MNC employment?

femur61

I'm wondering how many people are employed by MNC here in Ireland ? The the line we need our low coperation tax to attract MNC, this is often a smoking gun to heads as we bend over backwards to retain it. One of the negotiating reasons why our interest rate on the INF/EU bailout is so high. We needed money but the banks aren't lending all the spare cash they have seem to be paying the interest rate. SME's are going out of business as its the latest fashion, well in the SE they are are. Where I live it remind me of the 80's. So is it worth the high penality are the constraints put on us from the international community justified just to retain it. Would it not be better to a lower rate by raising it and any money we have invest in idigionous businesses.

RichardAnd

It's not simply a matter of employment, it's more complicated than that. Consider this very simple example of our corp tax situiation.

There are 10 companies, each generating (for the sake of the example) 100million euro in profits each year, thus, 1billion as a whole. With a 12.5% rate of CT, the state would get 125million euros from those profits.

Naturally, it seems to simply be a case that is our CT was 25%, we would gain a healthy 250 million euros from those profits. Sounds great doesn't it, so why not raise the CT and use that extra money for whatever? Here's why.

We raise our CT to 25% and of those 10 companies, 5 decide it's not worth staying and so they up sticks and leave. The remaining MNCs now generate 500million euros a year of which, with our 25% CT rate, we would get 125million. No change however we now have a few thousand more people unemployed than before and with a higher CT rate, companies will be less likely to set up shop here to provide new jobs.

Thus, whilst we could possibly gain more money from the CT tax going up, it would be at the expence of thousands of jobs which would drive up welfare costs. Further, it would be a reduction of consumers in the market which will lead to further retail slumps and more job losses.

The lesson, never take anything at first glance.

gurramok

As far as I know, MNC employment is about 10% of the private sector. http://www.eurofound.europa.eu/eiro/studies/tn0904049s/ie0904049q.htm

This is not the issue however as they account for around 90% of our exports and contribute alot in Corporation tax as well as spin-off employment. Basically this country will collapse if the foreign MNC's pulled out en masse.

And yes, there should have been massive investment in home grown companies but unfortunately all that investment over the last 10years went into a property frenzy instead.

Fratton Fred

Not sure about now, but a company called Round Island One was one of Ireland's biggest companies.

It employed a handful of people and It's registered office was a solicitors in Dublin, but it generated colossal amounts if IT exports to emea.

Not all the MNCs employ lots of people, a lot of them are shell company, set up to avoid tax. That is why Germany, France and the UK are hacked off about it.

Count Dooku

In 2007 spend in Irish economy by IDA supported FDI is €15.9b of which salaries €6.8b,
Irish raw materials €2.5b and Irish services €6.6b
Above figures have grown marginally since 2000.

IDA supported clients created 8,800 jobs in 2008, now employing circa 136,000 full time
This equates to c.6.5% of total numbers employed.

http://www.ija.ie/uploads/downloads/japan_ireland/Irish_Economic_Brief_2009-01.pdf

Cookie_Monster

RichardAnd wrote: »

It's not simply a matter of employment, it's more complicated than that. Consider this very simple example of our corp tax situiation.

There are 10 companies, each generating (for the sake of the example) 100million euro in profits each year, thus, 1billion as a whole. With a 12.5% rate of CT, the state would get 125million euros from those profits.

Naturally, it seems to simply be a case that is our CT was 25%, we would gain a healthy 250 million euros from those profits. Sounds great doesn't it, so why not raise the CT and use that extra money for whatever? Here's why.

We raise our CT to 25% and of those 10 companies, 5 decide it's not worth staying and so they up sticks and leave. The remaining MNCs now generate 500million euros a year of which, with our 25% CT rate, we would get 125million. No change however we now have a few thousand more people unemployed than before and with a higher CT rate, companies will be less likely to set up shop here to provide new jobs.

Thus, whilst we could possibly gain more money from the CT tax going up, it would be at the expence of thousands of jobs which would drive up welfare costs. Further, it would be a reduction of consumers in the market which will lead to further retail slumps and more job losses.

The lesson, never take anything at first glance.

This, and don't forget that there are probably many local firms supplying these MNC with everything from gas to food to materials and machinery and maintenance. These local companies would also lose a good chunk of their business and may have to scale back also, with potential layoffs and loss of CT from them.
Dell in Limerick is a good example of the devastation wrought on local supplier when a MNC pull out.

liammur

Cookie_Monster wrote: »

This, and don't forget that there are probably many local firms supplying these MNC with everything from gas to food to materials and machinery and maintenance. These local companies would also lose a good chunk of their business and may have to scale back also, with potential layoffs and loss of CT from them.
Dell in Limerick is a good example of the devastation wrought on local supplier when a MNC pull out.

Correct.
Dell's closure was 1,900 jobs lost, but around another 8,000 also went as a result - but this would be the exception rather than the rule.