared to sweet deal them (and I understand that many of the EU countries may offer under the table sweet deals) then we have to figure out the effect of loosing 300,000 jobs – if there were 300,000 more unemployed costing us 200 a week (on average) that is 10,000 a year for each of 300,000 – is that 3,000,000,000 (3 billion) a year? Better ring fence that tax for unemployment benefit.
I am not suggesting that all the multinationals would pull out but, apart from the income that they are bringing into the country, they are also keeping people off unemployment benefit (as that is what jobs do) – so this is a major important issue and not one to be used to point score or rally people with stupid uneducated banners.
I do not know the best solution as I do not have access to all the facts and I suspect that many of the people debating this issue also do not have access to all the facts and figures and certainly not to all the international laws on on taxation and tax treaties – what I do know is that on both national and international scales there are lots of “vehicles” used by lots of companies to reduce their tax bill legally and it is my opinion that the EU is trying to bully Ireland because of a failing in their own or in international tax law.
(It is my considered opinion that the EU would be much better handling all the consumer and welfare related issues making sure that all EU citizens benefit equally -for example multinational mobile phone operators charging it’s customers in one EU state an extra charge for using their service in another EU state -for example an Irish person paying double the amount for car insurance from the same company as they might in another EU state – why I have to pay extra taxes to import a tax paid car I purchase in another EU country – these are the little people issues that the EU has ignored constantly and will eventually lead to more people wishing to leave an over bureaucratic dictatorial EU)
.
Let’s look at some reality checks:
The next American president whether Clinton,Trump or another Obama is going to pull all multinationals home with tax breaks at home for America.
As much as I don’t like him Phil Hogan said a fact this morning ALL 26 European Commissioners are jointly in favour of Ireland getting 19 billion from Apple that means any judicial appeal will fall on deaf ears in Europe .They are locked in to Ireland following through with this ruling and everyone knows regardless of European Parliament the elite boys in European Commission say how EU is run in every respect and any appeal to EU will be waste of money going to solicitor fees.
Ireland is a false economy just like so many others who dont have huge gas and oil natural resources oops we gave it to SHELL off Mayo enda kenny country for FREE gas fields sold off in 1970′s
The false economy based on FDI is and always was destined to fall live the fantasy that Apple and others like Dell ,HP ,facebook,paypal ebay will all leave overnight when they see fit as business dictates better price elsewhere.
Conclusion Ireland either faces reality and leaves EU or take the money and run and use 100 billion from back taxes from all 6 major FDI companies to rebuild export businesses in Ireland based on tourism ,agriculture and technology home grown medium sized businesses reduce our overheads of electricity oil and gas coupled with building materials cap prices to promote building industry for instance introduce cap on price of sand and cement ,electrical cabling etc.
my opinion take the money and run dont bother fight EU leave EU and rebuild from scratch irish economy most people are poor anyway riddled with secondary taxes and hidden costs every day of our lives any austerity from readjustment would be acceptable if it meant a more honest and transparent and ACCOUNTABLE government in Ireland today God bless ye all and grant everyone in Ireland Grace of Immunity from God Our Father in Heaven Amen .
One would think that a body like FactCheck would at the very least get their facts right and get the Minister’s quote right. The minister did not refer to companies “brought here” he actually said “located here” which rightly leaves open the defence that the quoted 1 in 5 jobs includes indirect jobs.
13 billion would hire 400k nurses. How many construction workers would it take to build 86k social houses (real social housing not Coveney HAPS schemes)? What’s the indirect rmployment implications?
How many teachers could be hired?
Take the 13 Billion protest Wednesday Sept 7 17.30 at the Dail Dublin
….and yet these Ministers are involved in preparation and passing of budgets, economic policy and the use of public money. But can’t add ?
No more than ESRI figures about GDP, or the economy – why would be believe anything any of these people say ?
have your say