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Transport, Aviation, Ten-T and Project Ireland 2040

Submission to Review of TEN-T

The Department of Transport has recently published its submission to the European Commission on proposed revisions of the TEN-T network see here.

The Department advocate for the inclusion of the Atlantic seaboard region of Ireland on the TEN-T Core Network, which the WDC welcomes. In his submission, Minister Ross provides the national policy context, in particular noting the overarching objectives of Project Ireland 2040.

We need to manage more balanced growth … because at the moment Dublin, and to a lesser extent the wider Eastern and Midland area, has witnessed an over concentration of population, homes and jobs. We cannot let this continue unchecked and so our aim is to see a roughly 50:50 distribution of growth between the Eastern and Midland region, and the Southern and Northern and Western regions, with 75% of the growth to be outside of Dublin and its suburbs[1].

One of the key objectives of the NPF is to move away from ‘business as usual’ and to redirect growth to other areas. In making the case for inclusion of the Atlantic seaboard region of Ireland in the Ten-T Core Network, Minister Ross also notes the adverse impacts of Brexit noting that,

Continued EU support for transport investment projects in Ireland will become even more important in the context of Brexit, after which our peripheral location on the western point of Europe will leave us even more isolated from other EU Member States. While Project Ireland 2040 aims to highlight the actions, including capital investment, required to strengthen the Northern and Western Regions and mitigate the adverse effects of the UKs exit from the EU which are expected to impact disproportionately on this area, its inclusion on the Ten-T Core Network would result in further Irish projects being eligible to apply for Connecting Europe Facility (CEF) funding, thereby contributing to the balanced development of our regions….

Policy and funding alignment

While the WDC welcomes the views expressed by the Department of Transport in relation to inclusion of the Atlantic seaboard region in the Ten-T Core network, in reality, for funding to follow from Europe, the Department of Transport needs to prioritise funding for Atlantic Economic Corridor Transport projects. So, for example the Capital Investment Plan allied to the NPF identifies transport projects for investment in the AEC region but many of these are not planned to occur until towards the end of the 10-year period, unlike other projects which are prioritised in the next few years.

The WDC have argued following publication of the NPF 2040, that if sectoral policies are not aligned to support the objectives of Ireland 2040 then Ireland 2040 is likely to fail. The National Aviation Policy (2015) predates the publication and consideration of Ireland 2040. The National Aviation Policy can be seen to unduly reinforce the dominance of the larger airports (Dublin in particular).  Now that the NPF is Government Policy, the National Aviation Policy should be reviewed and reassessed in light of the overarching objectives of the NPF and the need to ensure sectoral alignment. In the absence of such reviews it is difficult to see how development can move away from a ‘business as usual’ approach and how the NPF can achieve its targets. It is sectoral planning and policy that is the real driver of spatial and regional development.

 Aviation trends

As the WDC pointed out in its Submission on Future Airports Capacity Needs at Ireland’s State Airports see here, the West and North West region in particular has relatively poor accessibility by air, which is the preferred transport mode for international access.

The CSO Aviation statistics, Quarter 4 and year 2018, see here, highlight the trend of the increasing concentration of air passengers travelling through Dublin airport compared to other airports. For example, in 2014, Dublin accounted for 81.9% of all passengers (Total = 26.5 million), compared to 85.6% in 2018 (Total = 36.6 million). This represents an increase of 9.6 million passengers in 4 years, a 44.2% increase. So along with a significant increase in total air passenger numbers, there is an ever-increasing share travelling through Dublin airport.

This ever-increasing concentration is of concern to those supporting exporters. For example, the

IEA submission to the Draft National Planning Framework noted that of those IEA members surveyed who use airports to export, 81% use Dublin airport predominantly as their primary route to ship goods out of Ireland. 15% said that this was not the closest airport geographically. Members surveyed said that they would use a different Irish airport as their primary route to ship goods from Ireland if:

  • There were more frequent flights from another airport – 36%
  • Road networks between primary distribution centre and another airport were improved – 23%
  • Another airport was upgraded – 14%

The implementation of hub connectivity from the west of Ireland directly into Heathrow or another European hub airport (example Schiphol or Frankfurt) would significantly enhance business connectivity and attractiveness to locate in the west of Ireland[2].

The WDC considers that with Dublin Airport, operating at or near capacity, cost-efficient and accessible alternatives to Dublin are required. Shannon and Ireland West Airport Knock are important transport centres enabling the international success of businesses in Ireland’s West and North West.

The WDC believes that there needs to be consideration of how the other State airports, in particular Shannon (given the remit of the WDC) can be more effectively supported through policy changes to deliver on the regional growth targets of the NPF.

 Role of ‘Regional Airports’

Similarly, the WDC believe that the role of regional airports has to be reviewed in light of the NPF and its regional population and employment targets. The Department of Transport is currently conducting a consultation on the Preparation of new Regional Airports Programme 2020 to 2024.

The Regional Airports Programme provides for funding to regional airports to help them deliver on their goal as outlined in the National Aviation Policy. Recognising the relative difficulty which smaller airports have in both meeting operating costs and attracting and retaining air services, the Department provides support under different funding mechanisms. These funding schemes are governed by EU guidelines on State aid some of which apply to airports handling up to 3 million passengers per year.

As the consultation document highlights, all regional airports are not equal! While passenger numbers at all four regional airports are less than 1 million annually, three of four have less than 400,000. The exception is Ireland West Airport Knock which has had annual passenger numbers in excess of 700,000 for the last three years. This is because Ireland West Airport Knock essentially serves the same purpose for its region (the North West) as the State airports perform in the Mid-West, South-West and East respectively. National aviation policy needs to fully recognise the international transport function Ireland West Airport Knock provides, ensuring direct international air services to a region much of which is not in the catchment of the other international airports, Dublin, Cork and Shannon.

The WDC believes that the road improvements planned for the North West will help support greater traffic through Ireland West Airport, which in turn will allow Ireland West Airport Knock perform a key role in supporting the Government’s wider/broader policy objectives of delivering the population and employment targets for the Northern & Western Region under Project Ireland 2040. The road improvements must be prioritised.

Similarly, Shannon Airport with passenger numbers under 3 million (and therefore eligible for capital support without prior EU State approval) can help deliver the objectives of Project Ireland 2040, to enable the cities of Limerick and Galway on the Western seaboard, to each grow by at least 50% to 2040 and to enhance their significant potential to also become cities of scale[3].

All sectoral policy areas, in this case – EU TEN-T, National Aviation Policy and the Regional Airports Programme – highlight the importance of an overarching policy framework, to which all other policies should be aligned in so far as possible. Without alignment, delivery on the overarching policy objective of Project Ireland 2040, is unlikely.

 

Deirdre Frost

 

[1] Project Ireland 2040, NPF, 2018, p.11

[2] http://npf.ie/wp-content/uploads/0725-Irish-Exporters-Association.compressed.pdf

[3] https://www.gov.ie/pdf/?file=https://assets.gov.ie/166/310818095340-Project-Ireland-2040-NPF.pdf#page=1 p.22.

Transportation & Storage Sector in the Western Region

The Western Development Commission (WDC) has just published the last in its ‘Regional Sectoral Profiles’ series which analysed the most recent employment and enterprise data for the Western Region on specific economic sectors and identified key policy issues.[1]

The final report examines the Transportation & Storage sector.  This includes activities such as taxis, bus companies, airlines and airports, haulage firms, couriers and services for the transportation sector.  Although it is among the smallest direct employers in the region, it’s significance to the regional economy and society is considerably greater, given its vital role in facilitating business activity, as well as providing services to individuals and communities.  Two publications are available:

Employment in Transport & Storage

According to Census 2016, 10,758 people worked in Transport & Storage in the Western Region.  Transport & Storage plays a smaller role in the region’s labour market than nationally (Fig. 1), accounting for 3.2% of total employment in the region compared with 4.0%. One of the reasons is the high concentration of this sector in Dublin due to the presence of Dublin Airport, Dublin Port, Dublin Bus and the headquarters of airlines and national transport companies

Among western counties, Clare has by far the highest share working in Transport & Storage (5.2%).  This is clearly due to the presence of Shannon Airport and Clare has the fourth highest share of its employment in this sector in Ireland.[2]  Roscommon has the next highest share in the Western Region, likely due to its very central location and the activities of logistics operations. At just 2.2% of total employment, Galway City has the lowest share working in the sector in the region and also in the state.

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

There was 4.5% jobs growth in the sector in the region between 2011 and 2016, higher than the 4.0% growth nationally.  Jobs growth in Transport & Storage was driven by a number of factors including increased demand from commercial clients as business activity recovered and evolving processes demanded more complex logistics and increased consumer and tourism spending. Growth in this sector was lower than overall jobs growth in the region (7.5%) however.

Transport & Storage sub-sectors

‘Postal, Courier, Warehousing & Cargo’ is the largest sub-sector in the Western Region (27% of total employment in Transport & Storage), and accounts for a higher share than nationally (23.8%).  The next largest is ‘Road Freight’ which is also more important in the region (21.2% v 18.4%). This illustrates the importance of the logistics sector in the region, which may not be surprising given its distance from the main international entry and exit points of Dublin Airport and Dublin Port.

In Clare, ‘Other Transport & Storage & Services’, which would include aviation services around Shannon, is the largest sub-sector while for Galway City ‘Taxi operation’ is largest with taxis being far more common in the city than elsewhere.  In Donegal ‘Road Freight’ is the biggest sub-sector and given the potential impact of Brexit on haulage, this is an issue of concern.  For all other western counties ‘Postal, Courier, Warehousing & Cargo’ is largest.

In the region, the strongest jobs growth (2011-2016) was in ‘Road Freight’ with employment increasing by 20% in the region, higher than the 15.9% growth nationally.  Only one sub-sector saw a decline with a 29.2% fall in the number working in ‘Taxi operation’ in the region.  Following growth in taxi numbers with de-regulation, over-supply of taxis in certain areas and increased alternative job opportunities with economic recovery, led to people leaving taxi driving.

Gender pattern and self-employment

Employment in this sector is highly male dominated with men accounting for 79.4% of the total Transport & Storage workforce in the Western Region.  Clare has the highest female share due to activity in aviation, while Donegal, where road freight is the largest activity, has the highest male share.

Of all those working in Transport & Storage, 20.1% are self-employed (employer or own account worker). This is higher than the region’s average rate of self-employment (18.3%).  Galway City (30.8%), Donegal (25.6%) and Sligo (23%) have the highest rates of self-employment and are also where ‘Taxi operation’ is most important.

There was an 18.3% decline in the number of self-employed working in Transport & Storage in the Western Region (2011-2016), the second largest decline of any economic sector.

Employment in western towns

When considering towns, commuting can be particularly important and it must be remembered that this data refers to residents of the towns, although some may travel to work elsewhere.

As may be expected from the previous sections, Shannon (10.8%) has by far the highest share working in the sector among towns in the Western Region (Fig. 2). Nationally, it has the fourth highest share working in the sector in Ireland with Newmarket-on-Fergus (9.5%) also in the top ten.[3] The towns with the next highest shares are also mainly in Clare.

Eight towns in the Western Region are among the bottom ten towns in Ireland in terms of the share working in Transport & Storage.  Six towns in the region have less than 2% of their employment in the sector.

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

Transport & Storage Enterprises

In 2017[4]  there were 3,291 Transport & Storage enterprises registered in the Western Region. This was 5.7% of total enterprises[5], well below the 7.6% share in the state.  The concentration of this sector around Dublin would be a factor in this pattern.

Galway[6], Sligo and Roscommon have the highest share of enterprises in the sector, though all well below the national average.  As noted above, ‘Taxi operation’ is most common in Galway and includes a large number of enterprises.  Differing from the pattern for employment however, Clare does not have a particularly high share of enterprises in the sector (5.5%) indicating it includes some large employers.

There was a 6.3% decrease in the number of Transport & Storage enterprises registered in the Western Region between 2012 and 2017 (Fig. 3).  This was a poorer performance than nationally where there was a 2.1% decline.  In both areas, the decline in the Transport & Storage sector contrasted with growth in overall enterprises.[7] Looking more closely at the data, there was the first sign of recovery in enterprise numbers between 2016 and 2017, so it could be expected that there has been some growth in the sector in more recent years.

All western counties had considerable falls in enterprise numbers in Transport & Storage, with Sligo and Mayo having the largest declines.  Roscommon and Clare, where the sector is most important as an employer, also had quite large falls in enterprise numbers.

Source: CSO, Business Demography 2017, Table BRA18.

Key Policy Issues

Smaller scale operations and high self-employment: Transport & Storage enterprises in the Western Region tend to be smaller in scale.  Self-employment in the sector declined as the economy recovered, largely due to a drop in the number of taxi drivers. Continuation of existing, and the development of new, initiatives and soft supports for sole traders and micro-enterprises is important to the future of the Transport & Storage sector in the region.

Responds to and facilitates economic growth: This sector depends on the level of activity in the domestic economy as this determines demand from commercial clients and private individuals.  As well as responding to economic growth, it also facilitates it e.g. by providing logistics services to business. Therefore, the presence of a strong Transport & Storage sector within the region, particularly given its peripheral location, is a key driver for regional economic growth.

Further development of the Western Region’s Airports: Shannon Airport plays a strategic national role in the transport sector.  In addition to transport services, there is considerable and growing activity in support services for the aviation industry.  At the same time, increasing international air access via Ireland West Airport Knock is important to improve accessibility for the West and North West.  The National Aviation Policy should be reviewed in order to further increase the role and capacity of these airports and reduce the dominance of Dublin Airport.

Brexit: The haulage and logistics sector will be among those most affected by Brexit.  The sector in Donegal potentially faces particular challenges.  It is important that the impact of Brexit be minimised and that haulage firms are supported in their efforts to adapt.  The Western Region’s peripheral location, and the role of the sector in facilitating wider economic activity, means this is of vital economic importance.

Opportunities in the logistics sector: Highly complex and integrated processes in manufacturing and retail increasingly rely on sophisticated logistics to minimise the time and cost of distribution and supply. In addition, the growth of online retail has greatly increased demand for postal and courier services. Given its central location, Roscommon has particular potential to further develop activity in this area.  Adaption to a low carbon economy is another area of opportunity for the freight sector.  

For more detailed analysis, download Transportation & Storage Sector in the Western Region: Regional Sectoral Profile and WDC Insights: Transportation & Storage Sector in the Western Region here

Pauline White

 

Photo The Shannon Group

[1] Previous Regional Sectoral Profiles are available here https://www.wdc.ie/publications/reports-and-papers/

[2] Fingal (8%), Meath (5.9%) and South Dublin (5.2%) have the highest shares, with Dublin Airport’s influence very clear.

[3] All other towns in the top ten are surrounding Dublin Airport.

[4] Data in this section is from CSO, Business Demography 2017

[5] Total enterprises includes all ‘business economy’ enterprises (NACE Rev 2 B to N(-642)) plus the sectors of Health & Social Work, Education, Arts, Entertainment & Recreation and Other Services.

[6] Business Demography data does not distinguish between Galway City and Galway County.

[7] As Business Demography data is not available for some sectors until 2015, changes over time are not based on ‘total enterprises’ but a sub-set of this called ‘business economy’ enterprises. This is sectors NACE Rev 2 B to N(-642) which is all economic sectors except Agriculture, Forestry & Fishing, Public Administration & Defence, Health & Social Work, Education, Arts, Entertainment & Recreation and Other Services.

Size matters: relative changes in regional economies

In the last post on this topic I examined some of the recent trends in regional GDP.  In this post, that analysis is continued, with a focus on the changing share of national Gross Value Added (GVA)[i] coming from each of the NUTS3 regions, regional size and productivity.

As ever, it is important to remember that regional GDP (and associated GVA) is just one measure of regional development and this measure has significant limitations.  It does not provide an indication as to the distribution of wealth between different population groups in the same region, nor does it measure the income ultimately available to private households in a region.  You can read more about this here.  In addition, other issues such as the relocation to Ireland by significant Multi National Enterprises (MNEs) of some or all of their business activities and assets (in particular valuable Intellectual Property) alongside increased contract manufacturing conducted abroad (which is included in Irish accounts), has clearly influenced shares of regional GVA and contributes to the widening disparity.  Despite these difficulties, however, it remains one of the most important regional economic statistics and is a key measure of regional development progress and it is useful to consider the contribution of the regional economies to the national total in more detail.

Unfortunately, as noted in the last post, data for both the South West and the Mid West have been suppressed by the CSO for confidentiality reasons (related to the very significant contribution to GVA by a small number of firms).  In this post these regions are combined into a region “Mid West & South West” for the purposes of discussion (with their combined statistics inferred from the data).  GVA at basic prices is the key statistic discussed here.

Regional Shares of GVA.

The Dublin region (39%) and the Combined Mid West & South West (35%) together account for almost three quarters of the Gross Value Added in the state (see Figure 1) with the Mid East, the next largest region producing 10%.  The Border and Midland regions account for the smallest part of national GVA, at 3% each.

Source: Source: CSO, 2019. Statbank, RAA06 Gross Value Addded by Year, Region and Statistic (2000-2016)

There has of course been very significant growth in GVA in recent years (especially in 2015, as discussed here) and, as much of this occurred in the South West, this has changed the balance of regional GVA with further concentration in the Mid West & South West.

Looking back to 2000 and 2008 the gradual change is evident.  In 2000 Dublin the Mid West and the South West together accounted for 68% of national GVA, in 2008 it was 66% and by 2016 it was 74%.  This is the consequence of very significant growth in the Mid West &South West economies (240%) between 2000 and 2016.  At the same time, GVA in the South East (164%), Dublin (149%) and the Mid East (138%) all more than doubled in size in that period.  Growth in the West (85%), Midlands (82%) and Border (69%) was significantly less.  The proportion of national GVA produced in these regions consequentially declined, although, as discussed in the previous post on this topic, their output did grow, just at a slower rate.

Source: Source: CSO, 2019. Statbank, RAA06 Gross Value Addded by Year, Region and Statistic (2000-2016)

This growth had two phases which can be seen when examining two different periods (2000-2008 and 2008-2016).  During the earlier period (2000-2008) GVA, grew in all of the regions, with the percentage growth highest in South East and Mid-East (Figure 3) and lowest in the Mid-West & South West and the West.  The Celtic tiger was an opportunity for regions to develop rapidly.  Since then (2008-2016) the Mid West & South West and the Dublin region have grown most rapidly.

Source: Source: CSO, 2019. Statbank, RAA06 Gross Value Addded by Year, Region and Statistic (2000-2016) –

The recovery from recession has been slower in the smaller regions, between 2008 and 2016 there was a decline in the size of GVA in the Border region, no growth in the Midlands and only an 8% increase in GVA in the West over the 8 year period.

Looking at the share of regional GVA over time (comparing the years 2000, 2008 and 2016) the consequences of the different growth levels is evident.  We can see (Figure 4) that between 2000 and 2008 the share of GVA from both Dublin and the Mid West & South West combined had reduced and the share from the South East, Mid-East and Midlands increased slightly.  Between 2008 and 2016 the very significant growth in GVA in the Mid West & South West increased the percentage share of the economy in that region to 35% while the share from all other regions consequently declined.

Source: Source: CSO, 2019. Statbank, RAA06 Gross Value Addded by Year, Region and Statistic (2000-2016) –

The West (which is all part of the Western Region) showed a very small decline in its percentage of national GVA (7.1% to 7.0%) while the Border (three of its five counties are in the Western Region) showed a small increase (4.9% to 5.1%) in the period 2000-2008.  Their percentage contribution declined further between 2008 and 2016, with the West accounting for 5% of GVA in 2016 and the Border 3%.

Size of Regions and Regional Economies

The size of the Dublin and the Mid-West & South-West economies is evident when we focus on regional GVA, but for a more balanced picture it is important to look at how these compare to the regional populations and persons at work.  The percentage of the State GVA, Population and Persons at work are shown in Figure 5 below.

Clearly Dublin (39%) and the Mid-West & South-West (35%) account for the highest proportions of GVA, but these regions also have the highest proportion of the population (Dublin 28%; Mid-West & South-West 25%) and the persons at work (Dublin 30%; Mid-West & South-West 27%).  Other regions are significantly smaller.  The Border region accounts for 3% of GVA, 9% of the population and 8% of the persons at work.  The West accounts for 5% of GVA, 10% of the population and 9% of the persons at work.

Source: CSO, 2019. Statbank, RAA06 Gross Value Addded by Year, Region and Statistic (2000-2016) –

There is a clear difference in shares of GVA compared to shares of both population and persons at work (which are quite similar in most region).

It is therefore useful to look more closely at productivity (GVA per person at work).  This is significantly higher in Dublin plus Mid East (these are combined for the purposes of discussion because many of the workers living in the Mid-East are contributing to the GVA of Dublin) and in the Mid West & South West (Figure 6).  GVA per person at work is lowest in the Border, West and Midland regions.  For the Midland region in particular, the commuting effect may be quite strong, workers living in the Midlands are producing GVA in Dublin but counted as persons at work in the Midlands

Source: CSO, 2019. Statbank, RAA06 Gross Value Addded by Year, Region and Statistic (2000-2016) –

The GVA per person at work in the Border and the West are significant lower than that for the state.  As discussed previously, other regions’ GVA has significantly benefited from the relocation to some regions by Multi National Enterprises (MNEs) of some or all of their business activities and assets alongside increased contract manufacturing which all contributed to the very significant growth in GDP and GVA in certain regions (and of course nationally) 2015 (see here for more discussion of this).

Productivity is also influenced by the sectors in each region.  Regions with more high value added enterprises (which are generating a larger margin between the final price of the product and the cost of inputs used to produce it[ii]) will tend to have higher GVA per worker.  The importance of different sector to regional economies is considered in the next post on this topic.

 

 

Helen McHenry

[i] GDP is Gross Domestic Product, GDP and GVA are the same concept i.e. they measure the value of the goods and services (or part thereof) which are produced within a region or country. GDP is valued at market prices and hence includes taxes charged and excludes the value of subsidies provided. GVA at basic prices on the other hand excludes product taxes and includes product subsidies. See background notes .

[ii] See here for more discussion of this issue

Our 5th Birthday! 5 years of the WDC Insights Blog

Five years ago today we published the first WDC Insights blog post.  This special anniversary post today is our 208th post.

As we noted in the celebration for our 200th post, the blog covers a wider range of topics from the impact of the famine on the Region’s population, to the analysis of economic and social issues for the Western Region.  We are delighted that the blog has given us an effective way to let you all know about our work and given us, the authors, the opportunity to explore issues we might not have otherwise considered.

In this short celebratory post we thought we should give you a little insight[1] into the workings of the blog and show you some of the other places where you can find our work.

About us

The WDC Insights blog is written by the Policy Analysis Team in the Western Development Commission.  There are three of us, Deirdre Frost, Pauline White and me, Helen McHenry.  Regular readers may have spotted that, while we all post on social and economic issues for the Western Region and for rural areas, we also have a few specialist areas. Deirdre, for example, is our telecoms and rail expert; Pauline posts on employment and enterprise; and I cover energy and low carbon issues.  These are just examples of some our work areas. We all cover specific issues relevant to different aspects of regional and rural development and , of course, have a particular focus on our seven county Western Region.

In general we rotate posting among the team, so we are all familiar with the three week deadline and the ‘what will I write about this week?’ question.   Sometimes it is obvious.  We may have completed or published some analysis, attended an interesting event or given a presentation.  Sometimes it is not so obvious.  The posts we write on these occasions, in retrospect, are often most fun to prepare, covering some issue important to the Region following something of particular interest to us, or analysing unusual data available at county level (something that still excites us!).  One great thing I have learned about those posts is that you never know when a piece of analysis will suddenly become relevant or useful.

Where to find our work

As the blog is a showcase for the work of the Policy Analysis Team at the Western Development Commission this is a good opportunity to highlight some of the other work we do which may be of interest.  All our work is on the website of the Western Development Commission www.wdc.ie and you can read more about the areas covered by the team here.

On the website we have statistics about each of the seven counties and the Western Region in our County Profiles.  The areas covered include:

  • Physical data (e.g. land mass)
  • Human Resource
  • Centres of Population
  • Education levels
  • Natural Resources
  • Employment
  • Local Sustainability
  • Tourism
  • Enterprises

 

So, if you want to know more about one of our seven counties (Donegal, Sligo, Leitrim, Mayo, Roscommon, Galway or Clare) or the Western Region itself, check out the County Profiles.

 

Publications

The best place to find our range of outputs in on the publications page of the WDC site which has all of our reports and papers and our submissions.

We produce a range of reports and papers including:

 

Submissions

We also make submissions to national policy consultations on an on-going basis to provide a Western Region perspective to national and regional policy making.  These are on the submissions page.  Recent submissions were on European Union guidelines for the development of the trans-European transport network, the options for the use of revenues raised from increases in Carbon Tax and to the Northern and Western Regional Assembly on the Draft of its Regional Spatial and Economic Strategy. See all of our submissions here

 

We hope that you continue to enjoy the blog and find our analysis useful and interesting.  Don’t forget that to be sure of getting our weekly posts you can follow the blog here.  You can also sign up to the WDC Insights Policy Mailing List for monthly updates on our work and publications or follow us on twitter where we are @wdcinsights.

In the meantime we are off to celebrate our five years of blogging!

 

Helen McHenry, Deirdre Frost and Pauline White

[1] Pun intended.

WDC submission to the Public Consultation on the development of the trans European transport network (TEN-T)

Introduction

Since 1993 the EU holds responsibility on infrastructure policy – in the fields of transport, energy and telecommunications. In the transport sector, Europe’s TEN-T policy aims to boost economic, social and territorial cohesion between all Member States and their regions. It aims to prevent obstacles to the free circulation of goods, services and citizens throughout the EU.

Developments over the last few years which impact on transport policy include;

  • Climate change
  • Automation
  • Digitalisation
  • Interconnection and interoperability
  • Brexit

As a result, the European Commission has decided to undertake a comprehensive evaluation of the guidelines for the development of the TEN-T and have undertaken a public consultation. The WDC submitted a response which is available for download on the Submissions page of the WDC website, see here.  In this blogpost we summarise some of the key points.

The importance of transport infrastructure policy at EU level

EU transport infrastructure policy is crucial to ensure that transport infrastructure & policy contributes to enhancing the connectivity & accessibility of outermost & peripheral regions.

In parts of the Western Region of Ireland, geographic peripherality is compounded by relatively poor transport infrastructure which militates against effective participation in the EU Single market. This will be exacerbated further after Brexit.

EU transport policy is critical to support the transport needs to peripheral island member states such as Ireland & its Western Region. The Irish Exporters Association has noted that the transport needs of exporters in the West & Mid-West would be better served by ports & airports located there.

What are the benefits if infrastructure policy is made at European level

One of the benefits will be to support, guide & enhance member states’ transport policy. In Ireland’s case some aspects need to be revised in order to support the broader policy framework of Project Ireland 2040. For example, the National Ports Policy (2013) & National Aviation Policy (2015) were devised well before publication of Project Ireland 2040 which seeks to balance growth more effectively across Irish regions & will need regional transport investment to enable this. This will require EU support for funding.

In view of the cross-border nature of transport infrastructure, policies & subsequent investments should be harmonized in order to address existing bottlenecks to keep the Union accessible and competitive. This is very important in view of Brexit for Rep. of Ireland and Northern Ireland.

A coordinated approach at EU level is the most effective way to address challenges such as the transition to a carbon-neutral economy & the subsequent investment in the required infrastructure.

Form of the TEN-T network

The comprehensive TEN-T network is not sufficiently connected with the core network since there still exist missing links. The current network also does not serve all EU regions, including the North Western region of Ireland, whose importance will grow in the face of Brexit and the uptake of renewable energies.

There is concern that designation on the Comprehensive network, compared to the Core, provides for less access to TEN-T funding. In the context of peripheral regions such as the Western Region of Ireland where there is a ‘need to ensure connectivity & accessibility of all regions in the Union’, it is important that designation does not alter the level of funding available.

The inclusion of Shannon and Ireland West Knock airports and ports such as Galway & Killybegs as nodes is important in the context of the Atlantic Economic Corridor which extends from Letterkenny/Derry south to Limerick & Kerry.

The EU Designation on the core TEN-T network, as currently defined on the island of Ireland, extends from Belfast to Dublin to Cork with a connection to Shannon Foynes port. Given its peripherality, the WDC would like to see the transport links north of Shannon Foynes, and particularly from Galway north to Sligo and Letterkenny (the Atlantic Economic Corridor – AEC) to be included in those TEN-T classifications which provides for the maximum sources of funding support from the EU.

There is a need to join existing networks together & complete ‘unfinished sections’. The priority should be to improve the outstanding road sections between Tuam & Sligo as this is a key element of the Atlantic Economic Corridor (AEC) and part of Irish Government policy. This network is even more important in the context of Border traffic and Brexit and the peripherality of the North west.

Also, the WDC urges the European Commission to take into consideration the added economic value of airports & ports, such Shannon & Knock airports & the further development of the Galway inner port & its future potential o to play a key role in the development of renewable energies and alternative fuels.

In the absence of investment, the relative standard of a transport network vis a vis another transport network which does attract funding is a relative disimprovement & therefore the region experiences a relative disadvantage in access. This should not be the effect of policy.

Infrastructure Use

The TEN-T guidelines specifically aim to achieve a better and more efficient use of existing and new infrastructure while increasing the benefits for the users.

Despite overall passenger growth, there is an ever-increasing share of passengers travelling through Dublin airport which is in part due to the investment in motorway access there. There is un-used capacity available for international access at Shannon & Ireland West Airport Knock which have received significant state support over decades. Improved services at these airports will reduce the need for residents in regional locations to avail of services at Dublin Airport which in turn will reduce journey numbers through an already congested Greater Dublin Area.

These airports provide efficient access both to & from the region to destinations in the UK, Europe and the US vital to supporting the various businesses across the region as well as tourism access. Shannon Airport is particularly important to the Limerick, Shannon and Galway regions and is the only airport on the Western seaboard with hub connectivity via London Heathrow. It also offers pre-clearance facilities to the US. The Irish Exporters Association has reported that exporters in the West & Mid-West would be much better served from the ports and airports there rather than at Dublin.

The Western Region’s many valuable marine assets are relatively under-developed. The port facilities at Galway & Killybegs & Sligo are critical to supporting potential in seafood products, tourism, amenity, ocean renewable energy & marine innovations for the lifesciences sector & need to be enhanced.

Freight facilities at ports, railway depots & interurban road/motorway junctions should be safeguarded & invested in. Brexit will likely lead to new freight transport routes which need to be supported.

Conclusions

Transport policy is an important tool of economic policy. In Ireland there is a Government policy commitment to rebalance growth away from ‘business as usual’ and to support greater population growth in the regions including the West & North West. For this to be achieved there needs to be investment in transport infrastructure especially along the Atlantic Economic Corridor. The WDC believes that EU support and TENT-T classification can help in delivering greater investment in transport infrastructure along this corridor.

In an Irish context there is an increasing concentration of traffic through Dublin Port and Airport which in turn demands additional new investment to allow expansion of services. Meanwhile there are port and airport facilities, as well as road and rail capacity with much spare capacity which could service existing and new demand.

EU policy should more effectively support member states to capitalise on the capacity already available and ‘sweat’ the state investment already made, such as the rail network, port facilities in the Western Region including Galway and the international airports such as Shannon and Ireland West Airport Knock.  This is especially as this is consistent & supportive of the overarching policy framework of Project Ireland 2040.

In view of Brexit, and potential ‘Third country status for the UK & Northern Ireland’, peripherality of Ireland should not become an obstacle and should not lead to a lack of competitiveness. The existing transport infrastructure across the WDC region, including the key ports, airports, the road and rail network should be recognized as an important contributor to enhancing the social, economic and territorial cohesion of the EU. The inclusion of these nodes and networks in the comprehensive network would provide access to funding need to develop infrastructure that enhances the accessibility and competitiveness of the Western region, Ireland, and ultimately, the Union.

Deirdre Frost

The Public Administration & Defence Sector in the Western Region

The Western Development Commission (WDC) has just published the 9th in its Regional Sectoral Profile series which analyse employment in different economic sectors in the Western Region.

And this one is of particular interest to us, as it’s the sector we work in!  The report examines the Public Administration & Defence sector which includes all those working in the civil service, local authorities and state agencies, as well as Gardaí, prison officers and the defence forces.  It does not include those working in Education[1], Health & Care[2] or ‘semi-state’ companies e.g. Bus Eireann.

Two publications are available:

Employment in the Western Region

According to Census 2016, 18,858 people worked in Public Administration & Defence in the Western Region.  It plays a somewhat greater role in the region’s labour market than nationally (Fig. 1) accounting for 5.6% of total employment compared with 5.3%.

There is considerable variation across western counties and at 8.4%, Roscommon has the highest share working in Public Administration & Defence in Ireland with Leitrim (7.9%) second highest and Sligo (7.5%) fourth. Donegal is also in the top ten nationally.  North Connacht and the North West have high reliance on the public sector to sustain employment, partly due to more limited job options in the private sector.  In addition to Public Administration & Defence, Sligo and Leitrim also have the highest shares in Ireland working in Health & Care while Donegal has the highest share working in Education.

In contrast, at just 3.6% Galway City has the lowest share of its residents working in Public Administration & Defence in Ireland, with Galway County (4.6%) also in the bottom ten nationally.  Greater economic and employment diversity around Galway reduces this sector’s relative importance.

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

During 2011-2016, the Western Region experienced a 7.4% decline in the number working in Public Administration & Defence, greater than the 6.3% decline nationally.  In both cases this decline contrasted with overall jobs growth.  This period was characterised by a moratorium on recruitment in the public sector.

Every western county, except Clare (+3.9%), saw a decline over this period.  Donegal (-14.2%), Galway City (-12.5%) and Mayo (-10.1%) saw particularly large losses.  One factor would have been reduced staffing in their respective local authorities which are significant employers, as well as declines in the defence forces.

Employment in western towns

In 2016 there were 40 urban centres with a population over 1,500 in the Western Region. The relative importance of Public Administration & Defence as an employer varies across these towns (Fig. 2).  It is important to note that commuting is a particular issue when considering towns and this data refers to residents of the town.

At 11.4% (53 people) Lifford (county town of Donegal) has the highest share working in Public Administration & Defence in the region and second highest of Ireland’s 200 towns and cities (1,500+).  Lifford shows the potential jobs impact of locating the administrative centre of an area away from that area’s main economic centre both to support development in smaller towns and also to ease congestion in larger centres.

Strandhill in Co Sligo (9.4%, 75 people) and Roscommon town (9.2%, 208 people) were next highest in the region and third and fourth highest nationally. Except for Galway City and Ballina, the region’s larger (10,000+) urban centres all have around 7% working in this sector. Many host local authority head offices as well as offices of Government Departments and state agencies.  The very low share in Galway City is due to the wider range of alternative job options as well as the role of surrounding commuter towns e.g. Athenry.

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

Of the 38 towns in the region for which data is available for both 2011 and 2016,[3] 28 of them experienced a decline in the number working in Public Administration & Defence between 2011 and 2016, nine had an increase with one unchanged.  Bearna (18.5%, +5 people) and Gort (15.8%, +6 people), had the largest percentage growth possibly due to commuting to Galway City or Ennis as several of the other towns which grew are also commuter towns e.g. Strandhill, Sixmilebridge, Moycullen.  In absolute terms, Ennis (6%, +40 people) had the biggest increase in the number of residents working in the sector.

Many more towns experienced decline than growth however. Clifden had the largest decline (-49.1%, -26 people) and was also the town with the largest population decline of all western towns. Ballyhaunis, Ballybofey-Stranorlar, Castlerea and Loughrea also experienced large declines. These are all medium-sized rural towns, at some distance from larger urban centres.

Employment by gender

Overall, employment in Public Administration & Defence is quite gender balanced.  In the Western Region women account for a small majority (51.4% are women) in contrast to the state where there is a male majority (52.4% are men).  The female share has been higher in the region than nationally throughout the past two decades.

In terms of the sector’s relative importance to total male and female employment (Fig. 3), 6.2% of all working women and 5.1% of all working men in the Western Region work in Public Administration & Defence.  While the sector plays a notably more significant role in total female employment in the region than nationally (6.2% v 5.4%), its importance to male employment is the same.

In all areas the sector accounts for a greater share of all women’s jobs than men’s.  In Leitrim (9.4%), Roscommon (9.2%) and Sligo (8.9%) Public Administration & Defence plays a critical role in total female employment.  More limited options for alternative professional career opportunities, particularly in more rural areas, increases the role of Public Administration & Defence in women’s employment.

For male employment, Roscommon (7.6%) is where the sector is most important by quite some margin.  This may reflect the nature of some public sector employment in the county e.g. Castlerea prison.  Again, neighbouring Leitrim (6.6%) and Sligo (6.2%) is where it is next most important for men’s jobs, while it is least important in Galway.

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

The period 2011 to 2016 saw both male and female employment in Public Administration & Defence decline by 7.4% in the region.  For both, this was a greater decline than nationally with the difference greater among women (-7.4% in the Western Region v -5.8% in the state) than men (-7.4% v -6.7%).

Key Policy Issues

Higher reliance on public sector employment in the Western Region: Public Administration & Defence is a more significant employer in the Western Region than nationally (5.6% of total employment v 5.3%) and this is the case to an even greater degree for the two other predominantly public sectors of Health & Care and Education.  The three primarily public sectors of employment jointly account for 28% of all jobs in the Western Region (24% in the state).

This is also reflected in income earned.  Recent analysis by the CSO[4] found that 41.7% of earned income by employees living in Sligo came from Public Administration & Defence, Education and Health & Care combined, the highest share in Ireland, followed by Leitrim (37.8%) and Donegal (37.8%).  The spatial pattern is very vividly illustrated by Fig. 4.  This higher reliance means that developments, such as the moratorium on public sector recruitment, had a greater economic and employment impact in the region.

Fig. 4: Proportion of earned income from Public Administration & Defence, Education and Health & Care combined, 2016

Source: CSO, (2019), Geographical Profiles of Income in Ireland 2016, Map 6.8

 

Important role in female employment: Public Administration & Defence is a more important source of female employment in the region compared with nationally and the gap widened over the past two decades as women’s employment in the region became increasingly dependent on this sector. This is particularly true in more rural counties with 9+% of women in Leitrim, Roscommon and Sligo working in public administration.  Such employment may help maintain the viability of household income, particularly during a recession when there are large private sector job losses e.g. in construction.  Future trends in public sector employment will have a greater impact on female than male employment levels.

Providing professional career opportunities in smaller towns and more rural areas: Public Administration & Defence plays a critical role in providing professional career opportunities, including in more rural areas and smaller towns where there may be fewer alternatives.  North Connacht and the North West, which is the more rural part of the Western Region, has particularly high reliance on the sector (see Fig. 4).  More limited private sector job options increases this sector’s impact on the local economy.  While the main focus for Public Administration & Defence policy must be on the provision of quality public services, it parallel role as a provider of jobs, particularly in smaller towns and rural areas, should also be a factor in policy decisions on the location of such jobs.

Contribution to achieving regional and rural development: As was highlighted in a previous WDC study ‘Moving West’[5] the location of Public Administration & Defence employment is a key policy tool at the disposal of Government. The relocation of public sector offices and jobs from Dublin to other locations has considerable potential to both stimulate development in these areas and to ease pressures on the capital.  The Government, national and local, can therefore play a very direct role in delivering the regional development objectives of the National Planning Framework (NPF) through its location decisions.  Lessons learned from previous relocations, as well as technological developments to facilitate more dispersed work locations, can contribute to implementing such moves.

For more detailed analysis see ‘The Public Administration & Defence Sector in the Western Region: Regional Sectoral Profile’.

Pauline White

 

[1] See WDC (2019) The Education Sector in the Western Region: Regional Sectoral Profile

[2] See WDC (2018) The Health & Care Sector in the Western Region: Regional Sectoral Profile

[3] Two towns with a population above 1,500 in 2011 (Portumna and Bunbeg-Derrybeg) dropped below in 2016. Two towns (Collooney and Convoy) rose above the 1,500 threshold in 2016.  There were also town boundary changes between 2011 and 2016 for 15 of the 40 towns in the Western Region which has an impact when considering change over time. For most towns the impact was relatively minor, however there was a quite substantial change for Ballina.

[4] CSO (2019), Geographical Profiles of Income in Ireland 2016

[5] WDC (2008), Moving West: An Exploratory Study of the Social and Economic Effects of the Relocation of Public Sector Offices to Towns in the Western Region

Carbon Tax: Use of revenue to address climate action issues in rural areas

The WDC made a submission to the Department of Finance Consultation on the options for the use of revenues raised from increases in carbon tax.

A detailed consultation paper was prepared by the Tax Division of the Department of Finance which provided background information on carbon tax revenues, proposed changes in the rate of the tax and possible implication of these increases for users.  They also outlined a number of options for the use of revenues from the tax.

The ESRI has also done a number of studies on distributional effects of carbon tax and revenue recycling options and noted that the carbon tax disproportionately affects lower income households and rural households.  I hope to look at these studies in more detail in a future post.

As regular readers of the blog know, the Western Region (the area under the WDC remit) is a largely rural region which takes in some of the most remote parts of the state. Using the CSO definition 64.7% in of the population live outside of towns of 1,500 or more. Using the definition in Ireland 2040 the National Planning Framework 80% of people in Western Region live outside of towns of 10,000. Thus WDC work has a particular focus on the needs of, and opportunities for, more rural and peripheral areas.  The five most rural counties in Ireland are in the Western Region (Leitrim, Galway county, Roscommon, Donegal and Mayo, and the Western Region also has a higher share of the population living in smaller towns.

In this submission we therefore concentrated on issues for rural areas and our region.  Climate action for rural dwellers is not often discussed in policy and there is no significant body of work (internationally or nationally) on climate change and emission issues for rural areas in developed countries and yet there are important differences in energy use patterns and emissions in rural areas.  Hence, the main focus of the submission was on key climate matters for rural dwellers including energy efficiency; home heating; transport; and stimulating rural enterprise.

The WDC emphasised that a portion of the revenues from increases in carbon tax focus should focus on addressing issues for rural areas, and on actions to ensure that rural areas are in a position to benefit from a move to a low carbon economy.  There are many opportunities to do so and targeted programmes would enable rural dwellers to make a fair contribution to national goals for renewable energy and to actions to mitigate climate change.

 

You can view the submission here.

 

Helen McHenry

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

200th WDC Insights blog post – Our Top 5!

It is hard to believe but this is our 200th post since the Policy Analysis team’s WDC Insights blog was first launched on 25th July 2014. Over the last (almost) five years and 200 posts we have addressed everything from labour market to climate change, broadband to county incomes, demography to electricity and much more in between.

We’ve tackled mysterious questions (Understanding rural transport statistics: Why are there so many new cars in county Roscommon?[1]) and pressing issues (Energy and Climate Action- the WDC View of the Draft National Plan); assessed the regional impacts of national trends (Leprechauns in Invisible Regions: Regional GVA (GDP) in 2015) and policies (WDC submission to Ireland 2040-Our Plan, the Draft National Planning Framework); analysed Census data (Census 2016: Housing In Ireland – What has been happening in the Western Region?) and explained changing statistical classifications (Nuts about NUTS!). And of course there’s our annual Christmas Quiz!

So of our 200 posts so far, what have been the most popular…?

Number 5: How are we doing?  GDP of Irish Regions in 2014

From April 2017, How are we doing?  GDP of Irish Regions in 2014 by Dr Helen McHenry is among our annual posts analysing CSO data on county incomes and regional GDP.  The analysis in this post showed the increasing dominance of Dublin and the South West in terms of their combined share of national GDP, with the share accounted for by other regions reducing over time, a trend that has continued.

Number 4: Preliminary Results of Census 2016 for Co Roscommon

Presenting our analysis to stakeholders is a key part of the work of the WDC’s Policy Analysis team and Preliminary Results of Census 2016 for Co Roscommon, from December 2016, summarised the main points from a presentation by Pauline White to the Roscommon Local Community Development Committee (LCDC). It outlined the key preliminary Census results for the county on population and the components of change.  Of course, these results have since been superseded by the final Census results, but it seems fitting this is in our Top 5 given that Roscommon is the WDC’s ‘home’.

Number 3: What is Rural?

It might seem like a simple question, but the popularity of this post by Dr Helen McHenry from October 2017 shows that defining What is Rural? is far more complex that you might think. The post explores differing definitions of ‘rural’ used by the CSO, the National Planning Framework and the Commission for the Economic Development of Rural Areas. It concludes by asking if we need ‘rural policy’ or policy for people living in rural areas?

Number 2: Census 2016: Rurality, Population Density and the Urban Population of the Western Region

Examining the population living in rural areas (using the CSO definition!), population density across western counties and the population of towns in the region, Census 2016: Rurality, Population Density and the Urban Population of the Western Region from May 2017 provides a handy overview of the distribution of the region’s population.  It highlights that the region’s highly rural nature, with a dispersed population and a large number of small and medium-sized towns, has important implications for the delivery of services and infrastructure to residents of the Western Region.

And finally …

Number 1: Balanced regional development – What does it mean?

In our most popular post (by a long way!) Balanced regional development – What does it mean? Deirdre Frost explored the differing definitions and uses of this much used (and abused?) term.  Written in May 2015, when the initial discussions were underway for the National Planning Framework, as a successor to the National Spatial Strategy, it concluded … ‘When considering a new national planning framework which aims to deliver balanced regional development, deciding and agreeing what we actually mean by balanced regional development and how we measure it would be a useful starting point which might ultimately ensure a greater chance of success.’   Whether the final NPF actually achieved this clarity is perhaps a topic for a future post …

So, 200 posts done and we are looking forward to the next 200.  We hope you have found (at least some of) them useful and of interest.  If you have, forward them to your friends!  And if there are any issues you think we should cover in future posts, just let us know policyanalysis[at]wdc.ie

All the best

Pauline, Deirdre & Helen

[1] The answer’s here