Business in Ireland Abridged 2012

GVA per person engaged was almost €78,900 for all enterprises and over €44,300 for indigenous Irish-owned enterprises. 

GVA per person engaged for micro enterprises was over €40,700 while for large enterprises the figure was almost €149,300.  When the foreign multinationals were excluded, the productivity measure for each of the size classes was reduced considerably.  This was particularly evident for large indigenous enterprises where GVA per person engaged at almost €74,700 was approximately half the figure for all large enterprises.  See Figure 5.2.

In 2012, each broad sector had a higher turnover per person engaged in large enterprises than small and medium enterprises (SMEs), with the exception of the Distribution sector.  This trend was most evident in Industry where large enterprises had a turnover per person engaged of over €887,100 compared to almost €379,500 for SMEs.  Although the gap between the two size classes was less in the other broad sectors, there was still a sizeable difference for both Services and Construction. 

Turnover per person engaged across both size classes was most similar in the Distribution sector where SMEs reported a value close to €327,100 while the corresponding figure for large enterprises was almost €294,300.  See Figure 5.3.

In relation to GVA per person engaged, Industry again had the largest gap between the two size classes, where large enterprises had a GVA per person engaged of over €327,500 while the corresponding figure for SMEs was just over €103,700.  See Figure 5.4.

Apportioning GVA between personnel costs and gross operating surplus

Personnel costs include wages and taxes as well as both employee and employer social security contributions.  When combined with gross operating surplus, it is possible to calculate gross value added.[1]  The proportion of GVA that is paid by enterprises in the form of personnel costs is presented here.  For enterprises, the lower the percentage paid in personnel costs, the more they are able to extract in the form of gross operating surplus or profit. 

In 2012, 42.9% of GVA was paid in personnel costs across all enterprises[2].  Indigenous Irish-owned enterprises (i.e. excludes foreign multinationals) paid 64.6% of GVA in personnel costs. 

Small enterprises with between 10 and 49 persons engaged showed particularly high proportions of GVA paid in personnel costs.  Within this category, all enterprises paid 63.4% in personnel costs while indigenous enterprises paid 74.6%.

Foreign multinationals had a significant effect on the shares reported by large enterprises.  All large enterprises paid 31.7% of GVA in personnel costs while large indigenous enterprises paid 61.3%.  See Figure 5.5.

When the sectoral breakdown is examined, it can be seen that industrial enterprises paid the lowest proportions of GVA in personnel costs across all sectors.  This is the case for both SMEs and large enterprises.  In particular, large industrial enterprises only paid about one fifth of GVA in personnel costs with the remainder being recorded as gross operating surplus.  

It should be noted that there are very few large construction enterprises.  Therefore, the GVA and personnel costs recorded by this category can be somewhat volatile. See Figure 5.6.

Business profitability in Ireland

Gross operating surplus is the balance available to an enterprise which allows it to provide a return to shareholders, to pay taxes and to finance all or part of its investment.  Gross operating surplus as a percentage of turnover is a measure of profitability for an enterprise and is presented here for each of the detailed size classes.  The higher the percentage the more turnover or sales an enterprise is able to translate into gross operating surplus or profit.

For all enterprises in the business economy, 15.6% of turnover was reported as operating surplus.  This figure was reduced significantly to 9.6% when the foreign multinationals were removed from the analysis.   

All large enterprises recorded 20.2% of turnover as gross operating surplus while large indigenous enterprises recorded a percentage of 11.6%.  See Figure 5.7.

The Distribution sector recorded the lowest levels of gross operating surplus as a percentage of turnover.  This profitability measure was 5.7% for SMEs compared to 7.4% for large enterprises.  In the Services sector, gross operating surplus as a percentage of turnover for SMEs and large enterprises were similar at about 14.1% and 13.2% respectively.

However, in industry, large enterprises recorded a profitability figure of 30.0% while SMEs reported a figure of 16.5%.  Therefore, the gap in the profitability measure for SMEs and large enterprises evident in the total business economy was driven by industrial enterprises.  See Figure 5.8.

Contribution of 50 largest enterprises

The fifty largest enterprises in Figure 5.9 were chosen firstly based on the size of GVA generated and secondly based on employment size. 

The fifty largest enterprises in the business economy by GVA accounted for 36.3% of total turnover, 41.6% of total GVA and 60.6% of total gross operating surplus. 

In contrast, the fifty largest enterprises in the business economy by employment accounted for 20.1% of total turnover, 19.9% of total GVA and 21.1% of total gross operating surplus.  See Figure 5.9 and Table 5.1.

Industry stands out in terms of its reliance on a small number of high value added enterprises.  The 50 largest enterprises in Industry by GVA accounted for the majority of all three main indicators within Industry at 61.4% of total turnover, 73.3% of total GVA and 85.0% of total gross operating surplus.  See Table 5.1.