Foreign direct investment helps to develop capabilities and critical mass in sectors and to enhance Ireland’s innovative capabilities. It also contributes to greater productivity and value added as well as to regional economic development. IDA Ireland client firms created almost 19,000 direct gross new jobs in 2015, resulting in a net of 11,833 jobs (when job losses are taken into account). This has been an excellent performance coming on the back of a deep economic downturn and continued international uncertainty.
The exporting sector, including foreign owned multinationals operating from Ireland to serve international markets, impacts on the wider economy through re-invested profits and expenditure of wages, materials and services. It also generates significant downstream effects in areas such as sub-supply and secondary employment. This impact can be calculated in terms of a multiplier. The value of the multiplier depends upon the percentage of extra money that is spent within the domestic economy.
The estimate of seven indirect jobs for every ten direct jobs is based on research and analysis undertaken by Indecon International Research Economists for IDA Ireland. The employment multipliers are derived from the Supply and Use and Input-Output tables for the Irish economy published by the CSO and cover all sectors of the Irish economy. Sectoral multipliers for employment are derived from these tables and then applied to IDA client firm employment data. The employment multipliers used include direct, indirect and induced impacts of IDA client firm activity (known as Type II Multipliers), taking account of demand on the suppliers and so on down the supply chain as well as induced impacts arising through the additional consumption that takes place as a result of the additional employment incomes created through the indirect impacts. It should be noted that Type II Indicators should be interpreted with caution, as they assume that all additional income generated through indirect employment is spent. Based on a robust methodology, sectoral employment multipliers were calculated and applied to the sectoral employment data IDA firms, and are set out in the following table.
Employment multipliers are best estimates as indicated in IDA’s statement and may be subject to small changes over time based on structural adjustments in the economy and the composition of the IDA client firm base.
Appendix I. Analysis of Employment Multiplier Impacts of IDA Ireland-Assisted Firms
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Manufacturing Sector
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Employment Multiplier*
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Chemicals
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1.12
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Food
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1.5
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Metals & Engineering
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1.92
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Computer, Electronic & Optical Equipment
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1.8
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Medical/Dental instruments & supplies
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1.28
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Miscellaneous Manufacturing
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2.33
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International Services
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2.2
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Financial Services
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1.16
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Other**
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4.91
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Total IDA Ireland
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1.72***
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Source: Indecon analysis based on Forfás IDA/ABSEI data for 2008 and CSO Input-Output and Supply and Use Tables, 2005
* The employment multipliers are Type II and include both indirect and induced impacts
** Including clothing and textiles
*** The overall multiplier is derived through the ratio of the addition of the individual sectoral, economy-wide impacts to the total IDA Ireland direct employment
