The threat to jobs in the high-tech sector follows a remarkable expansion of the sector over the past three years, which continued despite the pandemic.
The information, communications and technology (ICT) sector, which includes most the big multinational tech services firms such as Meta, Stripe and Twitter, added more than 25,000 jobs since 2019, an increase of 26 per cent, with pay also rising strongly in the sector.
Sectors with significant reliance on multinationals, such as professional services, also reported strong jobs growth over the period, as did manufacturing industry.
These were key drivers of the overall rise in employment which is now showing signs of topping out, though with some sectors still scrambling to find workers care is needed in interpreting this.
A new data series from the Central Statistics Office (CSO), based on Revenue payroll records, shows that employment in the ICT sector increased from 97,800 at the start of 2019 to 123,300 this August.
Meanwhile, job numbers in the professional, science and technology, which includes professional services as well as research activities many of which are linked to multinationals, rose from 127,000 to 150,100 over the same period.
This scale of increase backs up reports from recruiters and online website data showing a surge in job numbers in many areas of the tech sector.
Facebook, owned by Meta, has also reported strong growth in international hiring and its activities also support many contractors and staff seconded from some professional services firms, as well as wider spending in the economy.
The latest data from the CSO administrative series suggests that total employment across the economy topped out at 2.367 million in June before easing to 2.34 million in August.
With many employers still saying that it is impossible to find staff, this trend may reflect both a labour shortage in some sectors and the start of a weaker trend in others.
A key issue will be whether this weakness spreads and how significant it is. Job numbers in ICT were still rising in August, though the rate of growth was slower in the first eight months of this year than in the same period in 2021.
Analysts say the sector has expanded too quickly and is now being forced to contract as the cost-of-living crisis hits consumer spending and economic growth.
A key issue for Ireland is whether this is just a temporary readjustment or something which could take a few years – and whether any big employers in particular will be shown to be particularly exposed. While the tech sector is facing challenges, the other big provider of corporate tax revenues – pharma – still appears to be doing well.
ICT is the second-bigger payer of corporation tax after the manufacturing sector – which includes pharma – and its share of total corporate tax, as well as the cash numbers involved, have grown in recent years.
It is also responsible for about 11 to 12 per cent of income tax and the same amount again is paid by the professional, science and technology sector, including many professional service firms reliant on the big players.
Ireland’s income tax system is very reliant on people on higher wages – a 2021 Department of Finance analysis shows that the average income tax and USC paid by an ICT employee was about €20,000 per annum, compared with €3,850 for someone in wholesale/retail and less than €1,000 for the average employee in accommodation and food.
So there is a lot at stake as the sector restructures and the forthcoming announcement by Meta, one of the really big players, will be a key indicator.