Using Eurostat here we can summarise the contribution of enterprises to the Irish economy.
In 2011, Gross Value Added at factor cost was around €156.5 billion so we can see that enterprises contributed €87.8 billion (around 5/8ths) of that. The remainder would come from the household sector (the self-employed) and the government sector. The contribution of foreign-owned enterprises to the above is.
The GVA from enterprises was divided between personnel costs (€37.6 billion) and gross operating surplus (€50.2 billion). GOS is a measure of profits akin to earnings before interest, tax, depreciation and amortisation (EBITDA).
Looking at how much of this was contributed by the foreign-owned sector gives the following.
The importance of the foreign-owned sector in Ireland is clearly visible. Here is a table that shows the percentage of each item for enterprises coming from the foreign-owned sector. In 2011, foreign-owned enterprises made up just over 2 per cent of all enterprises in Ireland but provided 22.7 per cent of the persons employed by enterprises. Foreign-owned companies accounted for 55 per cent of enterprise turnover, 34 per cent of enterprise personnel costs and 72.8 per cent of enterprise gross operating surplus (somewhat equivalent to earnings before interest, taxes, depreciation and amortisation).
In 2011, Irish-owned companies generated a gross operating surplus of €13.6 billion compared to €36.5 billion from foreign-owned companies.
After making adjustments for interest and depreciation there is likely to be a taxable income from the foreign-owned sector of around €30 billion with 12.5 per cent of that being €2.5 billion.
[It should be noted that all the tables in this post exclude the financial and insurance activities sector - NACE K – as it is excluded in the Eurostat data. It should also be noted that columns are only approximately additive.]
Corporation Tax and financial and insurance companies and passive income not included in the above “operating” table would bring the corporation tax take from the sector to over €3 billion. The Income Tax (+USC) and PRSI collected from the €12.8 billion of personnel costs incurred by the foreign-owned sector is also likely to approach €2.5 billion. There will be further Exchequer revenues from VAT, Excise Duty and other taxes.
The following four tables give a breakdown of the above for companies controlled from the US, the UK, the Euro-area and Other (i.e. non-US/UK/Euro). The figures for US-owned companies are the largest: 100,000 jobs; €6 billion of labour costs likely leading to €1 billion of Income Tax and €0.5 billion of PRSI; €2 billion of Corporation Tax; €3 billion of gross investment in tangible goods; VAT; Excise Duty, local purchases of goods and services; etc. etc.
And finally here are the figures for Irish-controlled enterprises.
For Irish companies 65 per cent of added value is devoted to personnel costs, compared to just 26 per cent in the foreign-owned sector (and 17 per cent for US-owned companies).
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I see that in Irish-owned firms, as VA fell by nearly 10bn, labour costs followed, falling by nearly 10bn also. Yet gross profits remained constant at 13bn approx. Is this another sign of the falling labour share? It seems to suggest widening income inequality, as the profit share must be rising?
ReplyDeleteStephen,
DeleteInteresting question. I guess that part of the reason is due to the sectors that experienced the decline. They would have been sectors where the labour share of added value was high: construction, retail, accommodation and food service. With a reduction in the relative size of these sectors it is perhaps not surprising that the labour share would fall.
It also worth noting that "gross operating surplus" is an economic rather than accounting concept. It does not take into account balance sheet losses from changing asset values and also does not include financing costs (i.e. interest). Maybe a further analysis by sector is warranted.