Tech lay-offs a wake-up call to Ireland’s economy

The global job cuts at Meta, Twitter, Stripe and other tech giants are painful news for their employees in Dublin, coming just before Christmas. But experts said it was an “invitation” given Ireland’s heavy reliance on big technology.

Ireland’s decades-long gamble on global IT has paid off in revenue, jobs and billions in taxes from multinationals that have their glittering European headquarters in Docklands, Ireland’s capital, and employ 12 percent of the capital’s workforce, according to and stocks Davy. Group.

High tech performance has fueled Ireland’s economic growth and extraordinary corporate tax rates – despite Ireland’s corporate rate of 12.5 per cent – have provided the government with the financial resources it needs to meet today’s challenges.

With Meta firing 13 percent of the world’s workforce, Elon Musk cut Twitter’s record in half and Stripe, the payment company founded by two Irish brothers, leaving 14 percent of the workforce, the technological explosion of the last decade could explode. companies that have grown rapidly are now faced with rising costs of debt.

A short-term strike will mean many jobs lost in Ireland. However, some here believe that too much reliance on industry may not be a bad thing for the country that is sometimes called the “Silicon Valley” of Europe.

“Ireland is taking action on the farm when it comes to the future of technology. . . almost to the detriment of everything else,” said Mark O’Connell, executive chairman and founder of OCO Global, a business and investment advisory firm. “It’s not good for the people who are losing their jobs . . . but for the sectors that are affected by this, I think maybe it would be a good restart.”

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A slowdown in technology could also ease wage pressures, given the sector’s strong job growth, economists said.

Ireland has added 24,000 new jobs in the information and communications sector since the first quarter of 2021, when the country reached employment peak. The purchasing power of high-paid tech workers has pushed up rents in a market where housing was already struggling.

“The reality is that this is the right direction for the economy,” said Danny McCoy, chief executive of employers’ association IBEC.

He called Ireland’s housing crisis and increased public services “a key factor in the economic crisis”. If some of those things “start to cool down now, that’s a good sign that we can get better again,” he added.

Unlike when computer maker Dell moved a factory from Ireland to Poland in 2009, adding 1,900 jobs, the cuts this time won’t hurt the economy.

But Jean Cushen, associate professor of human resources management at Maynooth University, said the dismissal was a “wake-up call”.

“If the industry cuts costs and if we’re going into a tech winter, there will be no other sources of growth and growth,” Cushen said.

Chart of the number of ICT workers employed by multinational companies ('000s) showing Ireland's Big Tech workforce.

The impending cuts, which are expected to cut no more than 1,000 jobs in Ireland, have also rattled the government, which has warned for months that it cannot rely on tax cuts from tech professionals precisely because the bonanza could one day end.

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Tech giants and pharmaceuticals make up more than half of business tax revenues, which averaged €14bn in the nine months to September compared to around €6bn in the same period last year. Ireland has agreed to join the new global corporate tax rate of 15 per cent, although it is unclear when this will take effect.

Conall Mac Coille, an economist at investment firm Davy, said Ireland was dealing with a housing crisis even before the collapse of technology.

Tax chart for 2021 (bn) which shows Chunk of Irish tax data is based on technology.

“I don’t think the slow tech sector is healing Ireland,” he said. “Honestly, news is more bad than good. . . but it is not dangerous so far.”

Technology workers, who make up about 6.5 percent of all jobs in Ireland, pay 10 percent of their income tax, according to the finance ministry. But no company has announced it is closing shop in Ireland and Mac Coille said many are still waiting for revenue growth.

As talk of redundancies erupted at companies across the Dublin area, Dell announced a €2mn investment in an existing facility for customers to test new technologies in County Cork.

Mark Redmond, chief executive of the American Chamber of Commerce Ireland, said the layoffs coincided with the announcement of 520 new jobs in tech in Ireland.

Patrick Walsh, founder and chief executive of Dogpatch Labs, a Dublin-based tech hub and home to Ireland’s NDRC, said the current upheaval offers another opportunity: to give homegrown technology the same laser focus as Ireland has taught in the past. on tech tech.

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“In the 1980s, in the midst of recession, high unemployment and immigration, we lowered the corporate tax rate from 40 percent to 12.5 percent. This, combined with low costs and a highly educated, English-speaking population, began to attract foreign investment. ,” he said.

“It was not a wrong call. “However, the reality is that Ireland today has an economy that is at risk and the economy is suffering because of it,” added Walsh, who is also a member of the National Competitiveness & Productivity Council. the whole world if you’re Google, but we’re lagging behind on the big startup issues.”

Redmond said the OECD study showed a “diffusion” of talent from different countries to Irish companies. The decline in senior tech jobs means “a lot of talent is now back in the market, which can be good for business,” said one senior HR consultant in Dublin, although he added that his retail clients did not expect things to happen “anytime soon”.

Ireland is preparing to take on its share of the upcoming technology challenges. “The big problem is if the money starts to decrease, or decrease,” said Paddy Cosgrave, co-founder of Web Summit, a technology conference. “This would affect employment and taxation in Ireland.”


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