In the past, Ireland benefited greatly from US direct foreign investment. In fact, the past two decades have seen around £182 billion invested, a far greater number than what American firms have put into Brazilian, Russian, Indian and Chinese firms combined.

Foreign direct investment reports showed that an estimated 700 US companies based in Ireland provide around 130,000 jobs and contribute a lot of money into the economy. This includes big names such as Intel, Dell, Google and also Facebook.

Unfortunately, foreign direct investment by US firms has steadily reduced over the past two years, and the reduced investments may have a negative impact on the Irish economy moving forward.


Why are investments slowing down?

Let’s start by tackling the main issue; why are investments in the Irish economy by US multinationals slowing down? It all boils down to what services are now required.

In the past, particularly around the 1990s when foreign direct investment was at an all-time high, US multinationals were mostly involved in manufacturing. As time went on, it was decided that other countries such as China and India offered far better cost efficiency when it came to hiring low-cost labour. When jobs don’t demand much complexity but are intensive in terms of labour, multinationals now look towards other countries that offer far better profit margins than Ireland. Even developing countries like Ethiopia are a better option than Ireland. Most multinationals see investing in Ireland as an unnecessary expense, and the Irish population wouldn’t want the low wages that are offered in those developing countries.

This is ultimately the core issue when it comes to a reduction in foreign direct investment. This has meant that there are fewer jobs and with more companies pulling out to seek higher profit margins from other countries, the situation will only get worse.


The effect on the job market

Due to a reduction in foreign direct investment, labour-intensive jobs that don’t demand high levels of education are being phased out. This means that there are fewer opportunities in the economy overall, but it hasn’t changed what’s available for highly skilled graduates. This isn’t all bad news as the Irish Times earlier this year reported 60% of school leavers in Ireland progress to third level education.

US multinationals have remained in Ireland but with a different purpose; they’ve switched from focusing solely on manufacturing and production to services. While the demand for a strong workforce with a basic education is still around, the focus has shifted to highly skilled workers with knowledge and experience in a variety of fields. Due to the salaries that the Irish workforce demands, it’s important for multinationals to hire workers that offer more value to the company in the form of degrees and experience in high-tech industries.

This has lead to a clear definition of what US multinationals are looking for; an area that boasts skilled, talented and qualified individuals, backed by a strong and reliable workforce that possesses a basic education. A diversity of industries is also important, but the main focus is having talented workers mixed in with a strong workforce to achieve the right employee balance.

Unfortunately, this has the adverse side effect of drawing talented individuals away from smaller towns. Because many of these multinationals are operating in or around Dublin to tap into the bulk of Ireland’s workforce, highly skilled and educated people are moving away from smaller towns that could have become profitable areas for foreign direct investment. In developed countries like Ireland, highly skilled individuals are in high demand but there’s very little reason for these workers to stay in smaller cities because there aren’t as many job opportunities that could make full use of their skills.


How can Ireland improve its job situation?

It’s important to identify the core problems first;

  • Investing in Ireland has become less profitable than other countries like China and India
  • US multinationals switching away from manufacturing
  • Talent is being drawn away from profitable areas such as smaller cities and towns

With these problems in mind, we can start to take a look at Ireland from a different perspective and identify the strengths that can still be utilised so that multinationals are less likely to move away.

For starters, Ireland has excellent connections to the United Kingdom. This could provide a huge post-Brexit benefit that multinationals will absolutely take advantage of. Secondly, there are other multinationals and blue-chip organizations in Dublin, meaning there are many opportunities for networking and growth in the future. Thirdly, we can’t forget about Ireland’s tax regime and how it’s one of the most business-friendly among the entirety of not just Europe, but the entire world.

Lastly, we can’t forget about the highly talented workers in Ireland in addition to the strong and reliable workforce. As a developed country, Ireland produces many brilliant minds that are sadly funnelled into Dublin or forced to move abroad in order to utilise their skills and get a job worthy of their education level. By attracting these talented individuals away from Dublin and into the outskirts or to smaller towns, they could potentially improve quality of life yet still work in a fulfilling position with a well-known company that invests smartly into the Irish jobs market.

All of these points come together to show us that Ireland can improve its job situation, but it does require cooperation from multinationals and even smaller start-ups.


Final words

If this reduction of foreign direct investment continues, more and more multinationals will continue to pull out of Ireland, leaving thousands without jobs and desperately seeking employment. The country is seen as an expensive investment and people assume that China, India and developing countries are a more profitable choice for their company, especially for less skilled jobs.

However, it would be foolish to forget that Ireland still has plenty of highly educated graduates that would make excellent employees. With the high quality of life, the strong workforce and skilled workers, Ireland is still one of the best places for foreign direct investment–you just need to understand that talent in Ireland isn’t just located in expensive areas like Dublin, but all around the country in smaller cities and outskirt areas.