Multinationals pay workers €37bn, or a third of all wages in Republic

Research by economist John FitzGerald also finds living standards in the Republic are above the average of EU countries, despite the elevated level of prices here

'People have suffered a very substantial hit in terms of purchasing power,' said economist John FitzGerald. 'In the next three years, we would anticipate that wages would catch up.'

Multinational firms pay workers a total of €37bn, accounting for a third of all the wages in the Republic, while the economy is set to weather the current cost-of-living crisis, according to a new assessment.       

The Understanding the Irish Economy report by economist John FitzGerald, for the Economic and Social Research Institute, finds that living standards in the Republic are above the average of European Union countries, despite the elevated level of prices here. 

The assessment is based on an in-depth look at the savings accumulated by Government, companies, as well as households, and arrives at an alternative measure that excludes the well-known distortions entailed in measuring the Irish economy by Gross Domestic Product. 

Excluding distorting items, Ireland is still a wealthy economy where the standard of living and distribution of income and savings are at high levels, "which suggests that if invested wisely that the standard of living will continue to be high into the future", Mr FitzGerald said. 

The rapid growth in highly paid jobs and corporate tax revenues paid by multinationals to the Government have boosted their contribution to the Irish economy in recent years, according to the report.

A third of the €111bn paid in wages across the economy are accounted for by all types of multinational companies, and about half of the €37bn that multinationals pay in wages are US-owned companies, Mr FitzGerald said. 

He said that his report was upbeat on the resilience of the Irish economy because the level of savings across the economy was running at significantly higher levels than the excess levels of corporation tax, meaning that the economy was in good health, if managed well. 

"Rightly we have been through two massive crises in the 1980s and in 2010, and you are always looking at what could go wrong," said Mr FitzGerald. 

We are naturally cautious, but at the moment the economy is in a pretty strong position for the future."

The high level of savings, which includes Government savings, reflects the strong position to invest for the future. 

He said that, all going well with the economy, households would weather the current cost-of-living crisis, but it would likely take a number of years for wage rises to compensate many for the elevated levels of inflation. 

"If things continue the way they are going over the next two or three years, wages will catch up with prices," said Mr FitzGerald. 

"People have suffered a very substantial hit in terms of purchasing power. In the next three years, we would anticipate that wages would catch up and that people would again be better off in terms of their purchasing power, in the absence of another crisis." 

Mr FitzGerald said his alternative measure that takes account of wages, corporation tax receipts, and savings across the economy, gives a better picture of the economy than the GDP measure. 

Taking account of the wages and corporation taxes paid by multinationals and allowing for the levels of savings help to give a picture of "what is happening to the people of Ireland and their standard of living", he said.