Irish Economy: The IMF (International Monetary
Fund) wonders in a recent report about rising productivity not being reflected
in increasing exports' market shares. Some of the locals are also gripped by
The charts above come from
a June IMF report [pdf}
last Friday on an Irish Times feature on Irish exports.
On Monday, Dr Proinnsias Breathnach, a
lecturer at NUI Maynooth, had a letter published in The Irish Times in response
to the article. He had misread my comment in relation to headline export data in
the past decade and the limited economic impact of the increase. Jobs in the
both foreign-owned and indigenous exporting firms are at the 1999 level, even
though there has been a huge rise in exports in the interval.
A chara, – In a side panel accompanying a major
article on Ireland’s export prospects (Business, This Week, September 7th),
Michael Hennigan argues that Ireland’s service exports have “limited impact on
the real economy”, asserting that, in 2011, about 9,500 Irish workers were
responsible for 73 per cent of all services exports.
This is a distortion of the actual situation.
According to the annual Forfás survey of the economic impact of firms in receipt
of assistance from the State enterprise development agencies, in 2010 foreign
firms based in Ireland generated sales of €53.3 billion and employed some 46,600
workers. Since 96 per cent of these sales were export sales, it follows that
about 44,800 people were employed in export services.
On the same basis, we can calculate that about
18,500 workers in Irish firms were engaged in export services, giving an overall
total of some 63,300. This does not include firms engaged in export services
which are not in receipt of State support.
These figures are a far cry from those suggested
by Mr Henning and show that export services are a major source of employment
Furthermore, this is generally high-quality
employment, and the average payroll cost of workers in foreign services firms in
2010 was €61,000.
In addition, foreign service firms spent over €6
billion on Irish materials and services in 2010, over 40 per cent more than was
spent by foreign manufacturing firms based here.
Combined with the total payroll contribution of
these firms (€2.8 billion in 2010) and their corporation tax contribution, total
expenditure of these firms in the Irish economy was of the order of €10 billion.
And this is not counting the considerable contribution of services exports by
This hardly constitutes the “limited impact”
suggested by Michael Hennigan.
Mr Hennigan is also wide of the mark with his
assertion that the computer services sector has seen no growth in employment
levels since 2000.
According to population census data, the number
of people in computer software occupations rose from 19,598 in 1996 to 37,770 in
2002 and 50,282 in 2011. That’s an increase of over 150 per cent in 15 years. –
The following is my response, which has not yet
Dr Proinnseas Breathnach
of NUI Maynooth accuses me of distortion in respect of service exports. However,
I stand by my claim about the headline data in the past decade and the related
economic impact. I was not referring to the actual impact of all those involved
in service exports.
Last month, Forfás
published its 'Annual Employment Survey 2011' and in the 2002-2011 period
covered, service exports rose from €29 billion to €79 billion.
Full time permanent employment in both Irish and
foreign-owned firms in 'computer services' (a Central Statistics Office
classification) rose from 57,000 to 60,000 while employment in foreign firms
rose by 2,000 to 46,000. There was no change in 'business services' employment
in foreign firms
'Computer services' exports jumped from €10 billion
to €32 billion without any significant change in employment. 'Business services'
exports more than quadrupled to €22 billion.
The number of 9,500 relates to Microsoft, Google,
Apple, Oracle, Dell, aviation leasing (about 1,000 direct workers) and Facebook.
With the exception of Apple, 2011 staff and revenue estimates were based on
Apple Cork's Irish
financials have not been available publicly since fiscal 2004. The CSO gets the
data and the company is responsible for the world beyond the Americas and China.
We have estimated Irish-booked sales at €12
Dell Computer is mainly a
service business in Ireland and is ranked in fifth place in 'The Irish Times Top
1,000' database, with annual sales revenues of €9
Looking at its fiscal 2011 accounts, it appears to
be booking the output of its former PC plant in Lodz, Poland (now owned by Foxconn,
the giant Taiwanese contractor) in Ireland.
We estimate that only
50,000 Irish direct workers are responsible for 69 per cent of annual Irish
exports, based on the headline total value of €164 billion for merchandise and
services exports in 2011. That amounts to 2.5 per cent of the Irish workforce of
2 million, including the unemployed.
It's time to plan for an
uncertain future, based on reality not fairytales.
While Microsoft had a global
revenue per employee of $777,140 in fiscal 2011 and $27 million in Ireland,
Google had a global revenue per employee in 2010 of $1.33 million and $8.52
million in Ireland.
The data shows that
Ireland has miracle workers but 309,000 of them are officially unemployed.
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