Workers braced for redundancies as Twitter, Meta and Stripe set about cutting costs by reducing employee bases
Income tax has increased by 15.5pc so far this year due to high overall employment and wage increases in high-salary jobs, many in multinational organisations.
This has contributed to a massive €13bn increase in the overall tax take in the year to date. But some of that windfall could be threatened as global tech firms with big headcounts here – like Meta, Twitter and Stripe – shed thousands of jobs.
“The Government has highlighted the vulnerabilities associated with the concentration of corporate tax receipts and taken some actions already,” said Goodbody chief economist Dermot O’Leary.
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“From a wider economic perspective, the trend in employment over the coming quarters will be even more important.”
According to Goodbody, the tech sector in Ireland is among the biggest in the EU, representing 7pc of all jobs in the country.
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But the industry’s impact on incomes and tax revenue is out of proportion to its number of employees, due to very high average pay in the sector.
The average IT worker in Ireland earns €74,000 per annum, 64pc higher than the overall average, putting them in the top bands for both income tax and universal social charge.
While the sector accounts for 7pc of jobs, it contributes 12pc of all income tax receipts.
The vast majority comes from employees at multinationals that were attracted into the country by Ireland’s foreign direct investment strategy.
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The speculation about job losses at Meta, Instagram and WhatsApp comes as the tech sector struggles with a changing economic environment.
Several technology companies, including Microsoft, Twitter and Snap, have cut jobs and scaled back hiring in recent months.
This has been blamed on the slowing down of global economic growth due to higher interest rates, rising inflation and an energy crisis in Europe.
Irish tech darling Stripe said last week it would reduce 14pc of its workforce after “overhiring” during a period of rapid growth and inflated market value.
The company, which had pledged to hire an additional 1,000 employees in Ireland by 2026, took €42 million in investment from the Ireland Strategic Investment Fund in March 2021.
Twitter has told staff it is prepared to discuss ways to avoid or reduce the number of potential redundancies.
A message from the HR division for Europe, the Middle East and Africa, sent to workers in Dublin, stated that their roles were “potentially impacted” or they were “at risk of redundancy”.
The message sought to give some reassurance to those who suspected their positions were in immediate danger due to a suspension of access to the company’s systems.
It stated that although Twitter was forced to suspend access to systems to protect the security of confidential information, the Dublin-based workers are still Twitter employees.
“Upon election, we will consult with employee representatives to discuss the redundancy proposals, including ways to avoid or reduce the number of redundancies and mitigate the consequences,” it said.
“We will provide them with full information about the matters to be consulted upon, and one of their responsibilities will be to keep you informed about the progress of the consultation.”
It said if a redundancy is confirmed and no suitable alternative role is found, it is proposed that a statutory redundancy payment will be received.
Twitter will offer an ex-gratia payment of an extra month’s salary plus two weeks’ salary per year of service.
The message said the ex-gratia payment would be subject to conditions including signing a severance agreement. It says they would spend their notice period on gardening leave.