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SMEs in Ireland: What are the issues?

Earlier this year the WDC made a submission to the Seanad Public Consultation Committee. They are currently investigating the issue of Small and Medium Sized Businesses in Ireland.  Last Tuesday we were among 15 individuals and organisations invited to address a public hearing of the Seanad on the topic.  A video of the hearings is available here (the WDC’s contribution begins at 3:48) and the final report will be published by the Seanad early next year.

The inputs to the public hearing covered the owner, national and regional perspectives on SMEs in Ireland.  Over the course of five hours a very broad range of topics and issues relevant to the operation and future of SMEs in Ireland was discussed, here are just a few of the themes which emerged.

Incentivising entrepreneurship:  How can we make it more attractive for people to choose to establish their own business?  It was suggested the idea should be encouraged at primary school level, before children enter the ‘points race’, by adding entrepreneurship to the list of potential career choices.  It was also noted that some entrepreneurship, especially in rural areas, may ‘grow from the ashes’ as a result of the closure of a large business and limited alternative employment.  Reducing personal risk as a barrier to entrepreneurship was raised in terms of social insurance, as well as the issue of the rate of capital gains tax acting as a disincentive.

Varied forms of entrepreneurship: It was proposed that more varied forms of entrepreneurship and ownership models, including co-operatives and social enterprise, should be encouraged.  With a more socially conscious generation of young people, it was recognised there could be more demand to buy from socially and environmentally conscious local businesses.  It was suggested that this could support succession planning for family-run businesses with more options for buy-outs by worker co-operatives.

Attracting skills and management capacity:  As the labour market tightens, SMEs increasingly have to compete for employees with large multinationals. SMEs can lose trained staff to FDI companies paying higher salaries and this particularly restricts the development of management capacity as SMEs find it difficult to compete with FDI companies on salaries for high level management roles.  But a strong management team is central to SME success and can also help with succession through a management buy-out.  Incentives to retain staff, such as the Keep scheme, were seen as important to tackle this.  The diaspora was also highlighted as a potential source of key skills for SMEs and a number of initiatives to attract people back to rural, regional and Gaeltacht locations were outlined. For counties in the Greater Dublin Area, promoting ‘reverse commuting’ with SMEs encouraged to establish in commuter towns to take advantage of the pool of talent currently commuting into Dublin, was highlighted.

Education and training: To meet the skill requirements of SMEs there was a need for them to identify their current and future skills needs. EI are currently running ‘spotlight on skills’ workshops for companies which aim to help with this.  Close collaboration between SMEs in a region and local education providers (ETBs, IoTs, Universities) is critical to providing the pipeline of skills needed for future jobs as well as facilitating accredited lifelong learning to upskill current staff.  Increasing the range of sectors covered by apprenticeships and making the apprenticeship path more attractive were also raised.

Costs and regulatory burden:  The rising cost of utilities and insurance and the impact this is having on SMEs.  For example a number of key insurers have left the insurance market for retail businesses in Ireland and there is uncertainty how UK insurers providing cover in Ireland will be impacted by Brexit.  Initiatives to spread costs more evenly, such as the timing of Revenue payments, could help with SME cash flow.  The Government was urged to ‘think small first’ when developing new regulations and to take into consideration the cumulative impact of numerous regulations on small businesses, rather than looking at the impact of one regulation in isolation from others.

Procurement: The potential for public procurement as a market for SMEs.  The ‘bundling’ of contracts could put some public projects out of reach of SMEs and it was felt that, as far as possible within EU tendering guidelines, SMEs should be facilitated to access public procurement

Broadband and remote working: SMEs will not be able to connect with their markets in the absence of high-speed broadband across the country.  The lack of high-speed broadband in some rural and regional locations is a critical issue and has in fact led to the relocation of some companies.  It was noted that 4G /5G mobile technology was not sufficient the needs of SMEs and fibre broadband was the most future proofed technology.  Broadband could also facilitate remote working for employees and entrepreneurs.  The provision of digital hubs and innovation centres could facilitate networking and social interaction. It was noted that there needed to be a culture change in terms of remote working.

Scale and performance:  Recent Irish economic growth has mainly been driven by FDI and Irish SMEs are not performing as well in terms of exports or innovation.  It was felt that they were not living up to their potential, as research by the Enterprise Research Centre has shown that Irish micro-enterprises have greater growth ambition, digital adoption and use of innovation than their UK or US counterparts. Growing the scale of Irish SMEs and diversifying their markets, especially beyond the UK, were seen as priorities for improved performance.  It was also noted that some SMEs may be caught in the ‘middle’, too large for LEOs but not exporting so not within EI’s remit.  Brexit makes it difficult for any SME to plan and it was suggested that some companies may need more direct support to adapt to the Brexit impact.

Investment and finance:  There is a need for more investment in SMEs, who currently largely rely on short-term debt financing rather than longer term equity investment.  Investors need to be incentivised more to make equity investments in SMEs, while SME owners should be encouraged to be more open to equity investment.  While new, high-tech companies were very open to the idea, more established SMEs may be reluctant to seek such investment.  It was also noted there was a lack of private sector early stage and venture capital funding in the regions.  In relation to lending to SMEs, a Local Public Banking model, similar to that in Germany, was proposed.  Based on relationship banking, these local public banks could provide loans to SMEs and would operate on a non-profit basis.

The ultimate outcome of the consultation will be a strategy proposal document on SMEs in Ireland which the Seanad will publish early next week and propose to the relevant Government Minister.  It is hoped this will place a renewed focus on the role and importance of indigenous SMEs to the Irish economy and regional development.

Pauline White

Is e-Working on the Increase?

There has been much talk recently of an increase in e-working but does the evidence support the idea that it is more prevalent?

Technology development and in particular high speed broadband enables much office based work to be conducted remotely or away from the office. This, coupled with increased journey times to work has led to a greater demand for the opportunity for staff to work remote from the office and closer to home on a one or 2 days a week basis. Companies are reportedly increasing the availability of e-working in part as a means to retain key personnel[1].

The growth in employment opportunities in the shared or gig economy is another factor driving broadband demand to support employment growth and there is evidence that work and income generation in this sector is an important feature in rural areas such as the Western Region, see here.

Regional employers also value the ability to provide remote working opportunities, for example, Shopify recently announced the addition of 100 remote working jobs in the west of Ireland due to the presence of high-speed broadband, while Pramerica, a US multinational in Letterkenny, employ at least 20 e-workers who work from a well-established hub in Gweedore, Co. Donegal. Wayfair has also recently announced their intention to add over 200 jobs to their “Virtual” workforce in the west of Ireland (https://www.idaireland.com/newsroom/wayfair).

Benefits from e-working

Analysis for the Department of Communications measured benefits arising from delivery of high speed broadband planned under the forthcoming National Broadband Plan[2];

  • found that each house could yield a benefit of €89.00 per household per annum resulting from journey time and fuel cost savings from increased e-Working as a consequence of the availability of high speed broadband. This does not include other benefits such as carbon emissions savings etc.
  • Increased productivity is also forecast, generated from improved productivity of white collar workers living in rural areas but commuting to work in urban areas. This shows the benefit to the enterprise expressed as an increase in GVA per employee of 1.53% (€1,342) per worker, working from home or remote working on a 1 day per week basis. This does not capture benefits such as increased staff retention and more satisfied employees[3].

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

The success of initiatives variously called e-working spaces/ co-working spaces/ hubs also suggests e-working is on the increase. However the various terms are used to describe a variety of uses, only some of which may actually support the individual e-worker.

There are working spaces in the enterprise space some of which are funded by the Department of Business, Enterprise and Innovation. Hubs variously classed as innovation, enterprise or community hubs, many are focussed on start ups and incubation spaces rather than providing e-working spaces for individual employees.

In the Western Region, the success of Digital hubs in County Clare, https://www.digiclare.ie/  where there are spaces in three sites across the county, Kilrush, Miltown Malbay and Feakle suggest an increased demand for e-working spaces.  Many of these types of hubs are providing high speed telecommunications access to communities that do not yet have access and are (still) awaiting the rollout of the National Broadband Plan. Initiatives such as Grow Remote suggest e-working  is an increasing phenomenon.

 The evidence on e-Working

However as the WDC pointed out in its e-working policy briefing, the evidence on e-Working in Ireland is limited and complicated by different definitions. The most comprehensive data is collected in the Census and the same question has been asked on previous Censuses. The question asked is ‘how you usually travel to work?’ with one of the answers being ‘work mainly at or from home’.

According to the Census, nationally, in 2011, 4.7% (83,326) of all those at work, stated they worked mainly at or from home. By 2016 there were 94,955 persons working ‘mainly at or from home’ in April 2016, an increase of 14%. There was a 11% increase in the numbers at work over the same period, indicating an increasing prevalence of working from home.

However, the Census definition is a very broad definition in that it includes all those that are self-employed and work from home (such as childminders, home-based GPs, farmers and sole traders across all sectors) and not just e-Workers. Moreover, the Census definition only captures those employees that work from home most of the working week and excludes those who e-Work even one or two days per week, which some studies suggest is the most common pattern of e-Working.

In 2016 an IBEC survey of their membership found that 30% (110) of companies had a practice of e-Working/ home-working, on one or two days per week. At a regional level, 21% of companies in the West/North-West report a practice of e-Working one or two days per week, lower than the national average. The likelihood of e-Working among companies increases with company size so that 40% of companies with 500+ employees cite a practice of e-Working nationally. The trend is for continued growth in the practice with 31% of companies’ surveyed planning to increase their use of e-Working, with a forecast that 60% of office based workers will work remotely regularly by 2020, see here.

Examining e-Working in rural Ireland, a report commissioned by Vodafone, found that nearly one in four broadband users in rural Ireland use the internet at home in relation to their work (about 430,000 people) and one third have remote access to their company network for work purposes. These e-Workers report that e-Working means they can avoid commuting to work, typically about two days a week. An estimated 150,000 workers avoid commuting some or all of the time because they can connect to work remotely.

However, the same report found that a quarter of those who work from home – or nearly 100,000 adults – say their current broadband service is not sufficient to meet their requirements for e-Working, and that it limits the work-related activities they can do from home. This share rises to nearly half of those living in detached houses in the countryside. 30% report that slow and unreliable speeds currently prevent them and/or family members from working from home.

Conclusions

It is clear therefore that the incidence of e-Working is greater than the measure of ‘those working mainly at or from home’, as captured by the Census. It is also likely that the trend is generally upward.

It is also clear that the rollout of the National Broadband Plan remains a vital infrastructure investment needed to support employment growth and retention, apart from the various and widespread social benefits it can yield.

Better data is needed to capture the actual extent of e-Working. The CSO should consider revising the Census question as it currently only captures those ‘who work mainly at or from home’. Data should measure the incidence of e-Working on a one day, two days and more frequent basis. This will also provide a useful baseline for measuring trends.

[1] https://www.wdc.ie/wp-content/uploads/WDC_Policy-Briefing-no-7.pdf, https://www.wdc.ie/wp-content/uploads/WDC-Insights-Home-Based-Working-July-2017.pdf  IBEC HR Update Survey 2016, Issue 2.

[2] Indecon International Economic Consultants, July 2012. Economic / Socio-Economic Analysis of Options for

Rollout of Next Generation Broadband. http://www.dccae.gov.ie/communications/SiteCollectionDocuments/Broadband/National%20Broadband%20Plan.pdf

[3] See footnote 3. There is also an increase in productivity at the enterprise level – measured at 0.67% increase in GVA per small non-farm enterprise in the Intervention Area. This is as a result of productivity gains through improved businesses processes, online sales and owner managers having the flexibility of ‘always-on’ connectivity.

Issues for the Western Region’s SMEs

The WDC recently made a submission to the Seanad Public Consultation Committee on the important topic of Small and Medium Sized Businesses in Ireland.

In our submission we highlighted that the Western Region is a predominantly rural region with 65% of the population living in rural areas (outside centres of 1,500).  Trends in the location of FDI investments, especially in the period of the recovery, have shown increasing concentration in Ireland’s cities and their hinterlands, although this year has seen greater distribution (e.g. to Sligo) as Dublin’s cost of living and housing shortages drive multinationals to seek other locations. Regardless of this however, FDI is only one element of job and enterprise growth and is not the solution for the vast majority of the Western Region.  Therefore supporting the start-up, expansion and viability of Irish indigenous SMEs is at the core of both the region and Ireland’s future growth.

Indeed the important role of SMEs in regional development will be among the topics discussed at this Friday’s Regional Studies Association Annual Conference at IT Sligo, on the theme City-Led Development & Peripheral Regions.  International keynote speakers Professor Mark Partridge (US) and Dr Andrew Copus (Scotland) will be joined by academics and policymakers from Ireland to consider how (or indeed if) a ‘city-region’ regional policy approach can really bring benefits for peripheral regions and rural areas. Register now

SMEs in the Western Region

In 2016 there were 54,410 enterprises registered in the seven-county Western Region, and only 50 of these were large (250+) enterprises.[1]  Next week the WDC will publish a new WDC Insights publication examining enterprise data for the Western Region.

In our submission, we noted that SMEs located in the Western Region, including those in small and medium-sized towns, villages and rural areas, face some specific challenges:

  • Small local markets and distance from larger markets;
  • Poor transport connectivity (for staff and freight) with no motorway in the Western Region north of Tuam and often poor quality local and regional roads linking to primary and secondary routes;
  • Weaker broadband infrastructure (access and speed) constraining online operations;
  • Poor mobile phone coverage for voice calls and data;
  • Difficulties in identifying and recruiting suitably qualified staff, especially at senior managerial and technical levels;
  • Lack of regional seed and early stage venture capital funders;
  • Declining populations in some areas, especially in the economically active (and higher spending) age categories;
  • Reduced activity and footfall in smaller town centres with the growth of online retail and improved transport access to larger urban centres offering greater retail and service choice;
  • Isolation and lack of networking opportunities;
  • For SMEs based around Galway city, traffic congestion can be a major constraint;
  • SMEs in Border counties and throughout the Western Region currently face uncertainty regarding the implications of BREXIT. After March 2019 there may be very significant impacts on their businesses.  These smaller businesses are most vulnerable, lacking staff and resources to change and develop in response to changes in their commercial relationships with the UK.

The submission then goes on to set out some specific policy recommendations on access to finance, recruitment and retention of suitably qualified staff and infrastructure.

Read the full submission here.

Pauline White

 

[1] CSO (2018), Business Demography 2016

Broadband benefits – but when?

Recent statistics show that Ireland will not meet the EU 2020 targets for the universal availability of fast broadband[1]. Like other EU states, in Ireland there are particular challenges delivering fast broadband to rural areas and this is not helped by the complicated and lengthy procurement process.

Given the many initiatives in the recent past aimed at delivering better universal broadband, the WDC has believed that this current Plan, aimed at providing ‘future proofed services’ is the right approach, however given the fast pace of technological change, it is and will be imperative that future proofed technology is at the cornerstone of delivery to all.

There have been various analyses of the economic and social benefits of broadband and some Irish research was presented at a recent ESRI seminar. The seminar, titled Evidence of Some Economic effects of Local Infrastructure in Ireland focussed on the economic benefits of broadband infrastructure. Key findings included:

  • The availability of broadband infrastructure is a significant determinant on the location of new business, but its effects may be influenced by the presence of the levels of human capital and skill levels in the area.
  • Therefore when rolling out broadband in a structurally weak area, parallel measures to boost human capital should be deployed.
  • Human capital and proximity to third level institutions is important for all firms.
  • The effect of broadband depends on education levels within an area.
  • Infrastructure roll-out can help to re-balance economic activity.
  • Government departments and agencies usually have discrete mandates designed not to overlap too much.
  • Decisions to build infrastructure often not taken together (e.g. broadband or transport) or considered along with other factors such as health care provision or education.

The latter two points in particular highlight the need for co-ordination and the value of a comprehensive spatial and economic development plan such as Project Ireland 2040. See here for more information on the ESRI seminar.

Previously, the Department of Communications, Climate Action and Environment conducted its own research which examined the benefits of high speed broadband and research and this is available here. In particular the research identified travel savings through more remote working and increased gross value added, see here.

The analysis measured benefits arising from delivery of high speed broadband planned under the forthcoming National Broadband Plan, to the ‘Intervention Area’ (IA), which comprises approximately 757,000 premises across rural areas throughout Ireland. These areas are not currently receiving high speed services from commercial providers.

The analysis found that each house in the IA could yield a benefit of €89.00 per household per annum resulting from journey time and fuel cost savings from increased e-Working as a consequence of the availability of high speed broadband. This would amount to an annual total saving of €48.39 million, which does not include other benefits such as carbon emissions savings etc.

Increased productivity is also forecast, generated from improved productivity of white collar workers living in rural areas (the IA) but commuting to work in urban areas. This shows the benefit to the enterprise expressed as an increase in GVA per employee of 1.53% (€1,342) per worker, working from home or remote working on a 1 day per week basis. This does not capture benefits such as increased staff retention and more satisfied employees.

Research elsewhere reflects some of the findings of the ESRI research. For example, work undertaken in the US by Professor Mark Partridge found that our review of the economic research finds that broadband’s contribution to economic development in rural regions is often overstated. Broadband expansion does produce positive economic effects in certain rural area, specifically more populated rural counties adjacent to metro areas.

The same research quantifies the economic benefits of additional consumer choice, produced when households are able to access a broader range of products and services at lower prices. The research conducted in Ohio, see here, estimates that reaching full broadband coverage there would generate between $1 billion and $2 billion in economic benefits over the next 15 years. This estimate does not include other potential benefits that broadband offers such as reducing the period of unemployment among job seekers.

Professor Mark Partridge is due to present at the forthcoming Regional Studies Association Irish Section Annual Conference, to be held in Sligo IT on Friday 7th September 2018.

The theme of the conference is ‘City-Led Regional Development and Peripheral Regions’ and the call for papers is now open. Further details are available here.

The WDC believes that to realise all benefits from next generation broadband, it is imperative that the National Broadband Plan deploying future proofed broadband is delivered as soon as possible.

Deirdre Frost

[1] Reported in Irish Times 6th June 2018

Capital Infrastructure priorities – Broadband remains top of the list!

Engineers Ireland recently published The State of Ireland 2017, which focuses on the state of Ireland’s infrastructure and the extent to which it is fit for purpose. This is timely as the Government are in the process of considering the capital infrastructure priorities to be funded over the next few years.

This State of Ireland 2017 report, download here (3.4MB), is the seventh in a series of annual independent reports, on the state of the country’s infrastructure, informed by panel discussions and expert advisory groups.

This year’s report focuses on two key sectors, transport and communications though the report also makes separate recommendations on the infrastructure areas of energy, water supply and wastewater; flood management, water quality and waste infrastructure.

Transport

Ireland’s transport system was awarded a ‘C’ grade – meaning it is of mediocre standard: It is inadequately maintained, and / or unable to meet peak demand, and requiring significant investment. The report notes that investment in Ireland’s transport infrastructure is simply too low to support economic growth and jobs and more investment is needed to reduce congestion and increase sustainability.

Communications

The WDC was a member of the Communications Advisory Group which considered the coverage and connectivity of Ireland’s communications network and how Ireland’s communications network rates with the country’s needs.

As is evident from the report, unlike any other infrastructure considered, the quality of the broadband and communications network was graded spatially. A different grade was awarded depending on whether the infrastructure was located in urban, intermediate urban or remote rural areas which highlights the different quality of the infrastructure depending on location.

The urban areas are classed as the five major cities of Cork, Dublin, Galway, Limerick and Waterford. Intermediate urban areas are those other urban areas and surrounding townlands. The third category, rural including remote rural are the hinterlands of towns and remote locations.

Considering the question How would you rate Ireland’s communications network with the country’s needs, urban and intermediate urban were awarded a ‘B’ grade, whereas rural areas were awarded  ‘D’, conveying a poor, below standard poorly maintained, frequent inability to meet capacity and requiring immediate investment to avoid adverse impact on the national economy. The report notes that in rural and remote rural areas, State intervention is needed and the Government’s NBP programme must intervene for 542,000 premises representing 21% or one million of the national population.

For those of us who have long advocated that intervention is needed and that the National Broadband Plan needs to be implemented speedily and comprehensively, none of the report’s finding are a surprise. However the fact that the Communications Advisory Group, composed of companies such as the main telecoms providers, the telecoms regulator and Google among others, highlights the universal agreement that investment is needed as a matter of urgency.

Census 2016

Elsewhere, publication of Census 2016 data provides county data on broadband use in households.

Census 2016 Summary Results Part 1 Section 9, download here (1.1MB) shows the increasing take-up of broadband nationally, from 20% in 2006 to 70.7% in 2016.

The report also highlights the rural – urban divide where 61.1% of households in rural areas have a broadband connection compared to 76.2% of urban households. Looking at counties in the Western Region, all have a broadband rate lower than the state average of 70.7%, apart from Galway city, see Fig 1 below. Leitrim and Roscommon have the lowest broadband rates across the Region with 58% and 59.8% respectively.

Fig 1. Percentage of households with broadband internet access, Western counties 2006-2016

The National Broadband Plan

These same counties are relatively poorly served with broadband infrastructure. As the State of Ireland 2017 report shows the more rural areas are often the least well served. Under the National Broadband Plan the Western Region counties are among those requiring the most state intervention in rolling out high speed broadband networks. While 23% of premises nationally will be included in the National Broadband Plan ‘Intervention Area’, the rate is much higher across the Western Region with an average of 36.5% of all premises. Counties such as Roscommon and Leitrim are particularly dependent on the National Broadband Plan with 48% and 51% of premises respectively in the NBP Intervention area. The state intervention area in the other counties of the Western Region extends to 44% of premises in Mayo, 36% in Sligo, 34% in Donegal, 34% in Clare and 29% in Galway.

How Ireland Compares Internationally

Data recently released from the OECD highlights the need for urgent investment in Ireland’s fibre based broadband infrastructure. As Figure 2 below shows, Ireland is nearly at the bottom of the pile for the percentage of fibre connections as a share of total broadband subscriptions.

Fig 2. Percentage of fibre connections in total broadband subscriptions, December 2016

Located 4th from the bottom of OECD countries, this data published in July 2017 relates to December 2016 and there is likely to be an improvement since then, however the relative position of Ireland in the OECD group shows how far we are from being in the top tier. Without a doubt, investment in fibre connectivity throughout the country is needed. These data and additional comparative data across the OECD are available for download here.

 

Deirdre Frost

What are the Capital Infrastructure Priorities for the Western Region?

Last week the WDC made a Submission to the Public Consultation on the Mid-term Review of the Capital Plan 2016-2021.

The consultation sought views as to what should be included in the current Plan (€42 billion), over and above what is already included – arising from additional resources (€5 billion) being made available.

In addition, an interesting and welcome aspect was that the Consultation also sought views on the criteria which should inform consideration of the capital investment choices to be made. This was in the context of the remainder of the current plan, but also and arguably of more importance in the context of a longer term 10 year Capital Plan.

This idea of a longer term 10 year Capital Plan acknowledges another important Public Consultation underway – the National Planning Framework (NPF) and the need to consider investment priorities which would align and support the final NPF. A draft NPF is due for consideration over this Summer.

In discussing the Considerations for the Mid-Term Review of the Capital Plan (Section 2), the WDC highlighted the importance of infrastructure for regional development where all regions need quality infrastructure to compete effectively. The WDC submission also noted;

  • The importance of long-term planning, as decisions made on infrastructure now have very long term impacts.
  • The need to invest to join existing networks together and complete ‘unfinished sections’. For example once the Gort-Tuam motorway is complete, the priority should then be to improve the outstanding sections between Tuam and Sligo to ensure a high quality road network.
  • Identify and utilise existing available capacity before considering new investments at congested sites. For example there is international air access capacity available at Shannon and Ireland West Airport Knock. Another example is to develop more attractive services on the rail network, which is a valuable transport asset with capacity to ease congestion on the road network and help us meet Ireland’s climate change obligations.
  • Develop inter-regional linkages. While connectivity to Dublin from most regions has improved considerably in the last decade, inter-regional connectivity is relatively poor. By improving inter-regional connectivity, such as improving the road network between the urban centres in the Mid-West, West and North West then the investment potential of the key urban centres there can be enhanced.

The WDC submission also notes the importance of appropriate appraisal and evaluation methods when considering alternative investment projects. The capital appraisal and evaluation methods determining the costs and benefits of different investment projects need to be re-examined. The traditional cost benefit approach will naturally favour the larger and often largest population centres as the impacts are likely to be felt by a greater number, wherever the project is being delivered. To realise better spatial balance, there will need to be a change to the conventional appraisal and evaluation methodologies which are typically used to determine what projects proceed. The impact on the wider spatial balance of the country should be factored in.

In the section examining the prioritisation of Capital Expenditure and Selection of Projects/Programmes in current Capital Plan (Section 3), the WDC focused on the infrastructure areas it considers critical for Western development.

Key priority infrastructural investments include:

  • Funding to deliver and complete the National Broadband Plan as soon as possible to ensure high speed broadband for all.
  • National primary road improvements including N4, N5, N6, M17, M18, incorporating the Atlantic Road corridor.
  • National secondary roads see WDC Submission for specific priorities.
  • There is a need to increase regional and local roads funding to allow road maintenance programme to be enhanced.
  • The importance of Bus services and the Rural transport programme to citizens in the Western Region is highlighted.
  • Continue investment is needed to support increased rail frequencies and service levels on routes serving the Western Region.
  • Ongoing support for improvements and access to Ireland West Airport Knock and Shannon.
  • Investment in the electricity network and natural gas infrastructure is made through the commercial state sector, but it should be co-ordinated and monitored through the Capital Investment Plan.
  • Apart from completing all energy commitments in the Capital Plan there should be investment to connect to the natural gas grid at Athenry, Ballyhaunis and Knock, all three of which qualified for connection in 2006.

In Section 4, Long-term Capital Investment Framework (10 years), the WDC Submission examines the longer-term considerations needed for effective capital investment. The WDC believes that capital investment which is by its nature long-term investment should be undertaken within the context of a longer term planning framework as is proposed in the National Planning Framework 2040. The WDC has made a detailed submission to the NPF (4.5 MB) consultation conducted by the Department of Housing, Planning, Community and Local Government.

Other considerations include:

Capital spending on new infrastructure should focus on supporting better spatial balance as well as supporting those citizens and that part of the country which is relatively poorly served. Quality infrastructure is one of the necessary conditions for regional development.

Investment in road infrastructure to join existing networks together and complete ‘unfinished sections’. For example in the West/North West. These are often infrastructure requirements needed to satisfy current as well as future demand.

As outlined previously, the state should capitalise on the capacity already available and ‘sweat’ the state investment already made, such as in transport, for example the rail network and the international airports with spare capacity such as Shannon and Ireland West Airport Knock. Other examples include educational infrastructure (Institutes of Technology), Health facilities and Housing.

Policy will also influence the infrastructure investments needed. The need to lower carbon emissions will help influence infrastructural investments (for example supporting cleaner transport modes).

Another consideration is to enable greater policy integration and joined up investment decisions across all sectors, for example planning, employment and transport policy sectors, which are proven to help to make sustainable and active travel more attractive alternatives to the private car.

A good example is the benefits which could be realised through increased e-Working, see WDC Policy Briefing No.7 (748 KB) which can reduce transport demand, traffic congestion and emissions. It has been estimated that if just 10% of the working population of 2.1 million were to work from home for 1 day a week, there would be a reduction of around 10 million car journeys to work per annum[1]. Benefits arising from higher broadband speeds and greater levels of e-Working include time savings, enhanced communications, increased sales and productivity gains[2]. To promote greater take-up, e-Work needs to be prioritised as a policy objective and a cross departmental approach is required. Lead departments would include the Department of Jobs, Enterprise and Innovation and the Department of Communications, Climate Change and Environment.

The WDC Submission is available for download here (4 MB).

Deirdre Frost

[1]Department for Transport, Smarter Travel: A Sustainable Transport Future, A New Transport Policy for Ireland 2009-2020 http://www.smartertravel.ie/sites/default/files/uploads/2012_12_27_Smarter_Travel_english_PN_WEB%5B1%5D.pdf#overlay-context=content/publications. p.35

[2] Indecon International Economic Consultants, July 2012. Economic / Socio-Economic Analysis of Options for Rollout of Next Generation Broadband. Analysis undertaken on behalf of the Department of Communications, Energy and Natural Resources (DCENR) as part of the Government’s National Broadband Plan, 2012. http://www.dccae.gov.ie/communications/SiteCollectionDocuments/Broadband/National%20Broadband%20Plan.pdf

Key Issues for the National Planning Framework – Submission from the WDC

The WDC  made its submission on Ireland 2040 – Our Plan: National Planning Framework   yesterday.  The Issues and Choices paper covered a wide range of topics from national planning challenges to sustainability, health, infrastructure and the role of cities and towns.  A key element of the paper considered the future in a “business as usual” scenario in which even greater growth takes place in the Dublin and Mid East region with consequent increased congestion and increasing costs for businesses and society, while other parts of the country continue to have under-utilised potential which is lost to Ireland.  The consultation paper therefore sought to explore the broad questions of alternative opportunities and ways to move away from the “business as usual” scenario.

The WDC submission considers these issues from the perspective of the Western Region, the needs of the Region, the opportunities its development presents for Ireland’s economy and society as a whole and the choices, investments and policy required to achieve regional growth and resilience.

This post highlights the key points made in the submission.  The complete, comprehensive submission on the National Planning Framework by the WDC can be read here (4.5MB PDF).  A shorter summary is available here (0.7MB PDF).

 

What should the NPF achieve?

  • The National Planning Framework (NPF) provides Ireland with an opportunity to more fully realise the potential of all of its regions to contribute to national growth and productivity. All areas of Ireland, the Capital and second tier cities, large, medium and small-sized towns, villages and open countryside, have roles to play both in the national economy and, most importantly, as locations for people to live.
  • While spatial planning strives for ideal settlement or employment patterns and transport infrastructure, in many aspects of life change is relatively slow; demographics may alter gradually over decades and generations and, given the housing boom in the early part of this century, many of our existing housing units will be in use in the very long term. If the NPF is to be effective it must focus on what is needed, given current and historical patterns and the necessity for a more balanced pattern of development.
  • To effectively support national growth it is important that there is not excessive urban concentration “Either over or under [urban] concentration … is very costly in terms of economic efficiency and national growth rates” (Vernon Henderson, 2000[1]). Thus it is essential that, through the NPF, other cities and other regions become the focus of investment and development.

Developing Cities

  • As the NPF is to be a high level Framework, in this submission the WDC does not go into detail by naming places or commenting on specific development projects, as these will be covered by the forthcoming Regional Spatial and Economic Strategies (RSES). The exception to this, however, is in relation to the need for cities to counterbalance Dublin.  In this case we emphasise the role of Galway and the potential for Sligo to be developed as the key growth centre for the North West.
  • The North West is a large rural region and Sligo is the best located large urban centre to support development throughout much of the North West region. With effective linkages to other urban centres throughout the region and improved connectivity, along with support from regional and national stakeholders, Sligo can become a more effective regional driver, supporting a greater share of population, economic and employment growth in Sligo itself and the wider North West region.

Developing Towns

  • While the NPF is to be a high level document and the focus is largely on cities it is important not to assume that development of key cities will constitute regional development. All areas need to be the focus of definite policy, and the NPF should make this clear.
  • While cities may drive regional development, other towns, at a smaller scale, can be equally important to their region. Recognising this is not the same as accepting that all towns need the same level of connection and services.  It is more important to understand that the context of each town differs, in terms of distance and connectivity to other towns and to the cities, the size of the hinterland it serves and its physical area as well as population.  Therefore their infrastructure and service needs differ.
  • Towns play a central role in Ireland’s settlement hierarchy. While much of the emphasis in the NPF Issues and Choices paper is on cities and their role, for a large proportion of Ireland’s population small and medium-sized towns act as their key service centre for education, retail, recreation, primary health and social activities.  Even within the hinterlands of the large cities, people access many of their daily services in smaller centres.  The NPF needs to be clear on the role it sees for towns in effective regional development.

Rural Areas

  • Rural areas provide key resources essential to our economy and society. They are the location of our natural resources and also most of our environmental, biodiversity and landscape assets.  They are places of residence and employment, as well as places of amenity, recreation and refuge.
  • They are already supporting national economic growth, climate action objectives and local communities, albeit at a smaller scale than towns and cities. But a greater focus on developing rural regions would increase the contribution to our economy and society made by rural areas.
  • The key solution to maintaining rural populations is the availability of employment. It is important that the NPF is truly focused on creating opportunities for the people who live in the regions, whether in cities, towns or rural areas.

Employment and Enterprise

  • In the Issues and Choices paper a narrow definition of ‘job’, ‘work’ and ‘employer’ as a full-time permanent employee travelling every day to a specific work location seems to be assumed. This does not recognise either the current reality of ‘work’ or the likely changes to 2040. Self-employment, the ‘gig’ or ‘sharing’ economy, contract work, freelancing, e-Working, multiple income streams, online business are all trends that are redefining the conceptions of work, enterprise and their physical location.
  • If the NPF mainly equates ‘employer’ with a large IT services or high-tech manufacturing company, many of which (though by no means all) are attracted to larger cities, then it will only address the needs of a small proportion of the State’s population and labour force.
  • Similarly the NPF must recognise the need to enable and support the diversification of the Irish economy and enterprise base. It must provide a support framework for indigenous business growth across all regions and particularly in sectors where regions have comparative advantage.

Location Decisions

  • While job opportunities are a critical factor in people’s decision of where to live, they are by no means the only factor. Many other personal and social factors influence this decision such as closeness to family (including for childcare and elder care reasons), affordability, social and lifestyle preferences, connection to place and community.
  • Many people have selected to live in one location but commute to work elsewhere or, in some cases, e-Work for a number of days a week. The NPF needs to recognise the complexity of reasons for people’s location decisions in planning for the development of settlements.

Infrastructure

  • New infrastructure can be transformative (the increase in motorway infrastructure in recent decades shows how some change happens relatively quickly). Therefore it is essential that we carefully consider where we place new investments.  To do so, capital appraisal and evaluation methods determining the costs and benefits of different investment projects need to be re-examined if we are to move from a ‘business as usual’ approach.
  • Investment in infrastructure can strongly influence the location of other infrastructure with a detrimental impact on unserved locations. The North West of the country is at a disadvantage compared to other regions with regard to motorway access. This situation will be compounded if investment in rail is focused on those routes with better road access (motorways) in order for rail to stay competitive, or if communications or electricity networks are developed along existing motorway or rail corridors.
  • The WDC believes that the regional cities can be developed more and have untapped potential, however better intra-regional linkages are needed. The weaker links between the regional centres – notably Cork to Limerick and north of Galway through to Sligo and on to Letterkenny, are likely to be a factor in the relatively slower growth of regional centres in contrast to the motorway network, most of which serves Dublin from the regions.

Climate Change

For the future, the need to move to a low carbon, fossil fuel free economy is essential and needs to be an integral and much more explicit part of the NPF.  The National Mitigation Plan for Climate Change is currently being developed, and it is essential that actions under the NPF will be in line with, and support, the actions in the Mitigation Plan.

How should the NPF be implemented?

  • While much of the role of the NPF is strategic vision and coordination of decision-making, in order for the Framework to be effective it is essential that the achievement of the vision and the actions essential to it are appropriately resourced. The Issues and Choices paper does not give a detailed outline of how the NPF implementation will be resourced, except through the anticipated alignment with the Capital Investment Programme.
  • It should be remembered that policy on services and regional development is not just implemented through capital spending but also though current spending and through policy decisions with spatial implications (such as those relating to the location of services). Therefore it is essential that other spending, investment and policy decisions are in line with the NPF rather than operating counter to it.
  • While the NPF is to provide a high level Framework for development in Ireland to 2040, it seems this Framework is to be implemented at a regional level through the RSES. The Framework and the Strategies are therefore interlinked yet the respective roles of the NPF and the RSES are not explicit and so it is not evident which areas of development will be influenced by the NPF and which by the RSES.
  • In order to ensure that the NPF is implemented effectively it is important that there is a single body with responsibility for its delivery and that there is a designated budget to help achieve its implementation.

 

It is expected that a draft National Planning Framework document will be published for consultation in May.  Following that a final version of the Framework will be prepared for discussion and consideration by Dáil Éireann.

 

As mentioned above the full WDC submission on the Issues and Choices paper Ireland 2040 Our Plan- A National Planning Framework is available here (PDF 4.5MB) and a summary of key point and responses to consultation questions is available here (PDF 0.7MB).

 

 

Helen McHenry

[1] http://www.nber.org/papers/w7503

New WDC Publication: WDC Policy Briefing No.7 e-Working in the Western Region: A Review of the Evidence

The Western Development Commission (WDC) has published its latest Policy Briefing WDC Policy Briefing No.7 e-Working in the Western Region: A Review of the Evidence, which is now available for download at the following link here.

e-Work is a method of working using information and communication technology in which the work is not bound to any particular location. Traditionally this has been understood as working remotely from the office, usually from home, whether full-time or for a period during the working week. e-Working can provide particular opportunities in regions like the Western Region where many are living some distance from key employment centres.

The WDC Policy Briefing, which includes case studies from companies and individuals, examines:

  • The extent of e-Working.
  • The way in which weaker broadband access in more rural locations impacts on the rate of e-Working.
  • Factors driving e-Work.
  • Recommendations on how e-Working can be further promoted.

This Policy Briefing shows that e-Working is a widespread practice but somewhat hidden from official statistics. It also shows that while there is demand for greater e-working, broadband speeds need to be improved.

The WDC Policy Briefing contains recommendations to support more e-Working, including priority rollout of the National Broadband Plan to those counties with the lowest broadband speeds. Additional case studies are also available for download from here.

Deirdre Frost

2017 – A very important year for Broadband and the National Broadband Plan

2017 – Contract Signing and Build Commencement

2017 is the year when contracts are to be awarded to one or two telecommunications companies to rollout a high speed broadband network as part of the much awaited National Broadband Plan.

For those companies and citizens across regional and rural Ireland trying to operate with very basic broadband services, this is a really important milestone. Not only will it signal the start of an actual physical build out of the network, it will also provide some reassurance that Government policy is actually starting to deliver.

It had been expected that contracts would be signed in June 2017, though late last year the bidders (there are three), indicated they may need more time to prepare their bids. See Dáil Q&A.

Notwithstanding the scale of the project and process, the bidders have had years to prepare for this bid and it is imperative that contracts are awarded and the build commences. Rural businesses have had to endure poor services for too long and in a global marketplace where online connectivity is a basic pre-requisite, rural businesses have to work harder than their urban counterparts to stay in business. Recent research highlights the significance of broadband infrastructure compared to other infrastructure in supporting local enterprises and their development.

Report of the Mobile Phone and Broadband Taskforce

In the meantime, just before Christmas 2016, the Report of the Mobile Phone and Broadband Taskforce was published. This report seeks to address the gaps in the current delivery of telecoms infrastructure and is focused more on addressing improvements in the short term, in addition and separate to the National Broadband Plan which is over a longer time frame.

This is a very welcome initiative, not least because there is a lot of dissatisfaction with mobile phone coverage, especially in rural areas. Also, anything that can ‘fill gaps’ in existing broadband provision should be progressed, as even when contracts for the NBP are signed, some will be waiting years for the planned new broadband infrastructure.

There are 40 actions aimed at assisting the rollout of mobile services and high speed broadband, to homes and businesses. These include measures to streamline planning procedures for telecoms infrastructure, actions to build out new ducting along the M7/M8, and measures to help consumers directly.

Key actions include:

  • The Department of Communications, Climate Action & Environment will work with telecoms operators and ComReg (Commission for Communication Regulation) to identify mobile blackspots and come up with measures to address these blackspots.
  • All local authorities are to assign a Broadband officer who will act as a single point of contact for engagement with telecommunications operators building out infrastructure.
  • ComReg will develop and publish a new network coverage map, and develop a testing regime to measure the performance of mobile phone handsets which will help people to make informed choices on products and services they purchase.
  • There will be a new licensing regime to allow people to install high quality signal repeaters on their buildings – homes and businesses, which will boost their connectivity.
  • Work on building 95km of duct along the M7 / M8 Motorway, which will complete the ducting on the Cork-Dublin route is being undertaken by Transport infrastructure Ireland.
  • From Q1, 2017, all Local Authorities will apply waivers in respect of development contributions for telecoms infrastructure developments.
  • Other key actions include the review and updating of the relevant statutory planning guidelines to ensure consistency by local authorities, and the introduction of an online system to streamline the planning application process.

Spectrum Developments

  • ComReg expects to allocate spectrum in the 3.6GHz band in 2017. This will release an additional 86% of spectrum capacity, allowing fixed wireless and mobile operators to deliver services.
  • It is expected that by 2020 the 700MHz spectrum band is to be made available for use by the telecoms sector which will be particularly important in rural areas.

Finally, there is to be an Implementation Group established which is to drive and monitor the implementation of these actions.

 

For rural users, in the Western Region and across the country, lets hope 2017 will see delivery of these actions, that NBP contracts are awarded and the building of the National Broadband Plan Network commences.

Deirdre Frost

E-Work and New ‘Work’

In a previous blog post, E-Working – what are the trends? I examined the data available on e-work, also termed tele-working. Much of the data, especially the trend data available from the Census, only measures those workers who work ‘mainly at or from home’ and as discussed this only captures a small element of the workforce which we know, frequently work from home.

Capturing the extent to which people e-work is related to how the question is phrased; so for example if the Census question was changed, to ask whether a person worked on one or even a ½ day per week basis, it is likely to significantly increase the number reporting that they are e-workers.

Rural E-working

A recent report commissioned by Vodafone and conducted by Amárach Research, Connected Futures (3.8MB) examined the extent to which broadband has influenced those working in rural Ireland. The research found that nearly one in four broadband users in rural Ireland uses the internet at home in relation to their work (about 430,000 people). Among those remotely accessing work from home, most use the internet to check email and organise their work diary. Nearly half use the internet at home to work on reports and presentations. These e-workers report that with internet access, they can avoid commuting to work, which the research indicates typically occurs about two days a week.

Entirely Home-based E-work

The use of communications technology and more importantly its widespread availability at home has allowed new forms of work to emerge.

An early use of home-based working which is conditional on the availability of a minimum level of broadband speed has been the outsourcing of work where the employee is entirely home-based. For example Amazon and Apple were reported as requiring applicants to have a minimum 5Mbps download speed for home based customer support jobs. This and the need for universal high speed broadband is discussed in the WDC Report, Connecting the West, Next Generation Broadband in the Western Region (Low Res 1.5Mb).

Enforced Flexibility

A new report, published last week by TASC, Enforced Flexibility? Working in Ireland Today, (609kb) discusses an emerging practice where employees work entirely from home, though not by employee choice. For at least one of the high tech multinationals an emerging practice is to place some of their customer service workers in their own homes.  While traditionally the choice to work from home was perceived as a positive option, in this case the decision was made by the organisation rather than the individual: it was not an option as there was no possibility of working in an office. (p.62).

E-working has generally been considered in a positive light from the employee perspective, enabling more flexibility in working hours which can be more family friendly, reduced commuting time as well as fuel and carbon savings. However the TASC report notes that e-working which is wholly and entirely conducted from home, without the option of working in an office may not offer the same degree of flexibility. Constantly online during their shifts they were subject to the same tight supervision as those based in a traditional call centre environment. While it is difficult to establish what proportion of customer service workers now work in this way, there is evidence that the numbers are growing (p.62). In some instances these employees are self-employed contractors even though they are entirely contracted to the one employer.

The ‘Gig economy’

Measuring the extent of e-work is further complicated by the changing nature of work. The evolution of communications technology which has enabled the increased possibility of e-work, has evolved even further to allow new forms of ‘work’ to emerge.

Broadband and online platforms have allowed the development of new types of work and service delivery variously termed the ‘gig economy’, ‘sharing economy’, ‘crowd working’ and ‘uberisation’. Previously ‘gigs’ were how musicians earned a living, now the ‘gig economy’ includes all those who rent out their property, possessions or services for a fee, all of which is managed online!

The ‘gig economy’ is another form of e-work as it relies on electronic communication, though with the increasing use and availability of smartphones and mobile broadband this type of e-work is often less tied to a fixed location, whether this is at home or elsewhere. The ‘gig economy’ can also be seen as entrepreneurial, allowing individuals to initiate a process of selling goods or services and increasing the potential for self-employment.

Much of this type of work and service delivery is likely to be more developed in large urban centres, with significant critical mass. So far, within Ireland, Uber is just in Dublin and Cork – though the IDA announced a significant jobs announcement by Uber  in Limerick earlier this year.

However while parts of the ‘gig economy’ are urban driven, it is by no means exclusive to it. Airbnb can operate anywhere and maybe very popular in more rural areas with more limited supply, especially in high season.

As a type of employment, the ‘gig economy’ has raised questions about workers’ rights and protections such as guaranteed income, health care and pensions. Hillary Clinton, US Presidential candidate, when outlining her economic plan noted, This on-demand, or so called gig economy is creating exciting economies and unleashing innovation. But it is also raising hard questions about workplace protections and what a good job will look like in the future.

Evidence of the ‘Gig Economy’

To what extent the ‘gig economy’ is changing the nature of work is not clear. Some argue that while more are choosing to earn income from this ‘gig economy’, it is not clear whether this is in the absence of another job or to supplement existing paid employment?

Research undertaken by the University of Hertfordshire has tried to quantify the extent of the ‘gig economy’ in both the UK and Sweden.

The research found that in the UK around 5 million people are engaged in the ‘gig economy’. In the UK online survey 21% say they have tried to find work managed via so called ‘sharing economy’ platforms such as Upwork, Uber or Handy during the past year, equivalent to around 9 million people or almost one fifth of the adult population. Around 1 in 10 (11%) of respondents said they had succeeded in doing so, equivalent to around 4.9 million people.

Almost a quarter (24%) of UK women responding to the survey claim to have sought work via online platforms, and one third (33%) of 25-34 year olds.

3% of respondents claim to find paid work via online platforms at least once a week, equivalent to around 1.3 million adults, with 4%, or around 1.8 million finding work at least once a month.

Main source of income or a supplement?

A quarter of all those workers in the ‘gig economy’ say they rely on this income as their sole or main source of income.

Only 10% of those workers in the ‘gig economy’ were students, a proportion that dropped to 6% among those working in the ‘gig economy’ weekly. This is in line with the general proportion of students in the adult population of the UK (at around 8%).

The range of work is extremely broad, from high-skill professional work at one extreme to running errands at the other. The most common type of work, undertaken by more than two thirds is office work, short tasks and ‘click work’ done online. However a significant proportion are doing professional work, creative work, providing taxi services or a range of other services in people’s homes.

Where is the ‘Gig economy’?

From a geographic perspective, the largest numbers are in England with one in five based in London, just under a quarter each in the South, the Midlands and the North with 7% in Scotland and 3% in Wales. This reflects the general distribution of the UK population.

The Swedish online survey found a similar pattern to the UK survey. In Sweden 12% are working in the so-called ‘sharing economy’ for platforms such as Upwork, Uber or Skjutsgruppen, equivalent to around 737,000 people. Twice as many people (24%) used such sites in the hope of finding work – equivalent to almost a quarter of the working age population.

Conclusions

E-work can describe a variety of employment types ranging from ‘traditional work’ conducted at home or on the move, through to occasional engagement in online activity to generate additional income.

This can include a traditional employment relationship between an employee and an employer with the employee working from home possibly one or two days per week. It can also include the ‘new’ types of work and service delivery associated with the gig economy’, where people are often self-employed.

E-working of all types and the more recent growth in online platforms which has enabled new forms of income generation are all dependent on the widespread availability of broadband. The research to-date indicates that this type of employment and income generation is a very significant and growing element of the economy and labour market. The evidence cited from rural areas suggest that online participation for work is as prevalent, if not more so than in urban areas. This reinforces the need for the universal availability of quality broadband, another reason for the speedy rollout of the Government’s National Broadband Plan.

Deirdre Frost