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Aviation trends, Government Policy and Ireland’s airports

The Department of Transport, Tourism and Sport is preparing a new Regional Airports Programme 2020-2024 and has sought the views of stakeholders. The WDC has made a submission which is available for download here. The WDC views are set out in the context of aviation trends, Government policy and airport capacity across Ireland.

Aviation Trends & Implications

The latest 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, with Dublin Airport accounting for 95.2% of total passenger growth in that period. So along with a significant increase in total air passenger numbers, there is an ever-increasing share travelling through Dublin airport.

The WDC believes that without more active intervention, further concentration of air traffic is likely. An ever-increasing share of passenger traffic through Dublin Airport is not in the State’s best interest (from a safety and security perspective) as well as counterproductive in delivering on targets within Ireland 2040.

Globally, it is difficult for smaller airports to compete with larger airports. For example, 80% of airports in the world have fewer than a million passengers per annum and 94% of these airports are loss-making[1]. This is one of the reasons that the EU allows State aid under certain conditions to support smaller airports.

Government Policy: Project Ireland 2040

There needs to be consideration of how the airports of Shannon, IWAK and Donegal can be more effectively supported through policy changes and State aid to deliver on the targets of the NPF and effectively on the role in supporting the economic growth of their respective regions (planned under Ireland 2040). The overarching policy objectives of Project Ireland 2040 state;

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[2].

Policy and funding alignment

Given the recent Government commitment to Project Ireland 2040, sectoral policies need to be updated in order to effectively support the overarching objectives of Ireland 2040. If not, then Ireland 2040 is likely to fail. The National Aviation Policy (NAP, 2015) predates the publication and consideration of Ireland 2040 but can be seen to unduly reinforce the dominance of the larger airports (Dublin in particular).  Now that Project Ireland 2040 is Government Policy, the NAP should be reviewed and updated in light of the overarching objectives of the NPF. In the absence of reassessment and updating 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 are the real drivers of spatial and regional development.

The WDC believes that changes are required to more effectively support the growth of the airports in the Western Region, namely, Donegal, Ireland West Airport Knock (IWAK) and Shannon, to enable them to deliver on NAP and the regional targets contained in the more recently published Project Ireland 2040.

Airport Catchments

As the maps below show IWAK serves a very large catchment relative to some of the other airports. The planned road improvements for the North West will help support greater traffic through Ireland West Airport, which in turn will allow the airport better serve the catchment to its north including Sligo – a designated regional centre under Project Ireland 2040. The planned road improvements must be prioritised.

Maps 1 & 2: 30-min and 60-min catchment areas for Ireland’s airports

Source: Spending Review 2019, A Review of the Regional Airports Programme, DTTaS, IGEES

As the Department’s consultation document notes, though passenger numbers at all four regional airports are less than 1 million annually, just one airport – IWAK – has more than 400,000. IWAK has had annual passenger numbers in excess of 700,000 for the last three years and is forecast to have passenger numbers exceeding 800,000 in 2019. 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, illustrated by the maps above. This needs to be recognised in an updated NAP.

Donegal serves a large catchment within a 60-minute radius and given the geography of Donegal, the relatively poor surface accessibility and the likely impacts of Brexit, it is important that support for Donegal continues.

Shannon Airport is the second largest airport in Ireland (in terms of capacity of the airport campus) and is a critical element in the transport infrastructure of the mid-west region, serving the significant industrial cluster of Shannon and the wider catchment as illustrated in the maps. It is therefore important that it operates optimally to 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].

The WDC considers that with Dublin Airport now operating at or near capacity, and capacity available at other airports such as IWAK and Shannon, cost-efficient and accessible alternatives to Dublin should be utilised and promoted. Shannon, IWAK and Donegal are important airports serving the Mid-west, West and North west of the country and policy and funding needs to effectively support them.

Industry view

 Exporters are also concerned with the ever-increasing concentration of traffic through Dublin Airport For example, the Irish Exporters Association (IEA) advocate for support for better air connectivity from the West of Ireland such as direct access to a European hub airport.  The IEA submission[4] to the Draft National Planning Framework noted that of those IEA members surveyed many said that they would use a different Irish airport as their primary route to move 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%

These views are likely to be attenuated with Brexit.

In our submission, along with an updating of National Aviation Policy to align policy with Project Ireland 2040, the WDC propose some amendments to the existing operation of the Regional Airport Programme, see here for more detail.

 

Deirdre Frost

[1] ACI Report https://aci.aero/news/2019/03/28/aci-economics-report-affirms-the-importance-of-non-aeronautical-revenues-for-airports-financial-sustainability/

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

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

[4] IEA Submission https://irishexporters.ie/wp-content/uploads/2019/03/IEA-Submission_Draft-of-the-National-Planning-Framework.-Nov-17.pdf

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.

Regional Sectoral Profiles: The Complete Collection

A year ago we began publishing a series of ‘Regional Sectoral Profiles’ of economic sectors in the Western Region.  Now, 12 months and 12 reports later, the series is complete!  As publication has been spread over a year, I thought it would be useful to provide a synopsis and links to the full series.

So it all began in October 2018 with …

Wholesale & Retail (Oct 2018)

42,510 people were employed in the Wholesale & Retail sector in the Western Region in 2016 making it the region’s second largest employer.  The Western Region is characterised by greater self-employment in Wholesale & Retail than the national average (15.5% of total employment in the sector is self-employment compared with 12.7% in the state) meaning it is characterised by more, but smaller, businesses. Download WDC Insights-Wholesale & Retail in Western Region-Oct 2018 and Wholesale & Retail in the Western Region-Regional Sectoral Analysis-Oct 2018

Health & Care (Nov 2018)

42,027 people were employed in the Health & Care sector in the Western Region in 2016. At 15.5% of all employment, Sligo has the highest share working in this sector in the country, while Leitrim (13.5%) has the 2nd highest share nationally with Galway City and Galway County (both 13%) jointly 4th.  This sector is a hugely important and growing employer in the region.  Download WDC Insights-The Health & Care Sector in the Western Region-Nov 2018 and Health & Care Sector in the Western Region-Regional Sectoral Analysis-Nov 2018 

Education (Jan 2019)

32,349 people were employed in the Education sector in the Western Region in 2016.  Education is most important in Donegal (10.8% of all employment), followed by Galway County (10.2%). These are the highest shares working in Education in the country.  Moycullen (Co Galway) has the highest share of residents working in Education across Ireland’s 200 towns and cities. Within the sector, Pre-Primary education had the strongest recent jobs growth.  Download WDC Insights-Education Sector in the Western Region-Jan 2019 and Education Sector in the Western Region-Regional Sectoral Profile-Jan 2019-rev 12.03.19

Industry (Feb 2019)

With 45,754 working in Industry in 2016, it is the region’s largest employment sector.  It is considerably more important as an employer in the region than nationally (13.7% v 11.4%).  Among western counties, Industry is most important in Galway County, Clare and Galway City, while Ballyhaunis (Co Mayo) has the highest share of jobs in Industry among Ireland’s 200 towns and cities, where it accounts for 41.9% of total jobs.

Medical Devices is the largest activity accounting for 28% of all Industry employment in the region. The region’s industrial sector relies more on foreign owned companies than nationally (55.1% of assisted Industry jobs are in foreign owned companies v 45.3%).  Download WDC Insights-Industry Employment in Western Region-Feb 2019; WDC Insights-Industry Employment in Western Counties-Feb 2019 and Industry in the Western Region-Regional Sectoral Profile-Feb 2019-11.04.19

Accommodation & Food Service (Mar 2019)

23,038 people worked in Accommodation & Food Service in the Western Region in 2016.  Among western counties, it is most important in Galway City, Donegal and Mayo which are among the top 5 in Ireland in terms of the share of their workforce engaged in hospitality.  At 27.6% of total employment, Clifden has the highest share working in the sector in Ireland with Bundoran, Westport, Donegal town and Carrick-on-Shannon also among the top 10 towns.  The region is home to 23.7% of all Accommodation & Food Service enterprises in the state and it’s the sector where the region accounts for its highest share of national enterprises.  Download WDC Insights-Accommodation & Food Service Sector in the Western Region-Mar 2019 and Accommodation & Food Service Sector in the Western Region-Regional Sectoral Profile-Mar 2019

Agriculture, Forestry & Fishing (Apr 2019)

22,733 people were employed in Agriculture, Forestry & Fishing in the Western Region in 2016.  This only includes people whose main economic activity is working in the sector and does not include part-time farmers.  Of everyone working in the sector in Ireland, 1 in 4 of them live in the Western Region making Agriculture, Forestry & Fishing the sector where the Western Region accounts for its highest share of total national employment. Download WDC Insights-Agriculture, Forestry & Fishing Employment in the Western Region-April 2019 and Agriculture, Forestry & Fishing in the Western Region-Regional Sectoral Profile-Apr 2019

Administrative, Entertainment & Other Services (May 2019)

21,789 people worked in Administrative, Entertainment & Other Services in the Western Region in 2016. This sector provides ‘outsourced’ services to businesses, as well as personal and recreation services to individuals.  Bundoran has the highest share working in the sector of all Irish towns.  This sector is characterised by high self-employment, both compared with elsewhere (27.6% in region v 21.5% in state) and with other sectors. The number of self-employed grew by 19.4% (2011-2016) in the region, the highest growth of all sectors. Download WDC Insights: Administrative, Entertainment & Other Services in the Western Region and Administrative, Entertainment & Other Services in the Western Region: Regional Sectoral Profile

Financial & ICT Services (Jun 2019)

17,884 people worked in Financial & ICT Services in the Western Region in 2016. Financial & ICT Services plays a significantly smaller role in the region’s labour market than nationally (5.4% v 9%).  In the region the sector is most important in Galway City, Donegal and Clare.  At 14.3% of total jobs Letterkenny has by far the highest share of residents working in the sector in the region and is 11th highest in Ireland.  Download WDC Insights-Financial & ICT Services in Western Region-June 2019 and Financial & ICT Services in the Western Region-Regional Sectoral Profile-June 2019

Public Administration & Defence (Jul 2019)

18,858 people worked in Public Administration & Defence in the Western Region in 2016.  At 8.4% of total employment, Roscommon has the highest share working in the sector in Ireland with Leitrim and Sligo 2nd and 4th highest respectively.  North Connacht and the North West have high reliance on the public sector to sustain employment.  Lifford (Co Donegal), Strandhill (Co Sligo) and Roscommon town have the 2nd, 3rd and 4th highest shares working in the sector of Irish towns.  Download WDC Insights-Public Administration & Defence in Western Region-July 2019 and Public Admin & Defence Sector in the Western Region-Regional Sectoral Profile-July 2019

Professional Services (Jul 2019)

14,499 people worked in Professional Services in the Western Region in 2016.  It accounted for 4.3% of total employment in the region, far lower that its 6.1% share nationally.  Galway City is where it is most important in the region but it is still well below the state average.  This sector has among the highest rates of self-employment across all economic sectors and is considerably higher in the region than nationally (30.3% v 25.7%).  Download WDC Insights-Professional Services in Western Region-July 2019 and Professional Services in the Western Region-Regional Sectoral Profile-July 2019

Construction (Aug 2019)

18,166 people worked in Construction in the Western Region in 2016. In 2006 Construction accounted for 12.6% of all jobs in the region, by 2016 it was down to 5.4%.  Ballaghaderreen (Co Roscommon) has the highest share of residents working in Construction in the region and 2nd highest nationally.  Despite significant decline during the recession and slower recovery than elsewhere, Construction continues to employ a greater share of the workforce in the Western Region and particularly in more rural counties and towns.  Download WDC Insights-The Construction Sector in the Western Region-Aug 2019 and Construction in the Western Region-Regional Sectoral Profile-Aug 2019

And finally …

Transportation & Storage (Sep 2019)

10,758 people worked in Transport & Storage in the Western Region in 2016.  Clare has by far the highest share working in the sector in the region at 5.2% of employment and is 4th highest nationally due to aviation activity around Shannon. Shannon town (10.8%) has the 4th highest share working in the sector in Ireland with Newmarket-on-Fergus also in the top 10 towns.  There was a 6.3% fall in the number of Transport & Storage enterprises in the region between 2012 and 2017 mainly due to a sharp decline in taxi numbers.  Download WDC Insights-Transportation & Storage Sector in the Western Region-Sept 2019 and Transportation & Storage Sector in the Western Region-Regional Sectoral Profile-Sept 2019

So that’s the complete series of Regional Sectoral Profiles. In some ways it’s fitting that the series is now complete as this will be my final WDC Insights Policy Blog post.

After 16 great years with the WDC I am moving on to take up a new challenge.  I want to thank all my colleagues, past and present, and particularly my Policy Analysis team mates Deirdre Frost and Helen McHenry for all their help, support, encouragement and heated debated! over the years.

Wishing you all the best

Pauline White

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.

New Infographic: Enterprise in the Western Region 2017

The WDC has analysed the latest CSO Business Demography data on enterprises in the Western Region. This data is for 2017 when there were 57,951 total enterprises[1] registered in the seven-county Western Region (location of an enterprise is based on its address as registered with Revenue[2]).  In total, just over a quarter of a million people were working for enterprises registered in the region.

Enterprise in the Western Region 2017

The infographic shows some of the key indicators for enterprise in the Western Region.

The recession led to a 4.3% decline in the number of enterprises[3] in the region, this was compared to marginal growth in enterprises in the state (0.1%) over this period. With economic recovery, enterprise numbers grew again, rising 6.5% in the region between 2012 and 2017. While strong, this growth did significantly lag that nationally (11%).

As growth accelerated considerably between 2016 and 2017, it is likely that enterprise numbers have continued to expand since 2017.

Of all enterprises registered in the Western Region 92.9% were micro-businesses employing fewer than 10 people. This was a slightly higher share than nationally where 92.1% of enterprises are micro.

As each micro-enterprise is small in scale however, despite them accounting for 92.9% of enterprises, only 35.8% of everyone who works for an enterprise, works for a micro-enterprise.  Of course, direct employment is just one of the economic and social impacts of micro-enterprises and they play a particularly vital role in smaller centres and more rural areas, as well as in particular sectors e.g. Construction, Professional Services.

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

In terms of the number of enterprises, Construction is the largest sector in the Western Region accounting for 20.4% of all enterprises registered in the region.  Wholesale & Retail (15%) and Professional, Scientific & Technical activities (9.4%) are next largest.  All three sectors include many sole traders and micro-enterprises e.g. construction trades, solicitors, architects, small shops and they are also the three largest sectors nationally.

Considering the number of people working in enterprises however shows a different pattern.  Wholesale & Retail is the largest enterprise sector in employment terms (17.8% of all people working in enterprises in the Western Region) followed by Industry (manufacturing) (17.2%) and Accommodation & Food Service (13.4%). These three sectors include many larger businesses e.g. factories, hotels, large retail stores, so account for a greater share of employment than of enterprises.

County Data

Data for the same indicators that are included in the ‘Enterprise in the Western Region 2017’ infographic has also been published for each of the seven western counties in a ‘Key Statistics’ one-pager.  A few interesting findings for western counties:

  • Roscommon and neighbouring Leitrim jointly have the highest share of micro-enterprises in Ireland (94.7%).
  • While for most western counties Wholesale & Retail, Industry and Accommodation & Food Service are the three largest enterprise sectors for employment, for Galway and Roscommon, Health & Care is in the Top 3.
  • At 9.9%, Donegal saw the largest decline in enterprise numbers in the Western Region between 2008 and 2012 with Mayo (5.3%) having the next largest decline. Sligo was the only western county where enterprise numbers increased over this period (0.9%).
  • Clare had the strongest recovery in enterprise numbers between 2012 and 2017 at 10.4%, close to the national average (11%).

For anyone interested in more detailed analysis, a comprehensive ‘Profile of Enterprise in …’ document is also available for each county. Each 12-page Profile includes data on:

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

Download the ‘Profile of Enterprise in …’ CLARE, DONEGAL, GALWAY, LEITRIM, MAYO, ROSCOMMON and SLIGO

Conclusion

Clearly micro-enterprises play a very significant role in the Western Region’s enterprise base.  There is a higher share of owner-managers working in enterprises in the region which is important to keep in mind when designing and planning business supports. While enterprises in the region were hit very hard during the recession, there has been recovery, accelerating in recent years. There were more enterprises registered in the Western Region in 2017 than a decade earlier.

Enterprises form the backbone of the local and regional economy.  Supporting the establishment and growth of sustainable enterprises across the Western Region is a key priority for the WDC and we hope that this analysis of enterprise data will help to better inform both ourselves and other organisations, individuals and policy makers, about recent trends in the enterprise base  of western counties, including their vital role in job creation.

All documents are available from https://www.wdc.ie/publications/reports-and-papers/

Pauline White

Infographic designed by Resonate Design

 

[1] Data on total enterprises, total persons engaged and enterprises/persons engaged by Sector are based on a figure for ‘total enterprises’ which includes all economic sectors (NACE Rev2) except Agriculture, Forestry & Fishing and Public Administration & Defence.

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

[3] Data on enterprises and persons engaged by enterprise size (micro-enterprises etc.) and data on changes over time are based on a figure for ‘business economy’ enterprises which includes all economic sectors (NACE Rev2) except Agriculture, Forestry & Fishing, Public Administration & Defence, Education, Health & Social Work, Arts/ Entertainment/ Recreation and Other Services.

The Construction Sector in the Western Region

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

This report examines the Construction sector which includes the construction of buildings, electrical and plumbing installation, carpentry, painting, civil engineering (infrastructure projects), demolition etc.  It does not however include professional services related to the sector (e.g. architecture, real estate).[2]

Two publications are available:

Employment in Construction

According to Census 2016, 18,166 people worked in Construction in the Western Region. The past two decades have witnessed dramatic jobs volatility in this sector. The number working in Construction in the Western Region increased by 163.6% (from 16,674 to 43,956) in the decade from 1996 to 2006, followed by a 58.7% decline over the next 10 years (2006-2016).

These dramatic changes are clear from Construction’s share of total employment (Fig. 1).  In the Western Region, Construction accounted for 6.7% of total jobs in 1996 and by 2006 its share had almost doubled to 12.6%.  It sector was consistently more important in the region than nationally.

In the Western Region, the crash led to Construction’s share of employment more than halving to 5.4% by 2011; remaining unchanged in 2016. Nationally, the share also declined sharply to 4.8% in 2011 but its role grew somewhat in 2016 (5.1%) indicating that recovery in Construction in the region lagged that occurring elsewhere.

Source: CSO, Census 2016: Summary Results Part 2, Table EZ011; CSO, Census of Population 2006, Volume 7 – Principal Economic Status and Industries, Table C0713; CSO, Census of Population 2002, Volume 5 – Principal Economic Status and Industries, Table B0513; CSO, Census of Population 1996, Volume 5 – Principal Economic Status and Industries, Table  A0513

 In 2006, Construction accounted for 15% of total employment for residents of county Leitrim, the highest share in the region, with the largely rural counties of Mayo, Galway County, Roscommon and Donegal also having extremely high reliance on Construction jobs at this time.  By 2011, Construction’s share had fallen substantially in all counties.  Despite this, all western counties except Galway City and Sligo were still above the national average in 2011.

Between 2011 and 2016 there was 7.8% jobs growth in Construction in the Western Region, less than half that occurring nationally (16.6%), again indicating how recovery in the building sector in the region lagged that elsewhere.  Within the region Roscommon (11.1%), Galway County (9.5%) and Donegal (9.3%) had the strongest growth, though all still well below the national average.  In contrast to the general trend, Sligo actually saw a decline in the number of residents working in Construction between 2011 and 2016

Employment in Construction 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.

Ballaghaderreen (9.8%, 57 people) in Co Roscommon has the highest share of residents working in the sector in the region (Fig. 2) and is second highest among Ireland’s 200 towns and cities (1,500+ population).  Within the region, Carndonagh (9%, 72 people), Ballinasloe (7.1%, 162 people) and Lifford (6.9%, 32 people) have the next highest shares working in the sector.  Small and medium-sized rural towns tend to rely most on Construction.

Six towns in the Western Region are among the bottom ten nationally in terms of the share working in Construction, including the large centres of Galway City, Letterkenny and Sligo.  Greater economic diversity and more alternative job options reduces reliance on Construction.

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

Self-employment in Construction

Of the 18,166 people working in Construction in the Western Region in 2016, 39.7% (7,206 people) were self-employed (employer or own account worker).  This is the second highest[3] rate of self-employment across all economic sectors due to the nature of Construction sector with many people working in construction trades e.g. electricians, plumbers, being self-employed.

Self-employment is more common in the Western Region (39.7%) than nationally (36.7%) (Fig. 3) with Construction in the region characterised by a higher share of sole traders or micro-enterprises.

The number of self-employed people working in Construction in the region fell by -1.1% between 2011 and 2016. In contrast, nationally, there was strong growth in Construction self-employment (6.2%).  In both areas however the share of total employment that was self-employment declined between 2011 and 2016 (Fig. 3), because employee numbers out-performed self-employment numbers, reducing self-employment’s share of the total.

At 44.2%, Sligo has the highest share of Construction self-employment in the region and had the smallest decline in its share 2011-2016. Clare and Roscommon also have 40+% self-employment with Galway City (33.6%) having the lowest share, the only area in the region below the national average.  This is influenced by the presence of some large Construction firms in the city.

Source: CSO, Census 2016: Profile 11 – Employment, Occupations and Industry, Table EB033. Special run from CSO.

Construction Enterprises and Persons Engaged

In 2017 there were 11,806 Construction enterprises registered in the Western Region with 23,059 persons engaged.[4]  Construction accounted for 20.4% of total enterprises[5] in the region compared with 16.9% in the state (Fig. 4) and was the largest sector in terms of enterprise numbers.  As Construction is characterised by many small scale operations however, it only accounted for 9% of all persons engaged in enterprises in the region (6.7% in state) and was the fifth largest sector.

The rural counties of Roscommon and Mayo is where Construction accounts for its highest share of total enterprises, followed by Donegal and Leitrim where Construction also accounts for over 1 in 5 of all enterprises. This reflects lower business diversity leading to greater reliance on Construction. Sligo and Clare, which had low shares of employment in the sector (see Fig. 1), also have the lowest shares of their enterprises in Construction.

In terms of all persons engaged in enterprises, over 11% were working in Construction in Leitrim, Roscommon and Mayo.  This reinforces the significant role of the Construction sector in both the enterprise and employment profile of these largely rural counties.  Again Sligo has the lowest share in the region (6.7%).

Source: CSO, Business Demography 2017, Table BRA18.

Key Policy Issues

Plays a larger role in the Western Region’s economy, especially in more rural areas: Despite significant decline during the recession and slower recovery than elsewhere, Construction continues to employ a greater share of the workforce and account for a higher share of enterprises in the Western Region.  It is particularly significant for the region’s more rural counties and for small and medium-sized rural towns, in terms of jobs, income and enterprises.  The experience of the last recession highlights the importance of promoting diversity in the rural and regional economy and, while Construction must play a key role, a return to over-reliance on the building industry poses a risk.

Smaller scale operations and high self-employment:  Construction enterprises in the Western Region tend to be smaller and the sector is characterised by high self-employment.  The quality of some Construction self-employment, and its ability to sustain a person’s livelihood, are issues to be considered as the sector grows.  Supports for Construction sole traders and micro-enterprises such as business skills and financial training, as well as information on emerging trends and opportunities must be a focus for policy.

Important employment role among men including young and lower skilled workers: At the height of the Celtic Tiger 22% of working men in the Western Region worked in Construction and the impact of the recession on Construction greatly increased male unemployment and out-migration.[6]  Construction continues to play an important role and in 2016 employed 1 in 10 working men in several of the region’s more rural counties. It also helps to sustain the viability of part-time farms.  In total, 94.2% of the total Construction workforce in the Western Region are men.

While Construction includes many highly skilled and well-paid occupations, it is also an important source of jobs for younger and lower skilled workers.  It is important that current growth in the sector includes opportunities for people of differing skill and experience levels, while not acting as a disincentive to the pursuit of further or higher education.

Opportunities of a low carbon economy: Adaptation to a low carbon economy, specifically improved energy efficiency and renewable energy, presents a growing opportunity for this sector.  Government targets[7] of 500,000 building retrofits and installation of 600,000 heat pumps by 2030 present particular opportunities in the region and its rural areas.

For more detailed analysis, download The Construction Sector in the Western Region: Regional Sectoral Profile and WDC Insights: The Construction Sector in the Western Region here

Pauline White

 

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

[2] See WDC (2019), Professional Services in the Western Region: Regional Sectoral Profile

[3] The highest is Agriculture, Forestry & Fishing at 76.5%.

[4] Data is from CSO, Business Demography 2017

Each enterprise and all persons engaged in that enterprise are assigned to the county where its head office is registered with Revenue.

[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] WDC (2009), Work in the West: The Western Region’s Employment & Unemployment Challenge

[7] Government of Ireland (2019), Climate Action Plan 2019: To Tackle Climate Breakdown

What we do where:  Regions, Sectors and GVA

In this final post on regional Gross Value Added (GVA) data, the focus is on the role of different sectors in our regions.  As discussed in the previous post, the economic contribution of the regions is related to the size of the population and the workforce, but also to the strength of different sectors in each region.  This is examined, followed by a discussion on the importance of each region in national sectoral GVA and finally, although this data has only been available for the last two years, I take a brief look at the changes in Regional GVA for sectors for 2015 and 2016.  As before, there is a main focus is on the Border and West regions as they are the regions most aligned with the WDC’s Western Region[i].

The importance of different sectors in each region

It is useful to examine the importance of different sectors in each region and in Figure 1 the contribution of each sector to the individual region’s GVA is shown.  As noted in the previous blog posts on this topic (here and here), the data for the Mid West and South West regions was supressed by the CSO to preserve the confidentiality of some large Multi National Entities (MNE).  I have, therefore, inferred the data for a combined region (Mid West & South West) so that it can be included here.  Strikingly, in the combined in the combined region of the Mid West & South West the significance of GVA from Industry[ii] is evident (accounting for an extraordinary 64% of the total GVA in this combined region).  This compares to 36% of GVA nationally.  Industry is also particularly important in the Mid East (36% of GVA) and the West (35% of GVA).

The largest sector in the Border region is Pubic administration, heath and education[iii] (26% of GVA) and this is also the largest sector in the Midlands (27% of GVA) as well as being an important sector in the West (20%) and the South East (16%).  Unsurprisingly, the largest sector in GVA terms in Dublin is Information and communication.

Source: CSO, 2019, County Incomes and Regional GDP Table 9d

Looking at other sectors, Agriculture forestry and fishing contributed most to GVA in the Border region (4% of GVA) and accounts for 3% of Midlands GVA.  These figures somewhat underestimate the importance of this sector as the processing element of this sector is included with Industry.  The Agri-food sector therefore makes a greater contribution to the economy than shown here (estimated as 7% of GVA nationally, compared to 1% in this data).  Additionally, economic activity in the agriculture and food sector is derived from a much higher proportion of Irish inputs (74%) than other traded sectors (43%).  See here for discussion.

In 2016 the most important sectors in the economy of the Border region are Public administration, health and education (26%), Industry (20%) and Locally[iv] traded services (14%).  As noted above, Industry accounts for more than a third of the economy of the West (35%), Public administration, health and education accounts for 20% and Locally traded services and Real estate activities both contributed 11%.

The size of GVA from each sector varies significantly (see Figure 2), with Industry the most significant sector (nationally 36% of all GVA), followed by Locally traded services (13%), Public administration, health and education (12%); Professional and administrative services (11%) and Information and communications (9%).

Source: CSO, 2019, County Incomes and Regional GDP Table 9d

 Key sectors in the regions

While it is very useful to look at which sectors are most important to each region,  (as above in Figure 1) but it is also interesting to see which region are most important to different sector’s total GVA (Figure 3 below).  As discussed in the last post on this topic, the regions are very different sizes, in terms of population and persons at work as well as in terms of economic output.  It is important to remember this when looking at contributions from each region (especially Dublin and the combined region of Mid West & South West).

While, as noted above, Industry is very significant in GVA of the combined region Mid West and South West, this is turn translates into this region accounting for a very significant proportion of GVA from Industry (Figure 3) in all regions, close to two thirds of all GVA from Industry in Ireland (62%).  In contrast, Dublin, which is the largest region in terms of population, persons at work and GVA, only accounts for 16% of Industrial GVA (see Figure 3).

Dublin clearly accounts for the highest proportion of GVA in all other sectors (with the exception of Agriculture, forestry and fishing).  It is however, completely dominant in Information and Communication, accounting for 82% of all the GVA of that sector.

Source: CSO, 2019, County Incomes and Regional GDP Table 9d,

As noted, the size of the different sectors should be borne in mind, but it is also interesting to consider relative importance of the different regions (the Border and West in particular) contribution to national GVA in that sector.  Looking at the Border region, Agriculture (14%), Construction (7%), Public administration, health and education (7%) and Real estate activities are the sectors where the Border contributes more than 5% of each Sector’s GVA.

Although manufacturing is important in the West (the high value added medical device sector has a globally significant cluster), the significance of the sector in the Mid West & South West in this  means the West only produces 5% of sectoral GVA, even though this is the largest sector in that region accounting for more than a third of all GVA (Figure 2 above).  The West contributes more than 5% of national GVA in the Agriculture (10%), Construction (10%), Real estate (10%), Public administration (9%) and Arts, entertainment and other services (7%).

Changes over Time

Data on regional sectoral GVA has only been available for the last two years so it is not possible to look back at changes over the longer term.  It is, however, interesting to look at the difference between 2015 and 2016, bearing in mind that the data is very volatile across these two years.

It is difficult to say how much of this volatility relates to the factors underlying the level shift in GVA in 2015 (read more about this here) but it appears to apply in all sectors when looking at growth and decline across regions (Table 1).  Because we can only look at the change between 2015 and 2016, it is important not to place too much significant on the changes but, the significant volatility is evident at a glance.  In the table all declines are highlighted in pink with declines in GVA of more than 20% in bright red.  Growth of more than 10% is shown in pale blue and growth of more than 15% and 25% is shown in darker blues.  Both Construction and Financial and insurance activities grew significantly in all regions, while Industry, Information and communication and Arts, entertainment and other services each grew in some regions while declining in others.

Table 1: Changes in regional sectoral GVA 2015-2016

Source: CSO, 2019, County Incomes and Regional GDP Table 9d, 9e (own calculations)

Looking more closely at the Border and West regions (Figure 4), it is clear that while there was growth in most sectors the growth rates was often different in the two regions, for example in Professional and administrative services GVA in the Border grew by 26% and only by 5% in the West.  In contrast, Arts, entertainment and other services grew by 20% in the West and showed no growth in the Border region.  GVA from Industry fell in both regions (-23% in the West and -7% in the Border region) and while Agriculture, forestry and fishing grew in the Border region (6%) it fell in the West region (-6%).

Source: CSO, 2019, County Incomes and Regional GDP Table 9d, 9e

As noted above, this detailed data on sectoral GVA for the NUTS 3 regions have only recently been calculated.  It was published last year (2018) for the first time in relation to 2015, and this year 2016 data is available.  In future years it will be very useful to be able to examine trends over a longer period in relation to regional sectoral growth.  This will also be important to increasing our understanding of regional productivity issues as well as the different rates of economic growth and development across regions.  This post has been the first opportunity to consider this in more detail, but I look forward to continuing the analysis next year.

 

 

Helen McHenry

[i] Clare is the only Western Region county not in these regions.  Clare is part of the Mid West, for which data has been suppressed.

[ii] Mining and quarrying; manufacturing; electricity, gas, steam and air conditioning supply; water supply; sewerage, waste management and remediation activities.

[iii] Public administration and defence; compulsory social security; education; human health and social work activities

[iv] Wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; accommodation and food service activities

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

Professional Services in the Western Region

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

This report examines the Professional Services sector which includes two sub-sectors: ‘Professional, Scientific & Technical Activities’ (legal, accountancy, architecture, veterinary, graphic design, translation services etc.) and ‘Real Estate’ (auctioneers, valuers, property letting and management). Both are knowledge intensive services sectors, relatively high value and are highly sensitive to the level of overall economic activity.

Two publications are available:

Employment in Professional Services

According to Census 2016, 14,499 people worked in Professional Services in the Western Region.  Professional Services play a far smaller role in the region’s labour market than nationally (Fig. 1).  In 2016 Professional Services accounted for 4.3% of total employment in the Western Region compared with 6.1% in the state.

As would be expected, Galway City is where this sector is most important in the region (5.2% of its residents work in Professional Services), but this is still well below the state average and is in fact only tenth highest of all counties in Ireland.  Donegal is where it is least important (3.8%) and it has the second lowest share in the state.

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

Between 2011 and 2016 there was 10.8% growth in employment in this sector in the region.  Although growth in the region was only half that occurring nationally (21.1%), the sector still grew considerably more strongly than total jobs over this period in the region (7.5%) as the sector responded to increased economic activity and growing demand.  At 18.2%, Leitrim had the highest growth in the region, followed by Donegal and Sligo showing a strengthening of this sector in the North West.

Professional Services sub-sectors

Within the Professional Services sector, ‘Accountancy & Management Consultancy’ is the largest activity (22% of Professional Services employment) though its share is notably lower in the region than nationally (26.2%) due to the concentration of the head offices of large accountancy firms in Dublin.  The next largest sub-sector is ‘Architectural & Engineering Services’ accounting for 20.1% of all Professional Services jobs in the region (similar to the national share), linked to the construction and manufacturing sectors.

The third largest sub-sector is ‘Advertising, Market Research & Other’[2] and it is considerably more important in the state (20.3%) than the region (17.2%).  As this includes many quite specialised activities mainly serving business/commercial clients there is high concentration in cities and particularly Dublin.

Two sub-sectors where the region has a notably higher share are ‘Testing, Research & Development’ (10.9% v 7.3%) and ‘Veterinary’ (5.4% v 3.3%).  The region’s strength in manufacturing[3] with companies providing testing or R&D services to these factories influences the first, while the region’s rural and agricultural nature influences the second.

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.

Bearna (8.1%, 72 people) has the highest share of residents working in the sector (Fig. 2) and ninth highest among Ireland’s 200 towns and cities (1,500+ population).  Within the region, Strandhill (7.1%, 57 people), Loughrea (6.9%, 159 people) and Buncrana (6.4%, 153 people) have the next highest shares.  In all cases, this is influenced by commuting, with other commuter towns such as Oranmore and Athenry also having quite high shares.

A number of more rural, medium-sized towns such as Castlerea, Boyle, Carndonagh and Ballymote also have relatively high shares and clearly act as service centres for their rural hinterland.

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

Self-employment in Professional Services

Of the 14,499 people working in Professional Services in the Western Region in 2016, 30.3% (4,399 people) were self-employed (employer or own account worker).  This is among the highest rates of self-employment across all economic sectors which is not surprising given the nature of the sector with many small and micro businesses e.g. solicitors, photographers, vets.

Self-employment is considerably more common in the Western Region (30.3%) than nationally (25.7%) (Fig. 3). More people in the region have chosen self-employment as a route to work in this sector, perhaps due to more limited job options and also the fact that the smaller size of the local market favours smaller operations.

At 32.5%, self-employment is most common in Sligo, followed by Leitrim (32.4%).  This implies these counties tend to have a large number of smaller businesses and fewer larger firms.  Roscommon (27.5%) and Galway City (28.9%) have the lowest shares. In the case of Galway City, the presence of larger firms contributes to a lower share of self-employment.

Source: CSO, Census 2016: Profile 11 – Employment, Occupations and Industry, Table EB033. Special run from CSO.

In the Western Region, the number of self-employed people working in Professional Services grew by 5.7% between 2011 and 2016. This compares with a 1% decline in total self-employment over the same period, indicating that this sector differed from the general trend of declining self-employment in the region.

At a county level, Leitrim had the strongest growth in self-employment in the sector, increasing 20.4% between 2011 and 2016.  This was clearly a very strong driver of the county’s total jobs growth in this sector.  Sligo (11.4%), Donegal (11.4%) and Clare (9.1%) had the next highest growth.  Roscommon had the lowest growth (2.8%) which contributed to its current low share of self-employment.

Professional Services Enterprises

In 2017[4]  there were 8,139 Professional Services enterprises registered in the Western Region. This was 14% of total enterprises[5] (Fig. 4), well below the 17.3% state average.  The sector’s share of total enterprises in the region (14%) is substantially greater than its share of all employment in the region (4.3%, see Fig. 1), though it should be noted that the employment data refers to 2016. Again this illustrates that this sector is characterised by a large number of quite small enterprises.

At 16.2%, Galway[6] has the highest share of its total enterprises in this sector, though still below the national average. Sligo, Mayo and Clare have the next highest shares influenced by the presence of quite large urban centres.  In common with employment, Donegal has the lowest share of its total enterprises in this sector which points to less activity in the sector.

Source: CSO, Business Demography 2017, Table BRA18.

During the period 2012 to 2017 there was 16.8% growth in the number of Professional Services enterprises in the Western Region, the highest increase across all economic sectors.  Growth in the region was higher than the 15.7% increase nationally.

Key Policy Issues

Lower level of activity in Professional Services in Western Region:  Given that this is a knowledge intensive services sector offering high quality employment, increasing the level of Professional Services activity in the region could make an important contribution to diversifying and strengthening the region’s labour market as well as increasing income levels.

Responds strongly to economic cycles and changing domestic demand: While several Professional Services activities can be traded internationally e.g. architectural services, most enterprises in this sector serve clients in the domestic market and often quite locally.  It therefore relies heavily on the level of domestic demand in the economy including from the construction sector.  The fact that economic recovery in the Western Region lagged that occurring elsewhere in the country[7] was an important factor in the region’s lower jobs growth in this sector.

As well as responding to the economic cycle, this sector also helps to facilitate it, as Professional Services play a key role in business growth by providing legal and accountancy services, market research, advertising and so on, to enterprises. The presence of a strong Professional Services sector within the region is therefore a key driver for wider regional economic growth.

Smaller scale operations and high self-employment: Professional Services enterprises in the Western Region tend to be smaller in scale than the national average and it is characterised by high self-employment.  As many Professional Services are outside the remit for direct financial supports from enterprise development agencies, continuation of existing, and the development of new, soft supports for self-employed and micro-enterprises in this sector is important, particularly in smaller urban centres and rural areas where self-employment can be a key pathway to work and this sector is an important source of professional career opportunities.

Large urban locations play a critical role but there are also opportunities for growth beyond these:  More specialised Professional Services tend to be quite concentrated in larger urban locations.  Nationally, there is strong concentration in Dublin and within the region Galway City is a key location. It is important that the locational advantages of Galway City and the region’s other larger centres (e.g. office space, networking opportunities, digital infrastructure) are enhanced to allow them to play a greater national role as centres for Professional Services activity.

There is also potential for further expansion, at a suitable scale, in smaller centres and more rural areas, including through remote work.  Access to high speed broadband is a critical factor in facilitating this sector to such areas.

For more detailed analysis, download Professional Services in the Western Region: Regional Sectoral Profile and WDC Insights: Professional Services in the Western Region here

Pauline White

 

Feature image by Robert-Owen-Wahl from Pixabay

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

[2] The ‘Other’ includes graphic and fashion design, translation, agents/agencies etc.

[3] See WDC (2019) Industry in the Western Region: Regional Sectoral Profile 

[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] WDC Insights Blog Post, ‘Recent Trends in Regional GDP’ 14 June 2019

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