Foreign Direct Investment in Ireland 2015

The Average Wage in Foreign-Controlled Affiliates Operating in Ireland by Geography of Ownership

In Figure 4.2, the average wages of foreign-owned affiliates are broken down further into the regional ownership of the affiliate. Included in this figure, is the average domestic wage and the wage of Irish MNCs (lines). We see that it is largely European-owned foreign affiliates which are driving the wages of all foreign-controlled affiliates below that of the Irish MNCs (see figure 4.1). In the previous section we saw that European-controlled affiliates account for the majority amount of the employment in foreign-controlled affiliates. This large contribution to the total wage bill has a significant bearing here.

The average wages in affiliates with ownership in Europe, with the exception of those owned in Luxembourg, are seen to be less than the wages paid by Irish MNCs in Figure 4.3.

Figure 4.4 compares the average wages in affiliates controlled in other significant investor countries. Apart from the wages paid by Canadian-controlled MNCs, the wages in Figure 4.4 are all higher than those paid by the Irish MNCs. Notably, wages from US-owned affiliates have risen significantly in recent years.

The Average Wage in Foreign-Controlled Affiliates Operating in Ireland by Activity of Resident Enterprise

Figure 4.5 shows the average wage in foreign-controlled affiliates by NACE code. Only the wholesale and retail trade sector pays less than wages paid by Irish MNCs. Furthermore, wage growth in the ICT sector has far outstripped growth in other sectors. This contrasts strongly with the wholesale and retail trade sector, which has the slowest growth of the represented sectors.

FDI & Wages by NACE Sector

Figure 4.6 shows the accumulated FDI stock in Ireland, alongside the average wage in foreign-controlled enterprises, by sector. The graph shows that ICT has paid the highest average wage, despite having a relatively small FDI stock in the Ireland. Although this sector has the lowest number of employees of the sectors in consideration (Figure 3.2), it has added the most jobs over the period. The financial and insurance sector shows average wages which were similar to those in the ICT sector in 2012, but failed to achieve the same wage growth rates. The wholesale and retail trade sector had both the lowest average wage and the lowest average FDI stock over the period.

Although manufacturing wages have grown consistently over the period shown, this growth appears to be largely unrelated to the increase in FDI in this sector in 2015. In Figure 3.2, there was no apparent link between this investment stock and employment in the sector. This would imply that the investment was related neither to employment nor to wages.