Recent tech industry job losses “reaffirm concerns” about the concentration of foreign direct investment in a small number of sectors and represent a “mild negative shock” to part of the economy, according to a Government report.
The National Risk Assessment 2023 outlines 25 concerns ranging from climate change and extreme weather to pandemics, the fallout from Russia’s invasion of Ukraine, and societal risks related to the housing crisis.
It notes that the economy has “rebounded strongly” following the easing of Covid-19 restrictions last year, which it says can be seen “in the exceptional growth in employment”.
However, it adds that the invasion of Ukraine and Russia’s “weaponisation of energy supplies” triggered an energy price shock, catalysed a cost-of-living crisis and undermined global economic prospects.
“These developments taken together highlight the risk of a material deterioration in Ireland’s economic outlook in the coming years,” it says.
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It also warns that “legacy infrastructural deficits”, especially in the areas of energy, transport and housing, also have “the potential to act as a drag on our economic performance”.
Multinational consultancy and outsourcing firm Accenture told staff on Monday that it was seeking 890 redundancies in the State, the latest in a spate of job losses in the tech sector in recent months.
The Accenture announcement brings to just under 2,300 the known redundancies in the Irish tech sector over the past eight months. Companies such as Meta, Microsoft, Twitter and Indeed have previously announced cuts.
The risk assessment says job losses in the sector since the autumn “reaffirm concerns regarding the relative concentration of foreign direct investment [FDI] in a small number of high-value sectors and markets”.
It adds: “The concentration of Ireland’s exports in a small number of sectors, dominated by multinational enterprises, leaves us vulnerable to broader global shifts, as well as company/sector-specific shocks and decisions.”
The risk assessment says that “Ireland’s base of more than 1,600 multinationals plays a major and positive role in the economy”.
However, it adds: “The concentration of more than half of Ireland’s corporation tax (CT) revenues amongst 10 large foreign-owned multinational companies (MNCs) means that Ireland is exposed to considerable company and sector-specific risks.”
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Referring again to redundancies late last year, the assessment says: “While this may raise some opportunities with regards to reallocation within the labour market, allowing other sectors access to talent, it represents a mild negative shock to the most productive and innovative parts of the Irish economy.”
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The document states that the Central Bank “holds that this contraction is currently not indicative of a widespread economic downturn, however, it highlights a concentration of economic activity within a sub-section of the economy, and the corresponding structural vulnerability of the public finances in the case of any future sectoral contraction”.
Speaking as the assessment was published, Taoiseach Leo Varadkar said: “With the return of war to Europe, alongside national and international inflation, and accelerating climate change, the identification and assessment of unpredictable, precarious risk and threats to our country is of ever-greater importance.”
He said the risk assessment aims to “bring about greater awareness of risks and increase national preparedness, to ensure the best possible outcomes for our country”.
