Business Sectors and Employment in the Western Region: Exploring some potential impacts of the Covid 19 shock

While the detail and scale of the consequences of the Covid-19 containment measures are not yet clear, it is useful to consider, using available data, how the Western Region might be impacted.  There are many unknowns including in relation to the duration of the public health emergency and the speed and extent to which jobs will return once restrictions are lifted.

In this short series of blog posts I look at some of the WDC’s previous analyses[1] of our regional economy and society from the perspective of the potential impacts of Covid 19, so that we can begin to consider areas of priority for support and stimulation when opportunities again become available.  The first post in the series examined sectoral employment data from the perspective of the current economic shock, highlighted key areas of employment in the region and some potential implications of the crisis.

In this post, business demography data on enterprises, and those engaged in these in the Western Region, is examined from the perspective of the current economic shock, highlighting areas of potential vulnerability in relation to enterprises and the people they employ.  The data is from the CSO’s 2017 Business Demography report published last year[2].  This is the most recently available data.

 

Potential economic consequences of the containment measures.

As the Central Bank [3] and others have noted, the economic shock triggered by responses to Covid 19 has resulted in the widespread shutdown of businesses, mainly in the market services sectors of the economy with labour-intensive sectors, such as retail trade, food and beverage activities and accommodation, tourism and travel particularly affected.  These, as is discussed below, are key business and employment sectors in the Western Region.

The widespread restrictions on travel and mobility, along with financial market turmoil, have led to an erosion of confidence and heighted uncertainty[4] which in turn has led to a sharp contractions in the level of output, household spending, corporate investment and international trade.  The OECD notes that within service sectors, activities involving travel, including tourism, and direct contact between consumers and service providers, such as hairdressers or house purchases, are clearly adversely affected by restrictions on movement and social distancing.  Similarly, most retailers, restaurants and cinemas have also closed, although takeaway sales and on-line sales may prevent a full cessation of activity in some businesses.  Non-essential construction work is also being adversely affected.  The OECD assessment estimated that, taken together, the affected sectors account for between 30-40 per cent of total output in most economies.  They estimated that the potential initial impact on activity of partial or complete shutdowns on activity in Ireland would be just over 15% (over a number of years), which is the the least affected of the selected advanced and emerging market economies analysed.

More recently the Stability Programme Update prepared by the Department of Finance outlines that as the economic landscape has fundamentally changed in Ireland and across the globe, Irish GDP could fall by 10.5 per cent this year and Modified Domestic Demand, perhaps the best indicator of domestic economic conditions, is projected to fall by 15 per cent this year.  The labour market will the brunt of the economic shock, going from full employment to a peak unemployment rate of 22% in the current quarter, with annual unemployment rate in 2020 projected to be in the region of 14%.  If recovery in second half of year gains momentum, next year with economic growth is projected to be 6 per cent, and numbers out of work to fall below 10 per cent.  The Update notes that recovery over the second half of 2020 rests on successful virus containment and stresses that the level of uncertainly is such that the projections in the should be considered a scenario rather than a forecast as such.

 

What are key business areas in the Western Region?

Against the background of these economic projections it is useful to examine the type and scale of enterprises in the Western Region, those engaged in these in the Western Region and the sectors the businesses operate in.

The latest CSO Business Demography data on enterprises in the Western Region (2017) shows there were 57,951 enterprises[5] registered in the seven-county Western Region (location of an enterprise is based on its address as registered with Revenue[6]).  In total, more than a quarter of a million people were working for enterprises registered in the region (255,261).

Of all enterprises registered in the Western Region 92.9% were micro-businesses employing fewer than 10 people. This was a slightly higher share than nationally (92.1%). As each micro-enterprise is small in scale however, despite their accounting for 92.9% of enterprises, only 35.8% of those who work for an enterprise, works for a micro-enterprise.  Of course, direct employment is just one of the economic and social impacts of micro-enterprises and they play a particularly vital role in smaller centres and more rural areas, as well as in particular sectors e.g. Construction, Professional Services.

By their nature, larger firms (employing 10 or more people) play a more significant employment role, accounting for 64.2% of everyone who works for an enterprise, despite only accounting for 7.1% of firms.

In terms of the number of enterprises, Construction is the largest sector in the Western Region accounting for 20.4% of active enterprises registered in the region.  Wholesale & Retail (15%) and Professional, Scientific & Technical activities (9.4%) are next largest (see Fig 1 below).  They are also the four sectors (including Accommodation and Food Service (7.8%)) nationally with the most enterprises  but greater concentration in the Western Region is evident with the top three enterprise sectors accounting for 52.6% of enterprises in the Western Region and 49.8% in the State as a whole.  These top sectors, in terms of business numbers include many sole traders and micro-enterprises e.g. construction trades, solicitors, architects, small shops, B&Bs and restaurants and cafes.

 

Figure 1: Percentage of enterprises in each sector in 2017, in the Western Region and State

Source: CSO, Business Demography 2017,Business Demography / BRA18 / Published 2019

 

The picture is different when we look at the number of people engaged in enterprises (Fig. 2)[7], and this is key to understanding the consequences of the current crisis.  Wholesale & Retail is the largest enterprise sector in employment terms (17.8% of all people working in enterprises in the Western Region) followed by Industry (17.2%) which is mainly Manufacturing, and Accommodation & Food Service (13.4%).  These three sectors include many larger businesses e.g. factories, hotels, large retail stores, so account for a greater share of employment than of enterprises.

The Western Region is more reliant on more vulnerable sectors for employment than the rest of the state although there is variation within sectors.  For example, the extent to which the ‘Industry’ sector will be affected is not clear.  The strong med tech sector in parts of the Region may provide some stability in this area.  Likewise, parts of wholesale and retail (food supply) are performing well while other retail trade has ceased.  Nonetheless, as the ESRI noted, many outlets particularly in the retail and hospitality sectors have simply stopped trading, while the fall in consumption and restrictions on international and domestic travel also mean that tourism (Accommodation and Food Service) is likely to collapse over the quarter[8].

The fourth most important sector in terms of employment both in the Western Region and nationally is Health and Social care which will also provide some stability.

 

Figure 2: Percentage of people engaged in enterprises in each sector in 2017, in the Western Region and State

Source: CSO, Business Demography 2017,Business Demography / BRA18 / Published 2019

 

Concentration is more evident in relation to employment with the top four sectors nationally employing just over 50% of those working in enterprises, but they account for more than 60% of employment in the Western Region (and just over 66% in Sligo and almost 64% in Mayo).

Enterprise and employment in enterprise in Western Region counties

There will be variations in the impact of the response to Covid 19 across the Western Region counties, reflecting differences in the composition of enterprise, employment and output.  For example, where tourism or non food retail is relatively important these areas will potentially be affected more severely by shutdowns and limitations on travel.  In contrast, counties with strong med tech industry, greater reliance on agriculture (not covered by this data) or significant food retail may experience smaller initial effects from containment measures.

Looking at the key sectors in terms of enterprise numbers (Fig 3) in the Western Region counties shows Construction, Wholesale and Retail and Professional and Technical services have most enterprises in all Western Region counties and nationally.  As mentioned before, this is in part because of the prevalence of sole traders and very small business in these sectors.  As only essential construction is currently allowed to continue, and most retail (aside from food) is also closed, these businesses are experiencing the immediate shock of the restrictions from the pandemic, and are also likely to suffer from a fall in demand which will follow rising unemployment.  There is also likely to be a fall in demand for many Profession and Technical services in future, but at present a significant proportion of these jobs may be done remotely from home.

 

Figure 3: Percentage of enterprises in key sectors in 2017, in Western Region counties and State

Source: CSO, Business Demography 2017,Business Demography / BRA18 / Published 2019

 

Looking at top sectors for those engaged in enterprises, the importance of the most vulnerable sectors (Wholesale and Retail and Accommodation and Food Service) is clear.  They are in the top four (see Fig 4) in all Western Region counties (and nationally).  While for most western counties Wholesale & Retail, Industry and Accommodation & Food Service are the three largest enterprise sectors for employment, for Galway and Roscommon, Health & Care is in the third biggest employer in the enterprises being examined.

 

Figure 4: Percentage engaged in enterprises in key sectors in 2017, in Western Region counties and State

Source: CSO, Business Demography 2017,Business Demography / BRA18 / Published 2019

 

Industry is the most important sector for employment in Sligo (28.3%) and Clare (18.8%), with Wholesale and Retail particularly important in Mayo (22%) and Roscommon (22%).  Accommodation and Food service is particularly important in Donegal (15.9%) and Leitrim (14.3%).  The Health and Social Care sector may provide some stability especially in counties where it is relatively important (Roscommon (15%) and Galway (13.7%).

 

Conclusion

As the Central Bank noted, when it emerges the pace of recovery is likely to depend on factors such as the extent to which households and firms have been scarred by the downturn, the degree to which precautionary behaviour unwinds, the recovery in employment and incomes and, possibly also, the degree of stimulus in place to provide some impetus to recovery.

Clearly micro-enterprises, which play a very significant role in the Western Region’s enterprise base, are likely to have fewer reserves making them more vulnerable to the cessation of trading.  While enterprises in the Region were hit very hard during the previous recession, there had been recovery, accelerating in recent years. It is to be hoped that recovery in the Region following this crisis will be quicker than that which followed the financial crash.

While there will be some variation in the impact of the Covid 19 restrictions in Western Region counties, the consequences for the Region will be significant.  As the ESRI noted, there has been an almost total decline in certain types of economic activity from mid-March onwards. Many outlets particularly in the retail, food and hospitality sectors have simply stopped trading and in these key sectors remote working is generally not an option.  It is not clear how many of these will be in a position to resume trading when the shutdown period has ended but it is likely that some of these enterprises will not reopen.

Enterprises form the backbone of the local and regional economy.  Supporting the establishment and growth of sustainable enterprises across the Western Region is a key priority for the WDC and we hope that this analysis of enterprise data will help to inform ourselves and other organisations, individuals and policy makers about enterprise patterns in the Region.

This series of posts brings together previous WDC analyses and examines them from the perspective of the possible impacts of the Covid 19 pandemic on the economy.  In the next post on the topic I will look at what we know about regional sectoral output and how it might be affected.  The posts aim to develop our understanding of what may be happening at a regional level and what will need to be done after the public health emergency, but they are early interpretations and should be viewed as a work in progress rather than a definitive commentary.

 

Helen McHenry

 

The views expressed here are those of the author and do not necessarily represent or reflect the views of the WDC.

 

If you are interested in more detailed analysis of the Business Demography data (carried out in 2019), a comprehensive ‘Profile of Enterprise in …’ document is also available for each Western Region county. Each 12-page Profile includes data on:

  • Enterprise Trends 2008-2017: Active Enterprises and Persons Engaged
  • Employees as a % of Persons Engaged 2008-2017
  • Enterprises, Persons Engaged and Employees by Enterprise Size 2017
  • Change in Enterprises and Persons Engaged by Enterprise Size 2008-2017
  • Active Enterprises by Sector in 2017 and Change 2015-2017
  • Persons Engaged by Sector in 2017 and Change 2015-2017
  • Employees as a % of Persons Engaged by Sector 2017

Download the ‘Profile of Enterprise in …’ CLARE, DONEGAL, GALWAY, LEITRIM, MAYO, ROSCOMMON and SLIGOKey Statistics’ for each Western Region county (one page) is also available for download from the WDC.

If you are interested in reading more about the economic impacts of Covid 19 and government responses the ESRI scenario for the rest of the year is here.  The OECD has updated their report Covid-19: SME Policy Responses and has published an Evaluation of the initial impact of COVID-19 containment measures on economic activity.  The Department of Finance published its projections for key indicators in the Stability Programme Update.

[1] Thanks to my former colleague Pauline White for her original data analysis.

[2] https://www.cso.ie/en/releasesandpublications/er/bd/businessdemography2017/

[3] https://www.centralbank.ie/docs/default-source/publications/quarterly-bulletins/qb-archive/2020/quarterly-bulletin—q2-2020.pdf

[4] https://read.oecd-ilibrary.org/view/?ref=126_126496-evgsi2gmqj&title=Evaluating_the_initial_impact_of_COVID-19_containment_measures_on_economic_activity

[5] ‘Total Enterprises’ includes all economic sectors except Agriculture, Forestry & Fishing, Public Administration & Defence, Households as Employers and Extraterritorial Organisations(that is NACE Rev 2 sectors B to N(-642) and P-S).  in the discussion and the charts some of the sector titles have been abbreviated.

[6] The geographical breakdown for enterprises is an approximation. The county breakdown is based on the address at which an enterprise is registered for Revenue purposes, rather than where the business actually operates from.  In particular, where an enterprise has local units in several counties (e.g. a supermarket chain), but one head office where all employment is registered, all its employees are counted against the county where the head office is located.

[7] People ‘engaged’ in enterprises which included both those owning and operating the business as well as those employed by it.  In this post the term employed covers all those engaged in the enterprise.

[8]  Quarterly Economic Commentary Spring 2020

Exploring some potential impacts of the Covid 19 shock on the Western Region – revisiting sectoral employment patterns

The Corona virus pandemic and consequent shutdown is bringing, and will bring, a massive economic shock globally, nationally and regionally, but the detail and scale of the consequences are not yet clear.  There are many unknowns including in relation to its duration, and the speed and extent to which jobs will return once restrictions are lifted.  Nonetheless, it is useful to consider, using available data, how the Western Region may be impacted.

In this short series of blog posts I look at some of our previous analyses of our regional economy and society from the perspective of the potential impacts of Covid 19, so that we can begin to consider areas of priority for support and for stimulation when opportunities once again become available.

Please note that this post was originally published on 30th March, and is being republished now but has not been updated.  The data remains the most recent available and there will be discussion of more recently published analyses of the potential economic, employment and sectoral impacts of Covid 19 in future posts.

An overview of potential national impacts

The Quarterly Economic Commentary  (QEC) recently published by the ESRI (26.03.20) notes that authorities response to the spread of the virus, while absolutely necessary from a general health perspective, will result in millions of jobs being lost globally in the coming weeks and months and a sharp contraction in global economic activity.  They highlight that the swiftness of the economic deterioration is unprecedented in modern times and in many respects exceeds that of the financial crisis[1] (pg 1).

The ESRI examined the impact of the current restrictions on economic life with the assumption that the restrictions are in place over a period of 12 weeks. Under such a scenario the domestic economy would contract by 7.1 per cent and national unemployment increase significantly from 4.8 per cent in February to 18 per cent in Q2 2020 before falling back to just under 11 per cent by the end of the year (pg 2).

In this post I revisit some of the sectoral employment analysis carried out by the WDC insights team in the last few years from the perspective of the current economic shock, highlighting key areas of employment in the region and some potential implications of the crisis.  The data is from Census 2016, collected almost four years ago and while there will have been changes since, it still gives a good picture of sectoral employment patterns in the Western Region.

 

Employment in high level sectors

Differences between the Western Region counties and the Rest of the State[2] in sectoral employment is shown in Figure 1.  In order to make the chart easier to read, some sectors have been grouped together to create these ‘high level sectors’ which give a useful overview of employment characteristics (see foot note for detail of what is included in each high level sector.[3]).

 

Figure 1: Percentage in total employment by high level sector in seven western counties, Western Region and the Rest of State

CSO, Census 2016 Summary Results – Part 2. Table EZ011.  A table is also provided at the end of the post.

Public Services is the largest source of employment in all western counties. It ranges from 32.6% of all jobs in Sligo to 24.6% in Clare.  Public Services includes Health, Education, and Public Administration.[4]  Counties Sligo, Leitrim, Roscommon and Donegal are the four counties in the State with the highest shares of their population employed in Public Services.  In the short term these public sector jobs will provide some employment stability, though employment in the childcare sector, which is included here, has been devastated.

The next largest employment sector in all western counties is Locally Traded Services which includes the three sectors Wholesale & Retail, Accommodation & Food Service, and Transport & Storage.  These sectors are being very significantly affected by the shutdown and may face particular difficulties recovering.

The Western Region is weaker in Knowledge Intensive Services than the rest of the state.  While there will be significant variation, many Knowledge Intensive services (Financial, Insurance & Real Estate, Information & Communications, and Professional, Scientific & Technical activities ) lend themselves to remote working and so employment may be able to continue in this sector during the shutdown.

Industry (largely manufacturing) is the third largest employment sector (see more discussion below).  15.8% of all jobs in Galway are in Industry, with Donegal having the second lowest share (9.2%) nationally.

The relative importance of different sectors varies in the seven western counties, though Public and Locally Traded services are the two largest employers in all.  The dominant role of Public Services in the counties of the northwest shows the relative weakness of private sector activity in the area.  Worryingly, five of the six worst performing counties in terms of employment growth between 2011 and 2016 (the period of recovery from the financial crash), are located in the Western Region.  This vividly illustrates the job creation challenge still faced by the region and the importance of maintaining as many jobs as possible in the next few months.

In terms of the more immediate consequences of the Covid 19 shutdown, the high dependency on public service employment should provide more stable employment in the region in the short term but the lower level of employment in Knowledge Intensive services may make a return to economic growth more difficult.  Some manufacturing, particularly in the medical device sector, may be well placed to benefit from the crisis.

There is more detailed discussion on sectoral employment pattern in Western Region counties in this WDC Insights post.

 

Detailed sectors Western Region and Rest of State

Combining sectors allowed us to see consider the county data more easily.  However, it is important to look at employment in more detailed sectors and their importance in the Western Region to get a better understanding of potential employment consequences.  The two long established patterns of greater concentration of employment (with more employment in fewer sectors) and more reliance on traditional and public service sectors in the Western Region are still evident in 2016 (Fig. 2).

 

Figure 2: Percentage of total employment in each broad sector in the Western Region and Rest of State, 2016

CSO, Census 2016 Summary Results – Part 2. Table EZ011

 

The Western Region’s jobs profile relies more on traditional sectors and public services.  Industry’s share of total employment in the Western Region (13.7%) is considerably higher than in the rest of the state (11%). Manufacturing has consistently played a greater role in the Western Region’s jobs market and this intensified between 2011 and 2016.   The region’s Industry sector has performed very strongly. The high-tech medical devices cluster is a major influence, employing 28% of everyone working in Industry in the region and growing by 30% since 2011.  While many of the jobs in this medical devices sector may be maintained throughout the shutdown, and indeed there is some expansion in response to the crisis, other industrial jobs are more vulnerable.

Agriculture, Health, Education are other sectors that are more important in the region than elsewhere and are ones which are, in the short term at least, less likely to be affected by the shutdown (with the exception of childcare, which is included here).  In contrast, Accommodation & Food service which accounted for almost 7% of employment in the region is likely to lose almost all employment in the short term.

The Knowledge Intensive Services sectors of Financial, Insurance & Real Estate, Information & Communications, and Professional, Scientific & Technical activities are all considerably larger employers elsewhere. Combined, they employ 9.7% of workers in the Western Region, but 16.2% in the rest of the state.

Conclusion

As the ESRI noted (Pg 10), there has been an almost total decline in certain types of economic activity from mid-March onwards. Many outlets particularly in the retail, food and hospitality sectors have simply stopped trading. This will inevitably result in a dramatic increase in the numbers of workers in these sectors being made unemployed. In particular, the wholesale and retail trade and the accommodation and food service activities, which together employed over 65,548 people in the Western Region in 2016 (almost 20% of the 333,919 in employment then), look set to lose a substantial number of workers over a very short period of time.  Supermarkets, some food retailers and pharmacists are, however, increasing employment.

The pattern of employment in the Western Region compared to the Rest of the state has both positive and negative aspects in this current crisis.  Higher dependence on Accommodation and Food services means more vulnerability but in the short term the greater reliance on public service employment will provide more stability and resilience.

Yet the dominant role of public service employment in the region is also an indication of the relative weakness of private sector activity and opportunities.  The region’s slower recovery from the financial crash many mean it is more vulnerable in this crisis

If you are interested in reading more about the economic impacts of Covid 19 and government responses the ESRI scenario for the rest of the year is here.  The OECD has updated their report Covid-19: SME Policy Responses.  Potential business impacts and the pattern of business demography in the Region will be discussed the next post.

 

This series of posts brings together previous WDC analyses and examines them from the perspective of the possible impacts of the Covid 19 pandemic on the economy.  The posts aim to develop our understanding of what may be happening at a regional level and what will need to be done after the public health emergency, but they are early interpretations and should be viewed as a work in progress rather than a definitive commentary.

 

 

Helen McHenry

 

The views expressed here are those of the author and do not necessarily represent or reflect the views of the WDC.

 

 

[1] Quarterly Economic Commentary Spring 2020

[2] Rest of state refers to all counties in the Republic of Ireland except for the seven counties of the Western Region (Counties Donegal, Sligo, Roscommon, Leitrim, Mayo, Galway and Clare.)

[3] Locally Traded Services includes Wholesale & Retail, Accommodation & Food Service, and Transport & Storage; Knowledge Intensive Services includes Financial, Insurance & Real Estate, Information & Communications, and Professional, Scientific & Technical activities;  Public Services includes Health, Education, and Public Administration; Administrative and other services includes a wide variety of services including personal services, sporting activities, creative and other services.

[4] The Health and Education sectors also include substantial private sector employment e.g. private nursing homes, childcare, training providers.  It is not possible to separate this out however.

 

Table of Data from Fig. 1.

Working from Home – ‘The New Normal’?

Introduction

Though unintended, one of the biggest experiments in employment practices is underway globally; enforced working from home. Where possible, Governments have asked that all workers conduct their normal work from home, a radical change from what has gone on before.

What will happen when some degree of ‘normality’ returns? Some commentators suggest working from home will become a much more established feature of working life. Others suggest that life and work will return to ‘normal’, only time will tell. In this blogpost I look at patterns and trends in working from home and remote working up to the Covid-19 pandemic.

The terms telework and e-Work were more common in the past but generally refer to remote working – the practice of using technology (tele-work) and electronic ways (e-Work) to work at a location separate or remote to the office.  Working from home is specifically that and can be considered a subset of remote working, in contrast to working from a shared space such as a hub.

Recent History

Working from home and remote working is not a new phenomenon. As noted in the recently published Government report Remote Work in Ireland (2019), The late 90’s saw the first emergence of Government activity on remote work (then referred to as e-Work or telework). This was due to the increasing availability of ICT and broadband infrastructure. A series of actions were undertaken to promote e-Work (largely working from home).

  • In 1998 the National Advisory Council on Teleworking was established by Government. Comprised of experts across a range of areas it was charged with the task of advising the Minister on telework and related employment opportunities.
  • In 2000, twenty years ago, the Government approved a Code of Practice on e-Working entitled ‘e-Working in Ireland’ and the Programme for Prosperity and Fairness (2000-2002) (PPF) committed the Government to introduce e-Working options into mainstream public service employment by 2002.
  • In 2001-2003, the Western Development Commission (WDC), was represented on the e-Work Action Forum, the successor to the National Advisory Council. The e-Work Action Forum assumed the role of developing tasks and strategies set out in the report, e-Working in Ireland: New Ways of Living and Working.
  • The Department of Finance, in 2003 issued a circular on Pilot schemes to promote e-Working in the Civil Service. Though some individual Departments did introduce pilot schemes and may have continued the practice, no central evaluation or assessment of the policy has ever taken place.
  • The Office of the Revenue Commissioners issued guidance dealing with the tax implications of e-Working for employees and employers which was updated in 2013 and updated further in April 2020 to take account of the current enforced working from home practice under Covid-19.

Environmental impacts

Generally, the earlier work on promoting e-Working focused on economic and social benefits and there was little attention paid to environmental benefits. Before the financial crisis hit, and in line with economic growth, high employment levels and greater levels of commuting, the Department of Transport published its Smarter Travel Policy A Sustainable Transport Future, A New Transport Policy for Ireland 2009-2020 (2009). This included actions to reduce travel demand and traffic congestion.

  • One of the actions was to realise some of the benefits of e-Working. This included setting targets to encourage e-Working in the public sector.
  • There was also an objective to research and develop e-Working centres (in effect the precursor to enterprise centres & working hubs). For example, as part of the smarter travel town initiative, a pilot e-Working centre was established in Dungarvan in 2012. This ‘Remote Working Space’, allows workers to rent space and access broadband while also operating in an office environment closer to home than the office. At that time, Westmeath County Council set up six community e-Working centres aimed at residents who travel to Dublin or elsewhere to work.

However, the financial crash ensured that e-Working as policy objective was relegated and the ensuing higher unemployment, lower employment levels and associated lower congestion levels removed some of the impetus for e-Working.

Employment Trends and Working from Home

The unemployment rate and the numbers working from home rate, as measured by the Labour Force Survey (LFS) is shown in the chart below. The data from the LFS measures those who work ‘usually or sometimes’ from home.

In 2012, the unemployment rate was 16% and the working from home rate was 13.8%.

As the unemployment rate declined the percentage engaged in working from home increased. When unemployment was at its lowest, in 2019 at 5%, the percentage working from home was at its highest, 20%. One of the factors seems to be that with a tight labour market, and high employment levels, there are greater levels of working from home. More employees seek the opportunity of working from home especially given the longer journey times associated with full employment and congested transport networks. It is also argued that employers are more receptive to the practice in part related to the need to retain skilled workers.

The Labour Force Survey is a sample survey and therefore it is more difficult to get detailed regional breakdowns. The WDC uses Census data in order to get a Western Region picture.

Census data on Working from Home

The Census asks the question ‘How do you usually travel to work’? with one of the answers being ‘work mainly at or from home’. While the Census measure is valuable in providing regional data, it is limited in that it only captures those that work from home most of the working week, and excludes those who work from home one or two days per week. More recent data from the CSO (discussed below) suggest one or two days per week is the most common pattern.

Furthermore, the Census definition is inadequate in capturing the extent of e-Work as it includes all those that are self-employed and work from home (such as those engaged in agriculture and home-based sole traders such as GPs, childminders and others across all sectors) and not just e-Workers.  For example, in 2011, 4.7% (83,326) of all those at work, stated they worked mainly at or from home. Of these the most significant occupational group is farmers, fishing & forestry workers, comprising over two fifths (43.5%). Excluding this group, in 2011, the share of the state’s working population reported as working ‘at or from home’ was 2.8% (47,127)[1].

[1] This compares to 3.2% (8,994) of workers in the Western Region, indicating a higher incidence of working from home in the Western Region.

The chart above depicts the numbers ‘working mainly at or from home’ (secondary right-hand axis) and the unemployment rate since the late 1990s up to and including March 2020. This excludes the Covid-19 monthly unemployment figures which was first measured in March 2020. In 1996 there was over 158,000 persons who stated they worked ‘mainly at or from home’. As noted above, a large proportion of this number is those engaged in agriculture. With the ever-declining numbers employed in agriculture it is likely that the agricultural component has continued to decline.

Most recently, there were 94,955 persons who stated they worked ‘mainly at or from home’ in 2016. This was still below the 2006 peak of 105,706, though it represents an increase of 14% between 2011 (83,326) and 2016. Once more the peak in 2006 corresponds to a period of very low unemployment, while the dip in those working from home in 2011 corresponds to a period of high unemployment. Notwithstanding the caveats with the data there does seem to be a relationship between employment, unemployment and the extent of working from home.

CSO 2018

More recently, the CSO invited submissions to the consultation on questions for Census 2021. The WDC advocated for the inclusion of a question to more effectively capture the extent of Working from home/e-Working to which the CSO agreed. The CSO conducted a pilot survey in September 2018. This found that among those at work, 18% declared they worked from home. The level of non-response among workers was low at 3%. Of those working from home, the breakdown by number of days was as follows:

Working from home 1 day per week was the most popular practice (35%), followed by 2 days a week (13%) and 5 days per week (by 11%). It should be noted that 26% of those who said they worked from home did not state the number of days. One possibility may be that their pattern changes on a weekly basis.

Profile of those working from home

  • The CSO pilot results showed that the percentage of those working from home increased as age increased, peaking at 19.6% of those at work in the age group 45-49. Of this group 32% worked one day from home. The proportion of home workers decreased among workers in older age groups.
  • Over half of those who worked in ‘Computer programming, consultancy and information service activities’ indicated that they worked from home. This industry comprised 3% of all workers in the pilot but 11% of all home workers were in this industry. See the CSO release here.

IBEC collects data on the extent of e-Working (largely working from home) based on a survey of their membership. The most recently published data (for 2018) shows an increasing prevalence of the practice. For example,

  • In 2018, 37% of IBEC members (152 companies) had a practice of e-Working/home-working, on one or two days per week basis, up from 30% (110) in 2016.
  • The likelihood of e-Working among IBEC companies increases with company size, 54% of companies with 500+ employees cite a practice of e-Working 1 or 2 days a week.
  • There is a higher rate of e-Working among foreign owned companies compared to Irish, 40% and 33% respectively, and both these figures are up on two years previously – 34% and 27% respectively.
  • Sectorally the highest rates of e-Working are within the Electronic services sector (69%), followed by the Financial services sector (58%).
  • At a regional level IBEC members in the Dublin region have the highest incidence of e-Working, with almost half (49%) reporting having an e-Working policy of 1-2 days working from home per week. This rate drops to one-third of companies in the Cork region, one-quarter in the Mid-West and South-East and 24% in the West/North West. This regional variation supports the idea that at least some of the e-Working demand and take-up by employers is driven by the greater extent of congestion in larger urban centres.

What will be ‘The New Normal’?

So, if there is a correlation between economic growth, employment levels and the numbers working from home, what might happen once we emerge from the Covid crisis?

It is very likely that the ‘enforced’ working from home experience will have created an appetite and interest to continue the practice, by both employers and employees. The extent of this will depend on how suitable the work and role is and how effective the supports for employees working remotely has been. Some employers may find that they are pleasantly surprised with how its worked and will be receptive to continuing the practice, others may find the opposite. It is worth noting that the draft document for Government between Fiánna Fail and Fine Gael propose that public sector employees move to 20% home and remote working in 2021.

It is also likely that we will have a higher rate of unemployment than before the Covid pandemic and as with the aftermath of the financial crisis, with lower employment levels, congestion levels on public transport and road networks may drop considerably. However, the current circumstances are unprecedented and it is possible that any correlation with working from home and high unemployment will not apply while the various restrictions remain in force.

There are some differences in the context now and what prevailed in the late 1990s and early 2000s, which will likely impact on ‘the new normal’.

  • Technology is even more advanced with videoconferencing easily available and this can be useful for employers and employees in maintaining and promoting the remote working relationship.
  • Before the pandemic, working from home has become a feature of some company’s business models, illustrating that companies can operate very successfully with all staff working remotely (e.g Shopify, Wayfair)
  • The Covid pandemic forced a huge section of the workforce to engage in working from home, and in effect to trial it, albeit under rushed circumstances. While unintended, this provides a mechanism for much of the labour market to experiment working in a new way.

The most recent data[1], suggests that up to one fifth of the workforce work from home on at least a 1 day a week basis. This could be considered ‘the normal rate’ up to the occurrence of the Covid pandemic and under conditions of strong economic growth and close to full employment.

The LFS to be published in August will have additional data on the impacts of the pandemic including figures measuring the current extent of working from home.

However, as the restrictions are slowly lifted the numbers working from home will decline from their current peak and over the next few months and beyond the level of ‘the new normal’ will begin to emerge.

The levels of working from home may well be influenced by the extent to which the economy can recover relatively quickly or whether we enter a longer recessionary period. Either way ‘the new normal’ may not become clear for another year or so.

In the meantime, the WDC will continue to monitor trends and highlight issues as they emerge. As part of this work the WDC is collaborating with NUIG to gather the experiences of those working from home at this time and the findings will be discussed in a future post.

 

Deirdre Frost

23 April 2020

 

The views expressed here are those of the author and do not necessarily represent or reflect the views of the WDC.

[1] CSO Pilot September 2018

Does a Rising tide lift all Boats? A look at the latest CSO data on Poverty and access to Services

The CSO released the latest data on Income and Living Conditions (Survey on Income and Living Conditions SILC) last week, see here. The headline figures indicate a continued rise in incomes between 2017 and 2018 which in turn was higher than the figures five years earlier, in 2012 (see earlier post on this here). This is in line with other national economic indicators such as continuing economic growth, employment growth and decreasing unemployment. To what extent is a rise in incomes reflected in a decline in poverty rates and how is this distributed at a spatial level within Ireland? This post highlights some recent data and asks does a rising tide lift all boats?

Poverty Rates

The CSO produce data on three different poverty measures and here we will examine the different rates as they apply to rural and urban areas.[1]

At Risk of Poverty rate[2]

The at risk of poverty rate nationally decreased from 15.7% in 2017 to 14.0% in 2018.The at risk of poverty rate in rural areas in 2018 is 14.7% compared to 13.6% in urban areas. In both rural and urban areas, the trend is downward – in rural areas (down from 17.2% in 2017), and in urban areas 13.6% (down from 15.1% in 2017). This is illustrated in Chart 1 below.

Deprivation Rate

The CSO also measure the deprivation rate, which is a broader measure than poverty and is defined as follows: Households that are excluded and marginalised from consuming goods and services which are considered the norm for other people in society, due to an inability to afford them, are considered to be deprived.  The set of eleven basic deprivation indicators are detailed below[3]. Individuals who experience two or more of the eleven listed items are considered to be experiencing enforced deprivation.

Nationally, the deprivation rate has decreased over the last few years. In 2016 it was 21% and it has since decreased from 18.8% in 2017 to 15.1% in 2018. At a spatial level it appears that there is a higher rate of deprivation in urban areas than in rural, in 2018 the urban deprivation rate was 16.0% while in rural areas it was 13.4%. Both of these rates have also shown a decrease from one year earlier, in 2017 the rates were 20.2% and 15.9%. This is also shown in Chart 1 below.

Consistent Poverty

Finally, the other commonly used measure of poverty, is the consistent poverty rate. An individual is defined as being in ‘consistent poverty’ if they are

  • Identified as being at risk of poverty and
  • Living in a household deprived of two or more of the eleven basic deprivation items discussed above

Nationally the rate went from 8.2% in 2016 to 6.7% in 2017 to 5.6% in 2018. In urban areas the consistent poverty rate declined from 7.4% in 2017 to 5.5% in 2018. In contrast the consistent poverty rate in rural areas increased slightly; from 5.3% in 2017 to 5.8% in 2018.

Regional Difference

The CSO also publish produce data at NUTS 2 regional level for the different poverty measures.

At Risk of Poverty rate

The regional data indicates that the at risk of poverty rate is higher in the more rural regions (Northern and Western) with 20.1% or a fifth of the population there at risk of poverty in 2018. There was a slight decline on a year earlier (21.8%). This consistent poverty rate in the Southern region is considerably lower 15%, down from 16.8% a year earlier. The Eastern and Midland region has the lowest rate 11.1%, down from 12.8% in 2017.

Deprivation Rate

The deprivation rates are more similar across regions (compared to the at risk of poverty rate), as chart 2 shows, though both the Southern and Eastern and Midland regions recorded more significant declines than that experienced by the Northern and Western Region, so in 2018 the Northern Region has the highest deprivation rate (17.2%), compared to the Southern region (15.2%) and the Eastern and Midland region (14.4%).

Consistent Poverty

A similar pattern is evident when examining the consistent poverty rates by region. In 2017 the Northern and Western Region had the lowest rate (6.4%) but a year later the region reported the highest rate – up to 7.8%. This contrasts with the performance and trends in the other regions both of which recorded declines in consistent poverty levels. The Southern region rate declined from 7.1% in 2017 to 6.5% in 2018. The Eastern and Midland region rate declined from 6.6% to 4.2% in 2018.

Overall the CSO recent data show that rural areas have a higher at risk of poverty rate, compared to their urban cousins, but have lower deprivation rates while the consistent poverty rate is most recently showing an upward trend in rural areas and the Northern and Western region and is higher than urban areas and the Eastern and Southern regions.

Measuring Deprivation: Access to Services?

In a previous blogpost in early 2019, see here, I argued that any measurement of deprivation and poverty is more complicated and other considerations such as access to services need to be taken into account.

Access to services

It is often said that rural poverty and deprivation is more hidden or less visible than that in urban areas and one aspect of this is access to services. The CSO SILC definition of deprivation is based on enforced deprivation where there is an inability to afford goods and services. But what of the inability to access goods and services because they are not available in the locality. The case of broadband is a good example. Most people who cannot access good quality broadband see it as a deprivation. It impacts on a person’s ability to access goods and services on-line and often impacts on their ability to generate their incomes, for small businesses and the self-employed.

What about access to other services? Can limited or no access be considered an indicator or measure of deprivation? The CSO have just published data which provides insights into access to a wide range of services, including transport, health and other services see here. There is extensive data and mapping resources which the WDC will revisit but a snapshot illustrates some interesting differences:

  • The average distance to most everyday services was at least three times longer for rural dwellings compared with urban dwellings. For a supermarket/convenience store, pharmacy and a GP, the average distance for rural residents was about seven times longer.
  • Examining differences by county, residents in Galway County, Donegal, Mayo, Leitrim and Roscommon had higher average distances to most everyday services when compared against other counties.
  • The average distance to 24-hour Garda stations ranged between 1.5km in Dublin City to 19.3km in Donegal, while the average distance to a GP was 3.1km, but was more than 5km in Roscommon, Galway County and Cork County.
  • Half of the people living in Roscommon had to travel 5km or more to visit a GP, followed by Monaghan (48%), Leitrim (43%) and Galway County (43%) as illustrated in the Map below. The darker the colour the higher the percentage of the population living 5km or more from a general practitioner.

Map 1  Percentage of Population 5km or more from a GP location by county

The CSO also provide a useful data dashboard to illustrate in a visual way access to services, see here.

Also this November Trinity published data on data on health and Health services, The Trinity National Deprivation Index 2016 see here . This research examines health and health services at a detailed spatial level (Electoral Division) and highlights regional inequalities.

Conclusions

These different data sources provide really useful insights into the geographic distribution of poverty, deprivation and access to services. Overall, the CSO SILC data indicate that along with rising incomes nationally there is evidence of a decline in poverty rates. However, the exception to this is evidence of rising consistent poverty rates in rural areas and in the Northern and Western region.

After a period of sustained economic growth and rising incomes, it is clear that not all boats are being raised in the rising tide. These data provide a wealth of information highlighting regional and spatial difference and an evidence base for effective policy change. This is a tool to inform Government policy to focus on eradicating poverty and in doing so being cognizant of the spatial patterns of poverty. Various policies ranging from consideration of a new Rural Strategy in the short term to Project Ireland 2040 over the medium to long term are some of the policy frameworks which need to respond to these findings.

 

Deirdre Frost

[1] Urban or Rural are defined as follows: Urban – population density greater than 1,000. Rural is Population density <199 – 999 and Rural areas in counties.

[2] This is the share of persons with an equivalised income below 60% of the national median income.

[3] Two pairs of strong shoes, A warm waterproof overcoat, Buy new (not second-hand) clothes.

Eat meal with meat, chicken, fish (or vegetarian equivalent) every second day, Have a roast joint or its equivalent once a week. Had to go without heating during the last year through lack of money, Keep the home adequately warm. Buy presents for family or friends at least once a year. Replace any worn out furniture. Have family or friends for a drink or meal once a month, Have a morning, afternoon or evening out in the last fortnight for entertainment.

How are we doing? Annual earning in Western Region and other counties

Data on earnings of employees in different counties has just been released by the CSO, providing another important contribution to our understanding of local and regional economic development.

Earnings Analysis Using Administrative Data Sources (EAADS) provides statistics on earnings for which the primary data source is the Revenue Commissioner’s P35L dataset of employee annual earnings which is linked to CSO and other data to provide economic and demographic characteristics.  This new data, along with the Geographical Profiles of Income (also released for the first time this year and discussed on the blog here) and the County Incomes data (discussed here) gives us an opportunity to triangulate different data and gain a better understanding of patterns in earnings and some of the factors contributing to income differences in the region.  Having this data at county level allows for a more nuanced understanding of the situation and trends in the Western Region.

In this post the EADDS annual earnings data is discussed for Western Region counties.  It should be remembered that this data is specifically employee earnings data which is just one element of individual or household incomes.  Other incomes sources (e.g. social welfare, earnings from wealth or profits from business) are not included in this data set.

Annual Earnings, 2018

Looking first at median[1] annual earnings[2] for 2018 (Figure 1), even though all Western Region counties (green) are below the national figure of €36,095 both Galway (€35,632) and Clare (€35,568) are only slightly below, in sixth and seventh place nationally.

Note Total includes Northern Ireland counties not listed above.

Source: CSO Ireland, 2019, Earnings Analysis Using Administrative Data Sources Table 8.15 Median1 annual earnings by county and sex 2018

Donegal had the lowest earnings (€29,298), almost a thousand euro less than Monaghan, the next highest, and more than €10,000 less than the earnings in Dublin (the highest county (€39,408).  Earnings in Roscommon are higher than might have been expected (€34,082, 13th place) from other data such as that for County Incomes, though  in line with Geographical Profiles of Income.

Annual Earnings in Western Region counties

Focussing more specifically on the range of earnings per employee in the Western Region (Figure 2), the gap between the lowest (Donegal) and the highest (Galway) is a €6,334 per year while annual earnings in Mayo and Leitrim are both around €2,500 less than in Galway.  There is only €64 difference in the annual median income per person in Clare and Galway.

Note Total includes Northern Ireland counties not listed above.

Source: CSO Ireland, 2019, Earnings Analysis Using Administrative Data Sources Table 8.15 Median1 annual earnings by county and sex 2018

Changes in Mean Earnings 2016-2018

This data is available for the years 2016, 2017 and 2018.  While this covers a relatively short period it is interesting to examine the change in mean[3] annual earnings over this period throughout Ireland (Figure 3).  Nationally earnings grew by 6.1% over the period with the highest growth rate in Dublin (7.6%) followed by Cork (6.6%) and Kilkenny (6.2%).  The lowest rates of growth were in Cavan (4.4% and Longford (4.4%).

Note: Total includes Northern Ireland counties not listed above.

Source: CSO Ireland, 2019, Earnings Analysis Using Administrative Data Sources Table 8.14 Mean annual earnings by county and sex

Looking more closely at the Western Region (Figure 4), the highest rate of earnings growth was in

Galway (5.8%), and the lowest in Roscommon (4.7%) and Sligo (4.7%).  No Western Region county had earnings growth higher than the national rate.

Note: Total includes Northern Ireland counties not listed above.

Source: CSO Ireland, 2019, Earnings Analysis Using Administrative Data Sources Table 8.14 Mean annual earnings by county and sex

Gender Differences in Earnings

County data is also available by sex, so it is possible to compare earnings in each county for males and females (Figure 5).  In all counties male earnings were higher than female earnings in 2018, with the largest difference in Cork, a very significant €10,205 per year (female earnings were only 76% of male).  Nationally the difference between male and female earnings was €7,394 and the smallest difference in both amount and proportion was in Donegal (€3,153, female earnings 90% of male).  In general, the largest differences between male and female earnings were in the highest earning counties, but Waterford (€8,511), Limerick (€8,318) and Kerry (€7,234), which has the third lowest medial annual earnings, were exceptions to this.

Source: Source: CSO Ireland, 2019, Earnings Analysis Using Administrative Data Sources Table 8.15 Median annual earnings by county and sex

Gender Differences in Earnings in the Western Region

The difference between male and female earnings was smallest in the Western Region.  Six of the nine counties where female earnings were 85% or more of male earnings were in our Region.  Sligo had the narrowest gap nationally (female earnings 91% of male), followed by Donegal (90%), Leitrim (89%), Galway and Mayo (86%) and Roscommon (85%)[4].  Clare was the exception in the region, with female earnings only 80% of male earnings.

The difference in the Western Region are shown more clearly in Figure 6 which highlights the earnings gap (percentage difference in what females earn compared to males).  Clearly Sligo (9%) and Donegal (11%) perform best.  Nationally the picture is bleaker with a 23% annual earnings gap, and in Clare males earn 25% more than females.

Source: Source: CSO Ireland, 2019, Earnings Analysis Using Administrative Data Sources Table 8.15 Median annual earnings by county and sex

Some of this earnings gap is likely to be accounted for by the higher instance of part time working among females. The differences may also relate to earning levels in the different sectors where men and women tend to work, as well as differences in employment types.  Nonetheless, the gap in earnings is very significant but, at least in relation to this statistic, the Western Region is a good performer.  The prevalence of public sector employment in the Western Region (discussed here), along with employment in Education (3 out of 4 people working in the Education sector in the Western Region are women) and Health (21.4% of all working women in the Western Region work in Health & Care, it is the largest employment sector for women in the region), probably influences this.

Changes in male and female earnings over time.

There is no clear pattern for the growth in mean earnings for males and females between 2016 and 2018 in the Western Region counties (Figure 7 below).  In four of the seven Western Region counties female earnings increased by more than male earnings between 2016 and 2018.  This was also the situation nationally (though the difference is small (0.1%)).   Female earnings in Sligo grew by 5.0% while male earnings in the same period grew by 4.0%.  In Clare the difference in earnings growth was more significant (5.7% for females and 4.3% for males).  Galway had the largest growth in female earnings over the period in the region at 6.1%, while male earnings grew by 5.3%.  If this pattern were to continue the gap in male and female earnings would narrow, or even disappear.

Source: Source: CSO Ireland, 2019, Earnings Analysis Using Administrative Data Sources Table 8.14 Mean annual earnings by county and sex

In contrast in three Western Region counties (and a total of nine counties nationally) male earnings grew by more than female earnings between 2016 and 2018.  Leitrim and Roscommon had the lowest female earning growth (4.4%) in the region and nationally.  The difference was most significant in Leitrim where male earnings grew by 5.3% over the same period.  In Donegal the difference was less marked (4.8% for males and 4.6% for females).  Unlike the other Western Region counties discussed above, if this pattern persists in these counties the gap in male and female earnings will widen.

Conclusion

This data set is focused on earning for those in employment rather than broader income data covering households or adults not in employment so it does not give a full picture of income levels.  It is, nonetheless, very useful to have this data at county level.  We can now make robust comparisons between counties and see some of the changes over time.  In future analysis it may be possible to consider in more depth how the different employment patterns and sectors in the counties in turn influence earnings.  Similarly correlations between education and training levels, and skill sets in the counties will help us better understand the needs and opportunities for counties and regions.

In the New Year I hope to have time to compare the data in this release with the other income data available at county level to get a better understanding of what each source is telling us about the trends and differences in the earnings and incomes in the Western Region.

 

Helen McHenry

 

[1] 1Median annual earnings: Half of the employees earn more than this amount and half earn less.  Median is used as it reduces the influence of outliers, in particular exceptionally high earners who could increase the mean significantly.

[2] Employees who worked for less than 50 weeks in the reference year are excluded from the calculations for annual earnings. This is done to improve comparability of the data over time.

[3] Mean is used here for comparison over time to maintain consistency with gender data discussed later.

[4] Monaghan (86%), Cavan (85%) and Kilkenny (85%) were the other counties.

e-Work, Remote work and Hubs, Some Recent Evidence

Introduction

The WDC produced the Policy Briefing e-Working in the Western Region in March 2017, see here. This briefing aimed to quantify the extent of e-working in the Western Region and nationally and set out policy recommendations. Since then e-working or remote working and co-working spaces such as hubs have received a lot of attention, but to what extent is the activity on the increase?

In the Policy briefing, the WDC noted that the extent of e-Working is hard to measure, in part because of the paucity of data, and in part because the practice is sometimes not very visible; it is often in the absence of company policy and at the discretion of local management. Some recent data in relation to official statistics and company practice is presented here.

CSO Pilot for Census 2021

There has been limited official statistics measuring the incidence of working from home. To date the Census has asked the question ‘how you usually travel to work’? with one of the answers being ‘work mainly at or from home’. This is very limited as it only captures those that work from home most of the working week and excludes those who work from home one or two days per week, which some suggest is the most common pattern.

The CSO invited submissions to the consultation on questions for inclusion in Census 2021. In its submission, the WDC advocated for the inclusion of a question to more effectively capture the extent of Working from home/ e-working. Following the consultation exercise and a pilot exercise the CSO have now agreed to include a question measuring the number of days people work from home on a weekly basis in Census 2021. The results of the pilot survey were released earlier this year and they provide an insight into e-working. Some of the findings are highlighted below.

Among those at work, 18% declared they worked from home. The level of non-response among workers was low at 3%. Of those working from home, the breakdown by number of days was as follows:

Working from home 1 day per week was the most popular practice (35%), followed by 2 days a week (13%) and 5 days per week (by 11%). It should be noted over a quarter of those who said they worked from home did not state the number of days. One possibility may be that their pattern changes on a weekly basis.

Profile of those working from home

  • The pilot results showed that the percentage of those working from home increased as age increased, peaking at 19.6% of those at work in the age group 45-49. The proportion of home workers decreased among workers in older age groups. Among those in the 45-49 year age group, 32% worked one day from home.
  • Approximately 60% of people who work from home were male.
  • There were notable differences in the occupation of those who worked from home. e.g. 13.5% of those who worked from home worked in the ‘Science, research, engineering and technology professional’ occupation category.
  • In contrast only 0.6% of those who worked from home indicated they were in the ‘Process, plant and machine operatives’ occupation category
  • Over half of those who worked in ‘Computer programming, consultancy and information service activities’ indicated that they worked from home. This industry comprised 3% of all workers in the Pilot but 11% of all home workers were in this industry.
  • Of those who worked from home, 79% had fixed broadband internet, 18% had mobile broadband internet, and 3% indicated they had no internet connection. It is possible that that much of this 3% do not depend on internet access to conduct their work, for example those engaged in agriculture. See the CSO release here.

The WDC very much welcomes the inclusion by the CSO of the question on working from home in the next Census. This will allow a more thorough analysis of the practice based on comprehensive Census data.

Company Practice- Incidence of e-work in Ireland

Another part of the evidence base is data collected by companies on the extent to which they provide for flexible work practices such as e-working and the extent to which this is practiced by their employees.

IBEC have collected survey data on the extent of e-working for a few years now. Data has been recently published which shows an increasing prevalence of the practice based on a survey of IBEC members. For example,

  • In 2018, 37% of IBEC members (152 companies) had a practice of e-Working/ home-working, on one or two days per week basis, up from 30% (110) in 2016.
  • In 2018, 7% had a practice of e-Working five days per week, up from 5% in 2016.
  • The IBEC survey shows that the likelihood of e-Working among companies increases with company size, so that 54% of companies with 500+ employees cite a practice of e-Working on a 1 or 2 days a week basis.
  • There is a slightly higher rate of e-Work among foreign owned compared to Irish owned companies, 40% and 33% respectively, and both these figures are up on two years previously – 34% and 27% respectively.
  • Sectorally the highest rates are within the Electronic services sector (69%), followed by the Financial services sector (58%).
  • At a regional level IBEC members in the Dublin region have the highest incidence, with almost half (49%) report having an e-working policy of 1-2 days working from home per week. This rate drops to one-third of companies in the Cork region, one-quarter in the Mid-West and South-East and 24% in the West/North West.

This regional variation supports the idea that at least some of the e-working demand and take-up by employers is driven by congestion in larger urban centres.

Demand for e-working/co-working spaces/ Hubs

Another aspect of e-working or remote working is where the worker works from a hub rather than home. The success of initiatives variously called e-working spaces/ co-working spaces/ hubs also suggests e-working is on the increase. Some working spaces are funded by Department of Business, Enterprise and Innovation and some by the Department of Rural and Community Development. The hubs are variously classed as innovation, enterprise or community hubs, and many are focussed on start-ups and incubation spaces as well as providing e-working spaces for individual employees.

The Western Development Commission is coordinating an initiative with the Department of Community and Rural Development (DCRD) called the Atlantic Economic Corridor (AEC) Enterprise Hubs project. This three year project aims to create an interconnected community network from the 101 hubs identified in the AEC region (the region from Donegal to Kerry) along the Western Seaboard.

This week the WDC is convening two workshops, one in Limerick (19th November) and the second in Sligo (Thursday 21st November) aimed at bringing all key stakeholders together to work together to optimise the operation of the hubs and how they can support regional and rural development, e-workers and remote workers throughout the region. For further information see here for more information.

 

 

Deirdre Frost

Agency Workers – How Many Are There and Where do they Work?

Introduction

There is much discussion about the growth of ‘atypical’ forms of work – such as e-working, remote working, the gig, shared economy and temporary work etc.

The WDC has previously examined various aspects of atypical ways of working, identifying the extent to which it occurs in the Western Region, whether patterns differ to that elsewhere in the country, all aimed at informing labour market policy and identifying recommendations to support better employment opportunities in the Region.

The WDC Policy Briefing (No. 7) e-Working in the Western Region: A Review of the Evidence, examined the extent of e-work (also referred to as teleworking or remote working) in the Western Region, see here. Working at or from home can take different forms and this Policy Briefing examines e-working in traditional employer-employee relationships. The WDC also published case-studies of e-working in the Western Region which highlights a wide range of e-working experiences, see here.

A two page WDC Insights paper examined the gig or shared economy and how broadband and online platforms have enabled new forms of work and income generation to emerge. The paper examines the evidence on the extent to which Gig economy exists in the Western Region, download here.

In the third of the series, the WDC examined working from home. Based on Census of Population data which identifies whether people work ‘mainly at or from home’. The Census definition is self-assigned and can include those who work full-time from home or working from home on at least three days of a five day working week, see here. The WDC have suggested a change to Census 2021, to which the CSO has agreed, which will include a question asking people to list the number of days per week in which they work from home.

Agency Worker Employment

Another aspect of atypical working includes agency worker employment. Sometimes it is suggested that this type of employment is on the rise and is often less secure or more precarious than traditional employment forms.  Agency work, especially that which is temporary, is often considered insecure employment. Is it a phenomenon largely associated with periods of high unemployment and a fragile economy where employers are reluctant to recruit permanent employees or is it a feature of the business model of some companies?

Research conducted for the European Parliament found evidence of an increase in temporary employment as a consequence of the global economic crash a decade ago. The report noted, The financial crisis and its aftermath has been one driver affecting risk of precariousness in Europe. As employers and employees find themselves operating in a more competitive and uncertain context post-crisis, new hirings have increasingly taken place on the basis of temporary and marginal part-time contracts. This rise in atypical contracting has meant that job insecurity has increased significantly in some countries, such as Portugal, Spain, Ireland, Latvia and Greece, involuntary temporary work has increased significantly in Ireland, but also in Latvia and involuntary part-time working has increased significantly in Italy, Lithuania, Spain, Ireland, Latvia and Greece. The link to the full report (5.4MB) is here.

Examining more recent data at a regional level in Ireland, the CSO provide a broad regional breakdown at NUTS 3 level. In this blogpost we review the latest CSO data on agency worker employment examining trends and how the regions compare, see here for full release published in August 2019.

CSO definition

The CSO Labour Force Survey captures the levels of agency workers by asking the following question of all employees in the LFS: Do you have a contract with an employment agency that placed you in your current job and your salary? Yes or No. Responses are therefore based on self-reporting.

Nationally, in Q4 2017, there were 56,200 employees classified as agency workers, and in Q1 2019 the number had decreased to 50,400, a decrease of 5,800.

Examining trends by region, the trends are somewhat different as graph 1 below shows. Both the Northern and Western region and the Eastern and Midland region have a somewhat similar trend, albeit at different levels, unsurprising given the relative size of the numbers employed in each region.

In the Northern and Western Region, (depicted by the black line), the numbers of agency workers at the start of the period was 12,700, there was a decline to 4,300 in Q4 2018 and at the end of the period (Q1 2019) it was 7,500. It should be noted that the LFS is a survey and the results are weighted to conform to population estimates broken down by age, sex and region. Where there are smaller numbers, estimates are considered to have a wider margin of error and so should be treated with caution. In the data above, this wider margin of error has occurred where numbers fall below 7,500.

The Eastern and Midland Region (the orange line), starts with a level of agency workers of 27,000 at the end of 2017. At the end of the period the number of agency workers in the Eastern and Midland region was 22,200.

The Southern region (green line), displays a different trend, starting at 16,500, rising to 20,900 in Q2 2018, dipping at the end of Q4 2018 and then rising again in Q1 2019 to 20,700. It is not clear why the trend in the Southern region is somewhat different and this will be discussed further below.

Regional Share of Agency Workers

Examining agency workers as a share and proportion of all employees, Graph 2 below shows the regional share of employees who are agency workers over the period Q4 2017 to Q1 2019.

At the end of the period, in Q1 2019, the Northern & Western Region accounts for 14.9% of all agency workers in the country, the Southern Region accounts for 41.1% and the Eastern and Midland region accounts for 44%. The respective shares have changed over the last two years, with the Northern and Western Region accounting for a decreased share (22.6% in Q4 2017 to [14.9%] in Q1 2019. The Southern Region has increased its share (from 29.4% in 2017 to 41.1% in Q1 2019.

Proportion of employees who are agency workers

Given the different sizes of each regional labour market it is important to see the extent to which agency workers as a proportion of all employees, varies across time and region. This is illustrated in Graph 3 below.

Nationally (depicted by the blue line), in Q4 2017 agency workers comprised 3% of all employees. This proportion declined to 2.6% at the start of 2019. Both the Northern and Western and Eastern and Midland regions had proportions below the national average.

The Northern and Western region, depicted by the black line, started the period with the highest proportion of employees as agency workers (4.1%), but this has since declined to 1.4% and was recorded at 2.4% in Q1 2019. The Eastern and Midland region trend (depicted by the orange line) is very similar to the national trend albeit at a lower level.

For most of the period, the proportion of employees who are agency workers is the highest in the Southern region (depicted by the green line). At the start of the period under review, Q4 2017, the rate in the Southern region is lower than the national figure – 2.8% and 3.0% respectively. However, from Q1 2018 through to the end of 2019 the proportion of employees that are agency workers is consistently higher in the Southern Region than the national average.

Conclusions

The Southern region comprises the Mid-West (Clare, Limerick & North Tipperary), the South-East (Carlow, Kilkenny, Waterford and Wexford) and the South-West (Cork and Kerry). In the absence of NUTS 3 regional data it is difficult to know whether there may be specific concentrations associated with a concentration in industry sectors that may be more prevalent in the Southern region.

The CSO data does provide other information on the profile of agency worker employment. For example, nationally 52% of agency workers are female. There is a sectoral concentration within the Agriculture, Forestry, Fishing, Industry and Construction sectors where a quarter of all agency employees are employed. There is also a high concentration of agency workers in the Human health and social work activities sector, see here for full release.

Discussions with the CSO indicate it is difficult to ascertain why there is a relatively high share in the Southern region. The CSO point out that the LFS is a survey, the margin of error of the estimates can be greater with smaller cell sizes. More trend data will be needed to see if it is a more established trend and a particularly stronger feature of employment in the Southern Region or if it becomes a stronger feature of employment when economic growth is not as strong.

However, the availability of these data does allow us to monitor trends and helps us build a picture of the range and types of employment, all of which is critical to formulating and improving employment policy.

 

 

Deirdre Frost

Financial & ICT Services in the Western Region

The WDC has just published the latest in its series of Regional Sectoral Profiles analysing employment and enterprise data for economic sectors in the Western Region.

It examines the Financial & ICT Services sector which covers two sub-sectors: ‘Financial & Insurance Activities’ (banks, mortgage brokers, insurance and pension funding) and ‘Information & Communication’ (publishing, film, video, TV and music, telecommunications, computer programming (software) and IT services/support). Both are knowledge intensive services sectors, relatively high value, high skill and highly paid and tend to be quite concentrated in larger urban centres.

Two publications are available:

Employment in Financial & ICT Services in the Western Region

According to Census 2016, 17,884 people worked in Financial & ICT Services in the Western Region. This was just 9.9% of everyone working in this sector in Ireland, compared with the region’s 16.6% share of overall employment.

Financial & ICT Services plays a significantly smaller role in the region’s labour market than nationally (Fig. 1); 5.4% of total employment compared with 9%.  The balance between ‘Financial & Insurance’ and ‘Information & Communication’ also varies in the region.  Nationally, each accounts for the same share of total jobs (4.5% each) however in the Western Region ‘Information & Communication’ is notably more important than ‘Financial & Insurance’ (3% of all jobs v 2.3% of all jobs). This reflects the concentration of financial services activity in Dublin and particularly around the IFSC.

In the region Financial & ICT Services is most important in Galway City (9.1%), followed by Donegal (6.2%), Clare (5.6%) and Galway County (5.5%) with large urban centres and the Shannon Free Zone influencing the pattern.

Fig. 1: Percentage of total employment in Financial & ICT Services in Western Region and state, 2016

Source: CSO, Census 2016: Summary Results Part 2, Table EZ011

 

At a more detailed level, ‘Computer Programming & Consultancy’[1] is the largest employer among Financial & ICT Services activities (36.8% of all employment in the sector) and accounts for a higher share in the region than nationally (32.8%).  In contrast the region has a notably lower share in the next largest activity of ‘Financial Services’[2] (25.1% in the region v 31.3% in the state).  The two other ICT Services activities of ‘Audio-visual, Publishing & Broadcasting’[3] and ‘Telecoms’[4], also account for a greater share in the region, whereas the other financial activity of ‘Insurance, Pension & Fund Management’ accounts for a similar share in both.

Employment in western towns

At 14.3% (1,111 people) of total employment Letterkenny has by far the highest share of residents working in the sector (Fig. 2) and is the eleventh highest of Ireland’s 200 towns and cities (1,500+ population).  Most of the towns with a higher share surround Dublin city. Within the region, Bearna (11%, 98 people) and Oranmore (10.6%, 275 people) have the next highest shares working in Financial & ICT Services, likely due to commuting to Galway City.

Four towns in the Western Region are among the bottom ten nationally (Ballyhaunis, Bundoran, Ballyshannon and Ballymote) at less than 2.6% working in Financial & ICT services. All are rural towns at some distance from larger urban centres.  It is clear there is limited activity in this sector in such towns or commuting to work in other centres.  Remote work offers the possibility for more people working in this sector to live in such locations.

Fig. 2: Percentage of total employment in Financial & ICT Services in towns in the Western Region, 2016

Source: CSO, Census 2016: Profile 11 – Employment, Occupations and Industry, Table EB030

Change in employment in the Western Region and its counties

There was 4.6% jobs growth in Financial & ICT Services in the Western Region between 2011 and 2016 (Table 1). This was less than half the 12.1% increase that occurred nationally and significantly lower than overall jobs growth in the region (7.5%).  Galway City (14.5%) and Donegal (12.9%) experienced jobs growth higher than the national average and this sector exceeded overall jobs growth in both counties.

Mayo, where the sector is least important as an employer, had the largest job losses with a fall of 9.1% in the number working in Financial & ICT Services.  Leitrim (-6.8%) and Sligo (-6.6%) also saw large declines between 2011 and 2016 and in all cases this sector performed worse than jobs overall.  It is important to note that this data is from 2016 and there have been some significant job announcements in this sector since that time, particularly in Sligo.

The performance of the individual activities varied very significantly with a 49.3% increase (2,176 people) in employment in ‘Computer Programming & Consultancy’ in the region contrasting with a 22.8% decrease (1,330 people) in ‘Financial Services’.  Regardless of whether an activity grew or declined, its performance in the region was weaker than nationally, particularly for those activities which declined. The region was closer to the national average for the two growing activities

‘Computer Programming & Consultancy’ showed strong jobs growth across every western county, growing by 60+% in Roscommon, Donegal and Galway City. ‘Financial Services’ saw significant job losses across all western counties, declining by over a quarter in Galway City, Donegal, Sligo and Clare.  One of the main reasons for this was the closure of many bank and building society branches, particularly in smaller towns, growing online banking and increased automation reducing staffing levels.

Agency Assisted Jobs in Financial & ICT Services

In 2017, there were 12,844 agency assisted[5] jobs in Financial & ICT Services based in the Western Region.  Jobs in Financial & ICT Services account for 19.3% of all assisted jobs in the Western Region, but 32.4% of all assisted jobs in the state, consistent with the sector’s lower importance to total employment.

The relative importance of different activities varies (Fig. 3).  The share of total assisted jobs accounted for by ‘Computer Programming’ is essentially the same in both the region and state, indicating that this sector is well developed in the region.  For all other Financial & ICT Services activities, their share of total assisted jobs in the region is considerably lower than nationally. This is particularly the case for ‘Computer Consultancy’ which accounts for 8% of all assisted jobs in the state, making it the largest among these five activities, but less than half this share in the region.  Indeed, for all other activities, their share of assisted jobs in the region is roughly half that nationally.

Fig. 3: Percentage of total assisted jobs in each Financial & ICT Services activity in Western Region and state, 2017

Source: Department of Business, Enterprise & Innovation (2018), Annual Employment Survey 2017, special run

Ownership of Agency Assisted Jobs

Financial & ICT Services has a very high level of foreign ownership with 79% of jobs in foreign owned agency assisted companies, among the highest shares of foreign ownership across all sectors.  The level of foreign ownership has risen, in 2008 71.6% of jobs in the sector were foreign owned.

The balance between Irish and foreign ownership varies across the different sub-sectors (Fig. 4).  All assisted jobs in ‘Computer Facilities Management’ in the region are in foreign owned firms.  The largest activity of ‘Computer Programming’ is strongly foreign dominated with 97.6% of all assisted jobs in this activity in foreign owned firms.  International ‘Financial Services’ is another area of high foreign involvement, with 91.3% of all jobs in the region in foreign owned firms.

‘Computer Consultancy’ has considerably greater Irish owned involvement with only 49% of jobs in foreign owned firms.  In this activity the region has a lower foreign owned share and therefore greater Irish owned involvement.  This activity saw large job losses in the early part of the recession, only recovering somewhat in more recent years. The greater level of Irish ownership within this activity contributed to greater losses of Irish owned Financial & ICT Services jobs during the recession than foreign owned.

Fig. 4: Percentage of total assisted jobs in Financial & ICT Services activities in foreign owned companies in Western Region and state, 2017

Source: Department of Business, Enterprise & Innovation (2018), Annual Employment Survey 2017, special run

 

Key Policy Issues

Low current level of activity in Financial & ICT Services in the Western Region and the gap is widening as the rate of growth in the region significantly lagged that nationally between 2011 and 2016.  Given that this is a high value, high skill and highly paid sector, increasing the level of activity in Financial & ICT Services in the Western Region could make an important contribution to regional economic development, productivity and income levels. However as this is not a highly labour intensive sector it plays a modest role in direct job creation.

Lower level of international activity in the region but internationally trading firms performed better than domestically trading sector, particularly in financial services.  Sustaining and accelerating this growth in internationally trading Financial & ICT Services firms is the main route to increasing the sector’s regional economic impact.  Access to talent, high quality telecommunications, research capacity and a supportive business ecosystem, as well as an attractive quality of life, are critical to this growth.

High level of foreign ownership means there is a need to stimulate the Irish owned sector.   Stimulating start-ups and the scaling of Irish owned technology and finance companies, to a stage where they have the capacity to trade internationally, is important to creating a more sustainable balance in the structure of this sector in the region.  This is particularly important in light of planned changes to international corporation tax rules, developments in the US and Brexit.  Current initiatives such as NUIG’s TechInnovate[6] are trying to address this by facilitating technology start-ups in the region.

There is a growing gender imbalance as the male share of all employment in Financial & ICT Services rose from 50.9% in 2011 to 54.9% by 2016 mainly because of stronger growth in male dominated ICT Services (67.9% male) compared with large job losses in the more female dominated Financial Services (62% female).  Ongoing initiatives to encourage greater participation by women in computer science, technology and finance courses, addressing the perceived male culture within the sector, raising awareness of female role models and female entrepreneurship programmes can all help to redress this imbalance.

Key urban locations play a critical role as centres for Financial & ICT Services activity with Galway City and Letterkenny two key locations particularly in ICT Services, Shannon/Ennis also having notable activity especially in Financial Services and a number of high profile recent announcements for Sligo. The availability of suitable office space, physical and digital infrastructure, links with education and training providers, access to talent and quality of life, as well as addressing issues such as traffic congestion and rising costs, will be important to ensuring these key urban locations can enhance their regional and national role as centres for Financial & ICT Services activity.

Opportunities for growth exist beyond large urban locations, including remote workDevelopments in technology, the world of work and the need to develop more sustainable approaches means that remote work (from home, a co-working hub or other location) holds considerable potential for smaller urban centres and rural areas to host increasing activity in this high skill, high value and highly paid sector. Initiatives such as Grow Remote[7] are currently highlighting the potential for increased remote working and also highlighting key policy changes needed to facilitate its expansion and wider acceptance among employers.  Access to high speed broadband is one of the most critical factors.

Limited self-employment activity in this sector, but higher incidence in the Western Region, particularly for ICT Services in Sligo, Leitrim and Mayo. This implies the structure of the sector in these counties differs from that elsewhere with many sole traders or freelancers engaged in AV production, IT services or software development and fewer large employers. An opportunity exists to target these ICT entrepreneurs, many of whom may be based in quite rural areas and smaller towns, by providing networking opportunities, business support, co-working space and opportunities to collaborate.

Access to talent is critical.  A co-ordinated approach between education and training providers in the region, in collaboration with employers, is needed to ensure an adequate supply of the necessary skills including a strong focus on upskilling and lifelong learning.[8]  Attracting talent to relocate to the region is the complementary approach.  Promoting the quality of life, lower cost of living and shorter commuting times in the region, as well as the job and entrepreneurship opportunities available, are important to attracting people to relocate.  [9]The demand for talent is also increasing the incidence of permanent full time jobs and wages in the sector.[10]

For more detailed analysis see ‘Financial & ICT Services in the Western Region: Regional Sectoral Profile’ https://www.wdc.ie/publications/reports-and-papers/

Pauline White

 

Image by Free Photos at Pixabay

 

[1] Software and app development, IT services, data analysis consultancy etc.

[2] Banks, building societies, credit companies, venture capital, mortgage advisors etc.

[3] Publishing, newspapers, film, photography, music recording, TV production, TV and radio broadcasting etc.

[4] Wired, wireless and satellite telecommunications (phone, broadband).

[5] Department of Business, Enterprise & Innovation (DBEI), Annual Employment Survey 2017. A survey of all firms in Ireland who have ever received support from IDA Ireland, Enterprise Ireland or Udarás na Gaeltachta.

[6] See http://techinnovate.org/

[7] See https://growremote.ie/

[8] See https://www.regionalskills.ie/

[9] See www.LookWest.ie

[10] ‘Information & Communication’ had the highest growth in average weekly earnings nationally over the past five years increasing 21.1% Q1 2014 to Q1 2019. CSO, Earnings, Hours and Employment Costs Survey Q1 2019, Table EHQ03

The Benefits as well as the Costs of the National Broadband Plan

There are significant benefits associated with the planned rollout of the National Broadband Plan (NBP), though the recent media coverage seemed to focus largely on the costs.

A review of newspaper headlines over the period following the announcement of the preferred bidder and the likely cost of the National Broadband Plan (NBP), suggests that the overall benefit is significantly lower than the cost. For example some of the headlines included;

  • Its wrong to endorse broadband plan and ignore officials’ warning on costs, Independent, 12 May 2019
  • National Broadband Plan, labelled ‘the worst deal ever seen’ Irish Examiner, 13 May 2019
  • Government to press ahead with €3bn broadband plan despite cost warnings, 26 April, 2019

But in reality, the cost benefit analysis (CBA) conducted by consultants on behalf of the Department of Communications, Climate Action and Environment, found that under all three different scenarios considered, the benefits outweigh the costs. The CBA also made clear that many benefits were not included in the computations and some of the benefits were estimated on a very conservative basis.

The Costs and Benefits of the National Broadband Plan

The table below shows the costs and benefits anticipated under three different scenarios; pessimistic, central and optimistic. There is a detailed analysis showing how each of the costs and benefits are computed, all of which is published and available for download on the Department of Communications website, see here  (825KB)

Costs: The total project costs include both costs to the State and costs to the operator.

Benefits include benefits to residents and enterprises. The residential benefits refer to the residents who will benefit from the NBP through various savings which will be made in communications services, time savings through online access of services as well as time and cost savings from remote working.

The enterprise benefits refer both to benefits to all firms, those within the NBP area and those outside it.

For firms outside the NBP area one of the largest benefits to be realised is that many of their staff (who live in the NBP area) will now have better broadband access enabling productivity gains from remote/tele-working.

For firms within the NBP area, all SMEs will benefit. Farm enterprises will be able to engage in smart farming, while all SMEs will benefit from higher upload and download speeds to serve their clients and suppliers more efficiently.

Scope of Costs and Benefits

Table 1 shows that under all three scenarios the benefits of the NBP exceed the costs. In the analysis, the entire range of costs have been considered and furthermore they are capped and there are various clawback mechanisms to ensure limited and capped costs to the State.

The benefits that have been measured are just some of the range and a whole range of benefits have not been included. As the CBA report notes, in including and profiling benefits, the consultants adopted a deliberately conservative approach to ensure benefits were not overstated. As a result, there are important categories of benefits which are not quantified and therefore not included in the CBA analysis. Table 2 below provides an overview of these benefits and examples of how households and enterprises in the NBP area may benefit.

Measuring benefits – Other international examples

In making the case for various state supports and state aid for broadband investment, other countries have also grappled with how to measure and capture benefits. While investment in fibre networks can be evaluated in a similar fashion to investment in other infrastructure, technological innovation and new product and service developments are continually extending the range of benefits from investment in broadband infrastructure generally and fibre deployment in particular. Consideration of these other benefits is not new and other countries have valued the benefits of fibre rollout across various sectors.

For example, research undertaken in Sweden provides some economic calculations on additional returns to fibre which need to be captured in evaluation. In Sweden, higher rents are charged for homes with fibre connectivity. Tenants pay an extra €5.50 per month for a home with a fibre connection and this is valued at €267 million per year for all fibre connected homes, which yields €185.6 million per annum return on investment.

Investment in fibre networks can also reduce telecommunications costs to the user, for example the Stockholm Regional Council (regional government) reduced its telecommunications costs by 50% following deployment of the fibre network. This is attributed to increased efficiency and greater competition with more telecommunication operators providing services on the high capacity fibre network.

The development of eHealth technologies including remote monitoring and diagnosis will provide opportunities to deliver some healthcare direct to the community rather than through hospitals. Community care is generally significantly less expensive than hospital care. The greater bandwidth and symmetrical (upload and download) speeds with fibre networks can support those applications requiring very good upload and download speeds. As many of these applications such as eHealth are still being developed, it is difficult to estimate their full value and benefit.

At a wider economy level, the OECD has examined the benefits arising to other economic sectors (transport, health, education and electricity) of a national ‘fibre to the home’ network. The analysis examines the cost of deploying ‘fibre to the home’ across different OECD countries, including Ireland, and has estimated that the combined savings in each of the four sectors over a 10 year period could justify the cost of building a national ‘fibre to the home’ network. These examples are outlined in the WDC report, Connecting the West, Next Generation Broadband in the Western Region, see here (1.5MB).

Measuring the benefits of State investment should also take account of the impact on other Government policy objectives. More balanced regional and rural development and greater regional economic growth are important Government policy objectives.

State Aid

The Telecoms sector just like most other economic sectors are subject to strict EU State Aid Rules. State aid is subject to very strict criteria, one of which is that there is market failure. In the NBP areas, defined according to a detailed mapping process which was undertaken as part of the requirements for State aid, it is clear that no commercial deployment of high speed broadband has been or is likely to occur. This is then a case of market failure. Just as with other utility provision (transport, water, energy) the State intervenes where commercial provision does not occur.

One of the other criteria for State aid is that the aid serves an Objective of Common Interest. The European Commission’s Digital Agenda for Europe (DAE) is an objective of common interest to which Ireland has committed and this sets out a minimum of 30Mbps download for all homes and businesses by 2020. Given the increasing demand for higher speeds the EU Commission has revised upwards the target for member states which is now to achieve a basic service of 100 Mbps for all households by 2025. This objective and need to reduce the current digital divide complies with State aid requirements.

Conclusions

The NBP has been subject to probably the most extensive, thorough and comprehensive evaluation both within various Government Departments as well as across the wider public domain.

When the benefits exceed the costs, and the costs are capped while the benefits that are measured are only partial and conservatively estimated then the results of the CBA are positive and clearly make the case to proceed with the investment.

The full report on the benefits from the NBP (February 2019), is available for download on the Department of Communications website, available here (2.5MB).

The NBP Cost Benefit Analysis report (April 2019), is available for download for the Department of Communications, see here  (825KB).

 

 

Deirdre Frost

Administrative, Entertainment & Other Services rely on local demand from businesses & consumers, but potential to expand international activity

The Western Development Commission (WDC) has just published the latest in its series of Regional Sectoral Profiles which analyse employment and enterprise data for economic sectors in the Western Region.  This report examines the Administrative, Entertainment & Other Services sector, and two publications are available:

This sector includes three sub-sectors which provide services to both businesses and individuals:

  • ‘Administrative & Support Services’ primarily provide ‘outsourced’ type business services (property management and landscaping, contract cleaning, ‘back office’ business processing/call centres, recruitment, leasing and security) but it also includes travel agents and tour operators;
  • ‘Arts, Entertainment & Recreation’ (creative arts, cinemas, gyms, sports activities, amusements, museums and gambling); and
  • ‘Other Services’ (hairdressing and beauty, laundry, repair services, funeral services, unions and business groups and domestic staff) mainly provide services to individuals and households.

Given the wide scope of this sector, it is particularly important to consider differences across the sub-sectors. Some of the key findings from the analysis are:

Sector plays a smaller role in Western Region’s labour market

Administrative, Entertainment & Other Services account for a smaller share of total jobs in the region than nationally (Fig. 1); 6.5% of total employment compared with 7.5%.  Large urban centres and global business services activity around Shannon influence its relative importance across western counties.

The region experienced lower jobs growth in this sector than elsewhere between 2011 and 2016 (8.9% compared with 13.6%).  As this sector relies heavily on local demand, slower economic recovery in the region was a factor in this.  Nevertheless as this sector grew more than total jobs in the region (7.5%), it contributed to the region’s jobs recovery.

Fig. 1: Percentage of total employment in Administrative, Entertainment & Other Services in Western Region and state 2016. Source: CSO, Census 2016: Summary Results Part 2, Table EZ011

High and growing self-employment

This sector in the region is characterised by a high rate of self-employment, both compared with elsewhere (27.6% in region v 21.5% in state) and with other sectors. This is particularly the case in more rural counties and for locally provided services (38.1% of all employment in ‘Other Services’ is self-employment).

The number of self-employed in this sector in the region increased by 19.4% (2011-2016), the highest growth across all sectors, as many individuals responded to growing demand by setting up small-scale service businesses (e.g. gyms, barbers, HR services, phone repair).  Continuation of existing, and the development of new initiatives and soft supports, to support self-employment, including addressing issues of the quality and viability of some self-employment, is important particularly in smaller urban centres and rural areas where self-employment can be a key pathway to work.

Important contribution to town centre renewal

As online retailing grows, the availability and choice of local personal and recreational services is central to attracting people to visit and remain in town centre locations.  Facilitating such services, many of which are provided by sole traders and micro-enterprises, should be integral to local plans for town centre renewal.

At 11.2% of all employment Bundoran has the highest share working in this sector of Ireland’s 200 towns and cities (1,500+ population), largely due to ‘Arts, Entertainment & Recreation’ (Fig. 2).  Carndonagh (10.4%) and Ballyshannon (10.2%) are also in the top 10 towns in Ireland.  Shannon meanwhile has the second highest share working in ‘Administrative & Support’ in the state.

Fig. 2: Percentage of total employment in Administrative, Entertainment & Other Services in towns in the Western Region, 2016. Source: CSO, Census 2016: Profile 11 – Employment, Occupations and Industry, Table EB030

The structure of the sector in the region differs from the national picture

The mainly locally traded personal and leisure services are more important for employment in the region, with less activity in business services (Fig. 3).  The single largest employment activity is ‘Hairdressing & Beauty’ which is significantly more important in the region than the state, the next largest is ‘Services to buildings & landscape’, followed by ‘Sport, amusement & recreation’. The greater importance of locally provided services means the sector relies more heavily on local demand and disposable income.

Fig. 3: Percentage of total Administrative, Entertainment & Other Services employment in each broad sub-sector in Western Region and state, 2016. Source: CSO, Census 2016: Summary Results Part 2, Table EZ011

Some of the implications of this are:

  • ‘Administrative & Support’ less developed but with growth potential: The ‘Administrative & Support’ sub-sector accounts for a lower share of total employment (see Fig. 3) and enterprises (33.5% of all AEOS enterprises v 35.8%) in the region than the state and also experienced lower growth. There is an opportunity to further develop this sector in response to increased outsourcing and strong growth in global business services.  High quality communications infrastructure and property solutions, as well as improved accessibility and the availability of suitable talent are important factors.  Within the region the Shannon Free Zone is a nationally significant location for global business services (e.g. aircraft leasing, e-commerce outsourcing).  Strengthening this cluster to adapt to technological change, meet emerging skill needs and increase collaboration are among the actions needed to support this key regional asset.
  • Local ‘Other Services’ more important and in particular for rural counties: These services largely rely on local demand and respond strongly to disposable income.  As they are often consumed at the same location as they are supplied (e.g. hairdressing, dry-cleaning, nail bars), they play a particularly important role in the local economy of towns and villages.   This sector however is generally quite low paid (at €17.13 per hour ‘Other Services’ has the second lowest average hourly earnings of all economic sectors.[1])  The greater importance of this sub-sector in the employment profile of the region therefore reduces the overall economic benefit of the sector to the regional economy.
  • Role of ‘Arts, Entertainment & Recreation’ in the regional economy is growing: It experienced the strongest employment (13.6%, 2011-2016) and enterprise (12.6%, 2011-2016) growth in the region, in both cases expanding more than nationally. This sector is highly responsive to local disposable income with tourism a key driver. This is clear from its importance in locations such as Bundoran, Strandhill and Clifden.  The Western Region is recognised as having a strong creative and cultural industries sector, as well as tourism industry. The WDC has supported the creative sector’s development through a range of initiatives[2] and the recent Regional Enterprise Plan for the West region[3] included it among its strategic objectives. Adopting a coordinated approach is critical to help realise the growth potential of the creative industries.

For more detailed analysis, including of enterprises in the sector and agency assisted jobs, download Administrative, Entertainment & Other Services in the Western Region: Regional Sectoral Profile here

Pauline White

 

[1] Only ‘Accommodation & Food Service’ is lower. CSO, Earnings, Hours and Employment Costs Survey Q4 2018, Table EHQ03

[2] See https://www.wdc.ie/regional-development/creative-economy/

[3] Department of Business, Enterprise & Innovation (2019), Regional Enterprise Plan to 2020: West Region