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Creating Stronger Rural Economies and Communities- A Forum

The Rural and Regional strand of Project Ireland 2040 was launched in Westport last Friday (13 July 2018) at a Forum held in the Town Hall Theatre.  The focus was on the National Strategic Outcome 3 in Project Ireland 2040 ‘Strengthened Rural Economies and Communities’.

The Forum, themed “Creating Stronger Rural Economies and Communities”, was co-hosted by the Department of Rural and Community Development and the Department of Agriculture, Food and the Marine, and featured panel discussions and a keynote address from An Taoiseach .  The Minister for Agriculture, Food and the Marine, Michael Creed T.D. also spoke at the event as did Minister for Rural and Community Development Michael Ring T.D.  Minister of State Sean Kyne T.D. was also in attendance and participated in the event.

The speeches highlighted the recently launched €1 billion Regeneration & Development Fund which was a key commitment in Project Ireland 2040.  The Fund is to support collaborative, innovative and transformative projects across both public and private sector bodies and successful projects will leverage additional funding to maximise their impact in communities.

The Forum was structured around two panel discussions on the themes of creating stronger rural communities and creating stronger rural economies.

Creating Stronger Rural Communities

The first “How do we create stronger rural communities?” included An Taoiseach Leo Vardakar on the Panel along with Minister for Rural and Community Development Michael Ring T.D.  Also on the panel were Dr Maura Farrell from NUI Galway and the designated researcher for the National Rural Network (NRN), Ms Anna Marie Delaney the Chief Executive of Offaly County Council and Ms Irene Kavanagh from Kerry Social Farming.

The discussion was largely focussed on the farm family and farm diversification although Minister Ring also stressed the significant investments made under the Town and Village Renewal scheme and the benefits of investment in Digital and Food Hubs in rural towns under that Programme.

Creating Stronger Rural Economies

The second Panel discussion “How do we create stronger rural economies?” was preceded by a short presentation from Minister of State Sean Kyne T.D. and the panel members were three rural entrepreneurs. Mr Colman Keohane from Keohane Seafoods in Co Cork, Ms Evelyn O’Toole founder and CEO of CLS in Co. Galway and Ms Natalie Keane, from Bean and Goose , artisan chocolate company from Co. Wexford.  The panel also included Enterprise Ireland’s Manager for Regions & Entrepreneurship, Mark Christal.

The entrepreneurs told stories of their business set up and development and there was lively discussion of the positives and negatives for small business in rural Ireland.

 

The Minister for Agriculture, Food and the Marine, Michael Creed T.D. closed the Forum with thoughtful comments on the need to reimagine a rural Ireland that is fit for purpose today.  He noted that for rural Ireland to thrive it needs young people and they will want good quality of life, good jobs and connectivity in order to remain in rural Ireland.  He emphasised that, in thinking of the future for rural Ireland the focus should not just be on what worked before.  We need to consider the current context and develop a rural Ireland that works for now.

Attendees also received a publication “Strengthening Rural Economies and Communities’ which includes descriptions of schemes and policies which impact on rural Ireland and a number of case studies of businesses, farms and communities which have benefited from the schemes.

 

 

Helen McHenry

Understanding Changes in the Components of County Incomes

While my previous post on county incomes (based on the CSO’s publications County Incomes and Regional GDP, 2015) considered the changes in Disposable Income over time, in this post I look at the components of Disposable Income, some of the changes in these since 2000, differences among Western Region counties and their impact on the changes in Disposable Income.  The key component of Disposable Income is Total Household Income (which includes Primary Income and Social Transfers) and this is examined first.

 

Total Household Income is the amount of income from available to the household from earnings, and Rent of Dwellings (imputed) and net Interest and Dividends, as well as ‘Social Benefits and Other Current Transfers’.  Total Household Income grew steadily (Figure 1) in all counties between 2000 and 2008 (in Donegal there was a tiny decline between 2007 and 2008).  In most counties it declined between 2008 and 2011 and then began to grow slowly.  Despite this growth, preliminary figures show that by 2016 neither in the State nor any Western Region county had Total Household Income per person recovered to 2008 levels.  In Roscommon, for example, it was €25,061 per person in 2008 and €21,522 in 2016 (a difference of €3,539) , while in contrast in Sligo it was €24,940 in 2008 and €24,818 in 2016 (a difference of only €122).

 

Figure 1: Total Household Income per person

Source: CSO, 2018, County Incomes and Regional GDP ; Estimates per person based on own calculations using inferred population estimates. 2016 figures are preliminary.

 

Primary Income

Primary Income is the main component of Total Household Income and Figure 2 shows Primary Income as a percentage of Total Household Income over the period 2000-2016.  It should noted that Total Household Income also includes Social Benefits and Other Current Transfers and is balanced by the Statistical Discrepancy (arising from different collection methods being used to estimate income and expenditure).  Therefore that Total Household Income does not equal the sum of Primary Income & Social Transfers.

Nonetheless, it is useful to see how the importance of Primary Income (and by inference social transfers) has been to Total Household Income.  In 2000, in the State as a whole, Primary Income was 87% of Total Household Income.  It was also 87% in Clare but as low as 80% in Donegal but by 2016 it was 81% in the State, 79% in Clare and 70% in Donegal, indicating the increased importance of social transfers.

 

Figure 2: Primary Income as a percentage of Total Household Income

Source: CSO, 2018, County Incomes and Regional GDP

 

What is Primary Income made up of?

Looking at the breakdown of Primary Income (Figure 3) in 2015[1], it is clear that the main component in all counties is wages and salaries (Compensation of Employees (i.e. Wages and Salaries, Benefits in kind, Employers’ social insurance contribution) which nationally makes up 77% of Primary Income.  In the Western Region, Primary Income accounts for 77% in Sligo, 76% in Galway and 75% in Clare.  It accounts for 74% of Primary Income in Donegal, Mayo and Leitrim while in Roscommon it is only 73%.

 

Figure 3: Contributors to Primary Income, 2015

Source: CSO, 2018, County Incomes and Regional GDP

Other elements of Primary Income are accounted for by Net Interest and Dividends (4% in the State and all Western Region counties), and Rent of Dwellings (imputed) which is between 8% and 10% in Western Region counties and 9% in the State.

Income from self employment is the other main component of Primary Income, and this accounts for 14% of Primary Income in Roscommon  and Leitrim, and 11% in Galway and 10% in Sligo and 10% in the State as a while.  Income from self employment is more significant in all Western Region counties than the State as a whole.

Alongside a decline in self employment shown in recent years  there has been a significant decline in the proportion of Primary Income coming from self-employment (Figure 4).  In the State it accounted for 16% of Primary Income in 2000 and was 10% by 2016.  Western Region counties, though starting from a higher base, have followed a similar pattern.  For example in Roscommon income from self-employment was 24% of Primary Income in 2000, but 13% in 2016.  It is not clear why this decline has taken place, perhaps because of a decline in the numbers in farming, or perhaps because of poorer earnings from self-employment.

 

Figure 4: Self employment as percentage of Primary Income

Source: CSO, 2018, County Incomes and Regional GDP

 

Social Benefits over Time

Looking again at Total Household Income, it is interesting to examine the changes in social benefits (Figure 5) over time.   With the growing economy in the early part of the century, the amount received in social benefits per person grew alongside the growth in Primary Income, peaking in most counties in 2009.  After the downturn, however, there was a slow decline in the level of social transfer per person.  This was during a period of significant in some of the social benefits, but high levels of unemployment kept the level of transfers per person quite high.  The decline has continued, to 2016, presumably as the numbers claiming unemployment benefit and assistance has decreased.

 

Figure 5: Social Benefits and Other Current Transfers per person

Source: CSO, 2018, County Incomes and Regional GDP ; Estimates per person based on own calculations using inferred population estimates. 2016 figures are preliminary.

 

Taxation levels over time

Much of the discussion above has related to the components of Total Household Income, but in order to get to a figure for Disposable Income taxation has to be taken into account.

As would have been expected (see Figure 6), in line with growth in incomes between 2000 and 2007 taxes on income (per person) also grew to 2007.  With pay cuts and job losses, there was a sharp decline between 2007 and 2010 but then then taxation on income grew again to 2016.  It is likely that in the first few years this related to increases in tax levied, and then in more recent years the growth has probably come from the increase in the numbers employed and paying tax.

 

Figure 6: Taxation on Income (2000-2016) per person

Source: CSO, 2018, County Incomes and Regional GDP ; Estimates per person based on own calculations using inferred population estimates. 2016 figures are preliminary.

 While I have looked at changes in taxation and social benefits estimated on a per capita basis from 2000 to 2016 it is also interesting to see a direct comparison of the two for each county in 2015. Figure 7 shows social benefits and taxation as a percentage of Total Household Income (as noted above, these percentages should be used to compare the differences amount the Western Region counties, rather than as absolute proportions, as they do not take account of the effect of the statistical discrepancy).  Nonetheless it is useful to compare the different levels of taxation on income and social transfers among the counties.  Higher numbers of people in non-working categories (children, older people and people with disabilities) influences both the amount of tax paid and the level of social transfers received.  For a more detailed discussion of the levelling effects of the redistributive tax and transfer system (as relates to income inequality rather than regional inequality) see this paper from the ESRI.

 

Figure 7: Social Benefits and Taxation as a percentage of Total Household Income 2015

Source: CSO, 2018, County Incomes and Regional GDP; own calculations.

In the State as a whole taxation (24%) is a higher proportion of Total Household Income than Social Benefits (20%), and this is also the case in Galway and Clare.  In the five other Western Region counties social benefits are a higher proportion of Total Household Income than taxation.  This is most evidently the case in Donegal with taxation 18% and social benefits 31% of Total Household Income in the county.

 

Conclusion

Finally, given that this post has examined the various components of disposable incomes Figure 8 gives an overview of the different broad income components in Western Region counties in 2015.  As discussed above, Primary Income is largely made up of earned income (and imputed rent and net interest and dividends), while Total Household Income also includes social benefits.  Taxes are deducted from Total Household Income to give Disposable Income per person.

 

Figure 8: Primary, Total Household and Disposable Incomes for State and Western Region counties in 2015

Source: CSO, 2018, County Incomes and Regional GDP ; Estimates per person based on own calculations using inferred population estimates.

Disposable Income, the key ‘county income’ measure, is made up of different sources of income and transfers and is also affected by taxation, therefore it is valuable to understand the changes in each of these components in the different counties when considering changes to income.

 

 

Helen McHenry

[1] Figures published this year (2018) are for 2015, with provisional figures for 2016.  Therefore when looking at the most recent components of income, 2015 is examined

WDC Insights Publications on County Incomes and Regional GDP

The Western Development Commission (WDC) has just published two WDC Insights: How are we doing? County Incomes in the Western Region and What’s happening in our regional economies?  Growth and Change in Regional GVA.

Both of these examine data from the most recent CSO County Incomes and Regional GDP publication for 2015 (with preliminary data for 2016) and they have a particular emphasis on the counties of the Western Region and on our regional economy.

These two page WDC Insights publications provide succinct analysis and commentary on recently published data and on policy issues for the Western Region.  Both of these WDC Insights are shorter versions of the series of blog posts on County Incomes and Regional GVA which you may have read previously.

How are we doing? County Incomes in the Western Region

In this WDC Insights data on County Incomes in 2015 are examined with a focus on the difference among Western Region counties and changes over time.

Five Western Region counties had Household Disposable Income per Person (Disposable Income) of less than 90% of the state average, while Galway and Sligo were both 93%.  They  had the highest Disposable Incomes in the Western Region in 2015 (Galway (€18,991) and Sligo (€19,001)).

Donegal continues to have a significantly lower Disposable Income than any other county in Ireland (€15,705 in 2015).  Disposable Income in Roscommon was also significantly lower than the state average at €16,582 in 2015. This was the second lowest of any county in Ireland, while Mayo had the fourth lowest.

Regional divergence was at its least in 2010 when all parts of the country were significantly affected by recession. Since then, incomes in some counties have begun to grow faster and divergence has again increased, particularly since 2012.

The WDC Insights How are we doing? County Incomes in the Western Region can be downloaded here  (PDF 260KB)

 

What’s happening in our regional economies?  Growth and Change in Regional GVA

The most recent regional GVA and GDP data (for 2015 and preliminary 2016) published by the CSO is discussed in this WDC Insights with a focus on the regions which include the seven Western Region counties.

Between 2014 and 2015 there was very significant growth in GVA and GDP nationally (a level shift which occurred for a variety of reasons). It is therefore valuable to examine how this rapid economic growth was spread among regions. While data for the largest regions of Dublin and the South West has been suppressed by the CSO, to preserve the confidentiality, variation in growth and disparity in the other regions continues to be of national and regional importance.

The data shows that disparities are widening and economic activity, as measured by GVA, is becoming more and more concentrated.  The smaller contribution to national GVA from other regions highlights their significant untapped potential.

The WDC Insights What’s happening in our regional economies?  Growth and Change in Regional GVA can be downloaded here  (PDF  350 KB)

 

If you find these WDC Insights on County Incomes and Regional GVA interesting and would like to read more detailed discussion of the data please visit these recent WDC Insights blog posts:

Leprechauns in Invisible Regions: Regional GVA (GDP) in 2015

What’s happening in our regional economies? Growth and change in Regional GVA.

How are we doing? County Incomes in the Western Region

I hope that you find these WDC Insights useful.  Let us know what you think.  We’d welcome your feedback.

 

Helen McHenry

‘Delivering Balanced Regional Development’ … 10 years on

I was recently reminded that it’s been ten years since the WDC’s conference ‘Delivering Balanced Regional Development’ in May 2008. The context at that time was that balanced regional development had been included as a key objective of the National Development Plan 2007-2013 and was to have been a key consideration in public investment decisions.  At the same time however, the economic crisis was beginning to unfold. The WDC therefore felt it was timely to provide a forum in which the policy issues involved in balanced regional development could be discussed and debated.

Held at the Hodson Bay Hotel in Athlone, speakers included academics and researchers Professor Neil Ward from the Centre for Urban and Rural Development Studies at Newcastle University, Professors Gerry Boyle (NUI Maynooth) and Michael Keane (NUI Galway), as well Dr. Edgar Morgenroth (ESRI).  The line-up also included a number of policymakers including Julie O’Neill, Secretary General of the Department of Transport, Mark Griffin (Department of Planning) and Dermot O’ Doherty (InterTradeIreland).  All the presentations can be downloaded from here.

The focus of this post however is the paper by the WDC Policy Analysis team, presented by Dr Patricia O’Hara, then Policy Manager of the WDC.  Looking back at the paper I’m struck by how much has changed and how much has stayed the same.  The past ten years have seen massive changes in the country – the recession and recovery, a return to emigration, Brexit, significant social changes (very evident from last week’s referendum).

While the initial years of the recession actually saw some narrowing of regional disparities as all regions took a hit, the recovery has been spatially uneven and it could be argued that some of the trends driving the recovery e.g. multinational IT services firms, is accentuating regional imbalance.

2018 has seen the launch of the new National Planning Framework and a new National Development Plan, with three Regional Economic and Spatial Strategies currently being devised.  Therefore it seems an opportune time to reflect on what we had to say about balanced regional development a decade ago.

Deirdre Frost, Helen McHenry, Éamon Ó Cuív TD, Patricia O’Hara, Pauline White at the ‘Delivering Balanced Regional Development’ conference, 23 May 2008

The WDC’s paper was titled ‘The Regional Development Challenge: A Western Region Perspective’ and it set out what we considered better regional balance might look like, i.e. what regional development policies should be trying to achieve.  The list still seems as relevant today as then (but replacing the word ‘Gateway’ with city and key regional centres).

  • Future population growth distributed more evenly across Ireland.
  • Gateway centres with sufficient critical mass to serve as drivers for their regions.
  • Population increase in hubs and in small and medium-sized towns across the regions based on inward investment and indigenous economic activity, including significant employment in the public sector and locally traded services.
  • The natural resources of rural areas utilised in a sustainable manner and such areas well-linked to local centres.
  • An infrastructure base that enables all regions to optimise their participation in, and contribution to, the knowledge economy.
  • Quality social provision at local level and efficient access to services in other centres so that location does not contribute to social exclusion.
  • Careful planning and management of the environment, including landscape, cultural and heritage resources.

Following a discussion of regional disparities and trends, as well as international insights, the paper concluded with seven policy recommendations on what was needed to achieve more balanced regional development:

  1. Political commitment and vision based on an understanding of the kind of spatial structure most suited to Ireland’s social values, history and geography.
  2. Clear responsibility for delivery of regional development policy so that key government departments ‘mainstream’ the regional dimension into their spending decisions. One government department should have the mandate and resources for this and ensure, for instance, that other relevant departments include regional development outputs in their Annual Output statements to the Oireachtas.
  3. Resources should be provided to address the research and intelligence gap for policy-making, especially the development of regional indicators, measures of output and urban-rural links. Robust analyses of policy successes and failures are also necessary.
  4. Regional investment strategies should be directed to improving regions’ infrastructure, skill endowment and quality of life as the key drivers of their capacity to maximise their resource endowment and attract inward investment. Spending decisions in transport, energy, telecommunications, human resources, research, development and knowledge issues should clearly target reducing structural disparities between regions and not reinforce them.
  5. The NSS provides a robust framework for balanced regional development, but its operationalisation needs to be informed by a thorough understanding of the investment and planning requirements at different spatial levels.
  • The new, smaller gateways need support appropriate to their scale and state of development that maximises the possibility of sustainable growth and encourages them to form strategic alliances.
  • The interaction between gateways, hubs, provincial towns and rural areas needs to be investigated and understood in order to construct effective policy to support their function in the spatial hierarchy.
  1. All levels of government and stakeholders should be involved with common purpose in structures that facilitate knowledge-sharing and efficiency. Pending other reform, ‘ad hoc coalitions’ of local authorities could be an effective way of tackling common problems and facilitating cross-boundary/border cooperation between towns and smaller centres.
  2. The north-west of Ireland has some particular weaknesses that could be addressed by acceleration of investment in infrastructure links which would facilitate crossborder links and act as a counterbalance to the Dublin-Belfast corridor.

It can be argued that some progress has been made in a number of these areas with efforts to more closely align the National Development Plan investment priorities with the National Planning Framework. However many of these recommendations remain relevant, the need to integrate regional development far more closely in the investment decisions of the main spending Departments, the need to understand the interactions between different levels on the spatial hierarchy far better and to develop effective policy for cities, towns and rural areas and of course the continuing challenge for development in the north-west, which has been further exacerbated by Brexit.

It seems that delivering on effective balanced regional development is still a work in progress.

Pauline White

 

 

 

What’s happening in our regional economies? Growth and change in Regional GVA.

In the last blog post on this subject, Leprechauns in Invisible Regions, the very significant changes in GVA and GDP[1] at a regional level between 2014 and 2015 were discussed.  These largely applied in manufacturing, with a national growth in GVA that sector of 134%.  As mentioned in that post, some regional data for the NUTS3 regions of Dublin and the South West was suppressed by the CSO to preserve confidentiality.  The focus of this post, therefore, is on changes in other NUTS 3 regions.  Of course Dublin and the South West are the largest economic regions but it is useful to consider the changing situation in regions less affected by the level shift in GVA in 2015 (and not affected by the confidentiality issue), and to examine in more detail the other GVA data published by the CSO in its annual County Incomes and Regional GDP publication.

The change in GVA per person between 2014 and 2015 is shown in Figure 1.  Growth in the State as a whole (which includes the South West and Dublin regions) was most significant (37%), but there was a 30% increase in GVA per person in the Mid West region and a 30% increase in the South East region.  Growth in GVA in those years was more modest in the Midland region (17%) and the West region (9%), while it was only 5% in the Border region.

Figure 1: Regional GVA per person at Basic Prices, 2014 and 2015 

a Data for 2015 for Dublin and South West regions suppressed for reasons of confidentiality

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 9c GVA per person at Basic Prices, 2007 to 2016

Looking at changes over a longer period Figure 2 shows GVA per person in the NUTS 3 regions since 2007[2].  GVA per person was significantly higher in the Dublin and South West regions between 2007 and 2014.  There has been some change in relativities among regions since 2007 with the Midland region, which had lowest GVA per person in 2007, higher than the Border region in 2015 (22,320 in the Midland region compared to 19,060 per person in the Border region in 2015).  GVA in the West grew more rapidly than elsewhere in 2011 and 2012 but since that period GVA in the West has again fallen behind that in the Mid East[3] and the South East and the gap between them has widened.

Figure 2: Regional GVA per person at Basic Prices, 2007 and 2016 

a Data for 2015 and 2016 for Dublin and South West regions suppressed for reasons of confidentiality

b Preliminary results for 2016

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 9c GVA per person at Basic Prices, 2007 to 2016

As has been discussed, some of the regions showed very significant growth between 2014 and 2015 but, as can be seen in Figure 2, there was no significant increase in GVA between 2015 and 2016 in any region for which data is available.

Disparities within the State

An index of how GVA in the regions compared to that in the State between 2007 and 2016 (Figure 3) gives a useful picture of widening regional disparity.  None of the regions for which data is available were above the State average during that period.  The Border region had an index of only 36.3 in 2015.  In that year the Midland region was only 42.5% of the State while the West was 56.0.  In contrast in 2007 the Border index was 68.1, the Midland index was 65.5, and the West was 71.3.  The Mid West, which had consistently highest index of GVA for regions where data was available, was 72.6% of the State average in 2016.

Figure 3: Index of GVA for NUTS 3 Regions, 2007-2016, State=100

a Data for 2015 and 2016 for Dublin and South West regions suppressed for reasons of confidentiality

b Preliminary results for 2016

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 10 Indices of GVA per person at Basic Prices, 2007 to 2016 (State = 100)

All of the regions for which data is available have lower indices of GVA relative to the State in 2016 compared to 2007.  For example, the West was 71.3 in 2007 and 56.0 in 2016, and the Border was 68.1 in 2007 and 37.1 in 2016.  This indicates the very significant widening of disparities in GVA between these regions and GVA in the State which is influenced by the more rapidly growing Dublin and South West regions.

 

EU comparison

It is also interesting to look at changes in GVA over time relative to an index of regional GVA in the EU.  This shows how Irish regions are faring compared to the rest of the EU.  It is also important as the relative size of regional GVA per person impacts on the level and type of EU structure funding available to a region.  Regions where GDP per capita is less than 75% of the EU average are designated ‘convergence regions’ (86 regions between 2014 and 2020) and those with GDP per capita above 75% of the EU average are seen as developed regions (186 NUTS 2 regions).

Looking at the NUTS 2 regions in Ireland the changes relative to the EU average are very stark, particularly since 2015 (Figure 4).  In 2007 the S&E region was 163.8% of the EU average and it declined to 144.2% in 2009, there followed by steady grown to 2014, when it reached 153.2%, still below that in 2007.  The level shift in GVA in 2015 meant the S&E region increased dramatically to 213% of the EU average in 2015.  In contrast in 2007 GVA in the BMW region was at the EU average (100.9) but it declined relative to the EU average until 2014 (77.1%) with only slow growth for 2015 and 2016 (it is estimated at 80.1% of the EU average in 2016), compared to 213% in the S&E region.

Figure 4: Index of GVA for BMW and S&E regions (NUTS 2), 2007-2016, EU28=100

b Preliminary results for 2016

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 11   Indices of GVA per person at Basic Prices, 2007 to 2016 (EU28 = 100)

There is more fluctuation in GVA relative to the EU28 when we look at NUTS 3 regions (Figure 5).  Even without data for the regions with the highest GVA (Dublin and the South West) the other regions in the S&E NUTS 2 region have all had higher GVA than the EU average since 2014.  The Mid West region consistently had GVA higher than the EU average since 2007, despite some decline, while the South East and the Mid East were below the EU average between 2009 and 2014).

Figure 5: Index of GVA for NUTS 3 regions, 2007-2016, EU28=100

b Preliminary results for 2016

Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 11   Indices of GVA per person at Basic Prices, 2007 to 2016 (EU28 = 100)

 

In contrast, the three regions which make up the BMW were all at or below the EU average in 2015 and 2016, and the Border and Midland regions have never been above the EU 28 average.  The Border is currently only 65.7% of the EU average (2016) while the Midlands is 76.2%.  GVA in the West region has shown significant fluctuation, and was particularly strong in 2011 and 2012 (peaking at 108.8% of the EU average) but has since fallen back, though it is currently very close to the EU average (99.2%).

 

Productivity

It is also interesting to look at changes in productivity in recent years (Figure 6).  There was a dramatic increase of 42% in productivity (GVA per person at work) in the State between 2014 and 2016 (this includes the figures for the South West and Dublin regions), and there were also significant increases in the Mid East (38%), Mid West (34%) and South East (40%) regions.  While increases in productivity were much smaller in the Border (9%), Midland (20%) and West (15%) all regions did show productivity growth.

Figure 6: GVA per person at work 2014-2016 (NUTS 3)

Source: CSO, 2018, County Incomes and Regional GDP, 2015,Table 13  GVA at Basic Prices, population and persons at work for each region 2015

 

Regional Productivity is dependent on a number of factors, including the types of economic activities being undertaken in the regions so it is useful to look more closely at the data for this.

Economic Sectors

There is significant variation in the importance of different sectors in each region (Figure 7).  Looking at Industry, for example, the West region has the highest proportion of GVA from this sector (of the regions for which data is available) at 41.5% compared to 38.8% for the State as a whole.  There is substantial variation in the contribution of Professional, Scientific and Technical services to GVA (13.6% in the Mid East region and 13.4% in the South East compared to 5.3% in the Midland region and 6.2% in West region).  Public Administration and Defence makes a very significant contribution to GVA in the Border (27.9%) and Midland region (26.8%) but only accounts for 11.9% of GVA in the State as a whole.

Figure 7: Gross Value Added by Sector 2015

Source: Source: CSO, 2018, County Incomes and Regional GDP, 2015,Table 9d   Gross Value Added by Sector 2015

 

The relative importance of the three main branches of economic activity in the Border, Midland and West Regions is shown in Figure 8.  Manufacturing, Building and Construction accounts for almost half (46%) of GVA in the West region but only 24% in the Border and 32% in the Midland regions.  In contrast services account for 65% of the Midland GVA, and 73% of GVA in the Border region and 52% in the West region.  For the State as a whole Manufacturing, Building and Construction accounts for 41% of GVA and Services account for 58%.

Figure 8: GVA in Border Midland and West regions by branch, 2015

Source: Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 15   GVA at Basic Prices classified by region and branch, 2014 and 2015

 

Looking at changes in GVA between 2014 and 2015 for each branch of the economy and, as would have been expected, there were significant changes in GVA from Manufacturing, Building and Construction in most regions between 2014 and 2015, with a 105% increase in the State, a 76 % increase in the South East, and a 75 % increase in the Mid West.  In the West, however the increase in GVA in this branch was only 20% and again, very significantly (and giving rise to the low growth in GVA) in the Border it was only 3%.

Figure 9: Changes in regional GVA by branch between 2014 and 2015

 

Source: Source: CSO, 2018, County Incomes and Regional GDP, 2015, Table 15   GVA at Basic Prices classified by region and branch, 2014 and 2015

 

There were also changes of note in the Agriculture, Forestry and Fishing sector (which accounts for a relatively small amount of GVA).  There was a decrease in GVA from this sector of 7% in the State between 2014 and 2015 and a significant decrease of more than 20% in the South West and 14% in the Border region and the Mid West region.  GVA from services grew in all regions, but only by 1% in the West region (compared to 11% in the State).

 

Conclusion

While there are difficulties with using GVA and GDP as measures of regional development (see here and here) it is nonetheless a very important indicator of regional economic activity and essential to our understanding of the changes taking place in Irish regions.    However, in order to understand regional growth and change it is important to use GVA in combination with other data such as that on employment, enterprise activity, income, wealth and consumption.

 

 

Helen McHenry

 

[1] 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 .

[2] Data for the South West and Dublin Regions is not available for 2015 and 2016

[3] In previous posts on GVA the Mid East has been considered with Dublin (see this post for example) as much of the GVA in the Dublin region is produced by commuters from the Mid East (and other regions) and GVA per person for the Dublin region does not reflect this.  However, as data for the Dublin region is not available Mid East data is included here.

How are we doing? County Incomes in the Western Region

The CSO released data on County Incomes and Regional GDP in 2015 last month (and also published preliminary figures for 2016).  In this post changes in county incomes in the Western Region are examined with a particular focus on the difference among counties and the changes over time.  Regional GDP will be considered in a forthcoming post.

The map (produced by the CSO) gives an indication of the differences in Household Disposable Income per Person across the State.

Source: CSO, 2018, County Incomes and Regional GDP

 

Clearly Dublin has a significantly higher Household Disposable Income per Person than elsewhere, with Kildare and Limerick also above the state average, while many counties in the West and North West have Disposable Incomes well below the state average.

A quick overview of the recent trends in Household Disposable Incomes per Person is given in Figure 1, showing changes in the Western Region counties over the last decade. The 2008 peak and following rapid income decline is very clear but the recovery of income levels from 2014 onwards is also evident.

Figure 1: Household Disposable Income per Person 2006-2016 for Western Region counties

*Preliminary

Source: CSO, 2018, County Incomes and Regional GDP

 

No county in Ireland has returned to the income levels of 2008, and indeed in the Western Region only Sligo was estimated to have very slightly higher (€14) Household Disposable Income per Person in 2016 than it did in 2007 (along with only 4 other counties: Dublin, Wicklow, Limerick and Kerry).

Looking at the most recent figures, Galway (€18,991) and Sligo (€19,001) had the highest Disposable Incomes per Person in the Western Region in 2015 with Sligo higher than Galway for the first time, although the gap between them has been narrowing in recent years. In the preliminary 2016 figures Galway had a very slightly higher disposable income per person (Table 1).

Table 1: Household Disposable Income per Person in 2015 and 2016 for the counties of the Western Region

 

*Preliminary

**Western Region figures based on own calculations using inferred population estimates.

Source: CSO, 2018, County Incomes and Regional GDP

 

Donegal continues to have a significantly lower Disposable Income per Person than any other county Ireland (€15,705 in 2015).  This was just over 77% of the state average that year. Disposable Income in Roscommon is also significantly lower than the state average (81.5%) at €16,582 in 2015.  This was the second lowest of any county in Ireland, while Mayo was the 4th lowest (see Figure 2 below).  Sligo and Galway were in 13th and 14th places, but no Western Region county had more than 95% of the State average Disposable Income.

Figure 2: Household Disposable Income per Person in 2015 for all counties

Source: CSO, 2018, County Incomes and Regional GDP

 

Preliminary figures for 2016 (Figure 3) show that all counties had small increases in Household Disposable Income per person on 2015, the largest increase in that period (2015-2016) was in Galway (2.9%) while the smallest was in Donegal (2.5%).

Figure 3: Household Disposable Income per Person in 2015 and 2016* for Western Region counties

*Preliminary

**Western Region figures based on own calculations using inferred population estimates.

Source: CSO, 2018, County Incomes and Regional GDP

 

Increases were larger between 2014 and 2015 (see Table 1) with Sligo showing an increase of 5.7%, the lowest Western Region county increase was in Roscommon at 2.0%.  The state average increase for that period was 5.6% and Household Disposable Income per Person in Dublin grew by 6.3%.  These differing growth rates among counties are giving rise to increasing regional imbalance as is shown in Figure 4 which charts the income in Western Region counties as compared to the state average (State =100).

The gap between most counties in the Western Region and the state was at its widest in 2001 and narrowed (i.e. they got closer to the state average) during the boom period and into the slowdown.  In fact regional divergence was least in 2010 when all parts of the country were significantly affected by recession.  Since then, as discussed, incomes in some counties began to grow faster and divergence has again increased, particularly since 2012.

Figure 4: Index of Household Disposable Incomes per person in Western Region counties 2000-2016

*Preliminary

Source: CSO, 2018, County Incomes and Regional GDP

 

The pattern has not been straightforward, however, some counties were closer to the State average in 2000.  For example Clare was 96.4% of the state average in 2000 and Roscommon was 91.1% but by 2016 Clare was 88.8% and Roscommon was 81.3%, showing that they have been doing relatively less well.  Others, like Sligo where Household Disposable Income per Person was 88.1% of the State average in 2000 and 93.3% in 2016, and Leitrim which was 86.5% in 2000 and 89.6% in 2016, have narrowed the gap to the state average and are improving relatively.

The divergence in Income levels among counties would be much greater without the redistribution effects of social transfers and taxes.  Counties with the highest Primary Incomes[1] tend to have relatively lower social transfer figures (having fewer people in older and younger age categories or otherwise not working) and  higher tax (with more people earning and often higher incomes). See this post for more discussion of the components of change.  Figure 5 shows the percentage difference between Household Disposable Income and Primary Income for each county in 2015.  Counties which are doing well (e.g. Dublin, Kildare) tend to have a higher Primary Income level than Household Disposable Income level, while less well-off counties tend to have a higher Household Disposable Income than Primary Income (the difference being, as noted above, the effect of Social Transfers and Taxes).  The relationship is not simple however, counties which rank lowest for disposable income will not necessarily have a similar rank for Primary Income.  For more discussion of Primary Income see this post.

Figure 5: Percentage Difference between Household Disposable Income and Primary income for each county in 2015

Source: CSO, 2018, County Incomes and Regional GDP

 

 

This post has provided a brief overview of the key County Income figures for the Western Region based on the recent CSO release.  Regional GDP will be examined in a future post with the components and trends will be analysed in more detail in the coming months.

 

 

Helen McHenry

 

[1] Primary Income is defined for National Income purposes as follows: Compensation of employees (i.e. Wages and Salaries, Benefits in kind, Employers’ social insurance contributions) plus Income of self-employed plus Rent of dwellings (including imputed rent of owner-occupied dwellings) plus Net interest and dividends.

Total income is defined as: Primary income plus Social benefits plus Other current transfers.

Disposable income is defined as follows: Total income minus Current taxes on income (e.g. Income taxes, other current taxes) minus Social insurance contributions (e.g. Employers’, employees’, self-employed, etc.)

The Southern Regional Spatial and Economic Strategy – Beyond Cities

The newly published National Planning Framework (NPF) Ireland 2040 sets out regional targets for each of the Regional Spatial and Economic Strategies to deliver within their respective regions. The WDC recently made a submission on the Strategy for both the Northern and Western and the Southern Region, as the WDC region extends across parts of both.

A recent blogpost highlighted some of the issues the WDC considers relevant to the Northern and Western Region Strategy and the full submission can be downloaded here (or you can read the summary here). Here we examine some of the issues we highlight in our Submission to the Strategy for the Southern Region, available here and the summary is available here.

Cities

While most of the WDC region is in the Northern and Western Region, the WDC region extends into County Clare within the Southern Assembly region. The Southern Region includes three of the five cities (Limerick, Cork and Waterford), while each of the other regions has one city – Dublin in the Eastern & Midlands region), Galway in the Northern and Western Region. As such it would be important that the Southern Region strategy does not become overly city focused. Too often a strategy is made which is supposed to be for all people and areas, but the focus becomes that of cities and other areas are left without appropriate investment. This is a particular concern for the Southern Region Strategy.

While the cities within the Southern Assembly region are outside the remit of the WDC region the influence of cities extends across County Clare.  Galway to the north and Limerick to the South both impact on the residents of County Clare. The WDC has conducted analyses of Labour Catchments and Travel to work areas[1] which provide insights into the travel to work patterns of residents of County Clare and also the labour catchment of Limerick city.

This analysis shows the influence of Limerick city as a place of work for many residents of southern and eastern Clare and this has shown an increase since a similar analysis was done based on Census 2006. Just under 10,000 (9,647) workers live in that part of the Limerick city labour catchment which extends into Co. Clare, illustrating the importance of Limerick city as a place of work for residents of South-East Clare.

Labour catchments and their geographic reach provide important insights into the roles of urban centres and their hinterlands and consideration of these should inform the RSES. This will inform consideration of their strategies and defining the boundaries of the Metropolitan Area Strategic Plans as they exist and extend beyond local authority boundaries.

Lack of employment opportunities in towns as well as cities will be the key barrier to achieving the Draft NPF targeted levels of 20-25% growth. The employment centres of Ennis and Shannon in particular are key and ensuring that these centres attract and retain employment opportunities will be a key determinant in the achievement of the targets.

Ennis

After Kilkenny, Ennis is the largest urban centre outside of the cities and is the fifth largest urban centre in the Southern Assembly region. While the Southern Assembly region contains thirteen towns with a population greater than 10,000, just one of these – Ennis is located in Co. Clare.

Larger regional towns such as Ennis which are quite close to cities (Limerick and Galway) can benefit from good connectivity and economic spill overs. In the case of Ennis, proximity to Shannon as an employment centre is also a driver.

Forthcoming analysis by the WDC identifies the Ennis labour catchment in which the influence of Ennis extends over a large area but is predominately contained within county Clare. While the labour catchment extends to large parts of the county it excludes south western areas which are more influenced by the Kilrush labour catchment to the West and the Galway City labour catchment to the north ( which extends into north-west Clare in areas close to Fanore and Ballyvaughan). Ennis is still the dominant labour catchment for parts of east Clare (Tulla and Feakle) but east of this area is mainly under the influence of Limerick City which acts as a major destination for residents of south-east Clare.

Shannon

The WDC considers that Shannon should also be considered in the category of larger centre with population in excess of 10,000 – as its resident population of 9,729 is just below the threshold used and it is a more significant employment destination than its resident population would suggest. The CSO identifies the ‘daytime population‘[2] which includes those travelling into work and study as well as those that are normally resident there and who do not travel to work or study. It is clear from the significantly larger ‘daytime population’ that Shannon attracts a large influx of people to work there, both at the airport and among the 100+ international firms located there.

Rural Areas

Realising Clare’s Rural Potential, Clare Rural Development Strategy 2026, was published in 2016. Focussing on community development and community run social enterprises, development will take a partnership approach with communities and agencies working together. It details a range of actions designed to target a reversal of population decline across parts of Rural Clare. The strategy aims to deliver 4,000 jobs in rural areas over 10 years and challenges the presumption that urban living is the only model for growth. There are useful insights into innovative approaches to rural development which could benefit other rural communities across the Southern region.

It is essential that the NPF, the Regional Strategy and the Action Plan for Rural Areas work in a coherent manner to provide a strong policy and strategic basis for regional and rural action which are focussed on improving economic opportunities for people living in rural communities. Furthermore national goals must align with regional strategies and county and local plans and across all sectors.

The Southern Region is different to the others in that it has three cities within its remit, with one city each in the other regions. It will be important that the Southern Regional Spatial and Economic Strategy does not become overly city focused and that it considers the needs and opportunities in all those places between cities – such as County Clare as well as the rural areas within its Region.

The WDC Submission to the Strategy for the Southern Region is available here with the summary available here.

 

[1] Travel to Work and Labour Catchments in the Western Region (forthcoming) analysis by AIRO for WDC based on POWSCAR Census of Population 2016.

[2] http://census.cso.ie/p11map41/

 

Home-Based Working in the Western Region

The Western Development Commission (WDC) has published its latest WDC Insights Home-Based Working in the Western Region,

download here (267 KB):, which is the third in a series examining the current nature of work, focussing on work which is often home based.

Working at or from home can take different forms:

  • The WDC Policy Briefing No.7 e-Working in the Western Region: A Review of the Evidence (download here – PDF 748KB), examined the extent of e-working in the Western Region, examining those in traditional employer-employee relationships, but who work from home, whether full-time or for a period during the working week. This form of working is also illustrated with several case studies of the practice, (download here – PDF 484KB).
  • The second publication in the series, WDC Insights ‘New Work’ – the Gig economy in the Western Region, (download here – PDF 254KB), examined the nature of the gig economy and the extent to which it exists in the Western Region.
  • This WDC Insights on Home-Based Working in the Western Region examines the data on those people who work ‘mainly at or from home’ derived from the Census question ‘how do you usually travel to work?’ with one of the answers being ‘work mainly at or from home’
  • According to the Census, nationally, in 2011[1] excluding those working in the Agriculture, forestry & fishing industries[2], the share of the state’s working population reported as working mainly at or from home was 2.8% (47,127).

In the Western Region the share was higher with 3.2% (8,994) stating they worked mainly at or from home.

There is a higher rate of self-employment in the Western Region and this is likely to be a contributory factor.

  • Those working mainly at or from home represent a broad range of workers; the self-employed, employees, ‘gig’ workers and e-Workers across a broad range of sectors. They may have very little in common except their place of work, which is less visible than traditional work places.

Better data is needed to capture and measure the incidence of all types of work so as to ensure that our policy focus is not limited to the traditional workplace-based employer-employee relationship.

Policies are needed to support all employment types and evidence of the nature and extent of work that occurs in the home is required to inform this.

 

Deirdre Frost

[1]Census of Population 2011, the most recent Census data available. Census 2016 data will be available in September 2017.

[2] The rest of the data presented in this WDC Policy Briefing exclude those working in the Agriculture, forestry & fishing industries, in order to understand the prevalence of e-working in the wider economy. The WDC wish to thank the CSO for a special run of data excluding those working in the Agriculture, forestry & fishing industries.

How are we doing?  GDP of Irish Regions in 2014

The CSO has recently published Gross Domestic Product (GDP) figures for Irish regions (NUTS3) for 2014.  This publication updates the preliminary figures for 2014 which were published last year (and also makes some changes to the 2013 figures) but it does not, unfortunately, provide any 2015 estimates.

While a regional GDP[1] figure is provided (Table 9a) most of the information for regional accounts is for GVA at basic prices (Table 9c).  These are considered in this post which examines differences among regions and changes over time.

Discussions of GDP inevitably must also consider on the limitations of the statistic as a measure of economic development (see here ) but it is the key statistic used, despite shortcomings.  As Eurostat notes here GDP per capita 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, as commuter flows may result in employees contributing to the GDP of one region (where they work), and to household income in another region (where they live).

This drawback is particularly relevant when there are significant net commuter flows into or out of a region. Areas that are characterised by a considerable number of inflowing commuters often display regional GDP per capita that is extremely high (when compared with surrounding regions). This pattern is seen in many metropolitan regions of the EU, but principally in capital cities and is very clearly displayed in Ireland in particular between Dublin and the Mid East.

Indeed, the Solas Regional Labour Market Bulletin for 2016 has noted that the prevalence of inter-regional commuting was the highest in the Mid -East region, where 40% of workers who resided in the region were employed in other regions, the majority of whom were employed in Dublin. For this reason in most of the rest of the post Dublin and the Mid East regions are considered together.  It highlights that commuting to work was also sizeable in the Midland region, where a quarter of those in employment were commuting to other regions , while in the Border, South-East and West regions the corresponding figure was about one-in-ten.

Given these difficulties with the data, a  better picture of regional growth and development would be gained from a broader focus considering Income, Wealth and Consumption data but while Income figures are available at NUTS 3 level (see here) there is little regional data on Wealth and Consumption.

Despite issues with GDP and GVA they are important regional statistics and considering relative levels and changes over time can help us better understand economic development and growth in our regions.

 

How much of our GDP is produced in each Region?

The Dublin region contributed 45% of Ireland’s GDP and the South West contributed 17%.  In contrast the Midland region produced 3% (see Figure 1 below) and the rest of the regions were responsible for between 5 and 8% of national GDP in 2014.

The high level of commuting into the Dublin Region means much of that region’s GDP, more than any other, is produced by workers residing in other regions (mainly the Mid East but also Midland and Border regions).

 

Figure 1   GVA per Region at Current Market Prices  (GDP), 2014 

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 9

It should also be remembered that the regions also vary considerably in size.  While Figure 1 shows the GDP produced in each region in 2014, Figure 2 shows the proportion of the population (as estimated by the CSO for 2014) in each region.  Some of the reasons for the  different distribution of population and economic activity are discussed later in this post.

 

Figure 2 Population Distribution by Region 2014

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 13

It is interesting to see how the proportion of GDP produced in each region in 2014 compares with that in 2004 (Figure 3).  In that year Dublin produced 39% of GDP (compared to 45% in 2014) and the Border produced 8% compared to 5%.  This, as will be seen again later in this post, shows the dominance of Dublin, in particular, but the South West is also increasing its relative contribution while the relative importance of GDP from other regions has reduced over time.

 

Figure 3   GVA per Region at Current Market Prices  (GDP), 2004 

Source: CSO, 2015, County Incomes and Regional GDP 2012, Table 9b

 

Regional GVA per person

Clearly Dublin produces much of Ireland’s economic output, but it is important to look at how much is produced per person in each region.  As noted by Eurostat here, in a majority of the multi-regional EU Member States, capital city regions were generally those with the highest average GDP per capita; the only exceptions to this rule were Germany, Italy and the Netherlands.

Figure 4 shows the amount of GVA produced per person resident in each of the NUTS3 regions.  Dublin and the Mid East had the highest GVA per person in 2014 (€51,799), while the South West also had high output (€45,956).  In contrast the Border (€18,371) and Midland (€19,778) were much lower, the Border region only 35% of that in Dublin and the Mid East and the Midlands 38%.

 

Figure 4: GVA per person at basic prices 2014

Source:  CSO, 2017, County Incomes and Regional GDP 2014, Table 9c

 

Regional recovery in GVA- or not…?

The different trends in GDP overtime can be seen in Figure 5 below which shows GDP per capita for 2006, 2010 and 2014.

The Border is the only region to still have a lower GVA per person in 2014 than it did in 2010.  All other regions are now above the 2010 level, (though only by small amounts in the Midland and West).  However, only Dublin plus Mid East and the South West had higher GVA per person in 2014 than in 2006.

 

Figure 5: GVA per person (basic Prices) NUTS3 Regions (2006,2010,2014)

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 9c

Looking at the variation since 2006 (Figure 6 below) the strong recovery in Dublin and the Mid East since 2011 is evident.  The recovery in the South West was less consistent with a decline in 2013 but these two regions are significantly ahead of the other regions both in terms of the level of GVA per capita and the scale of recovery.  The West region which had begun to recover well had GVA growth between 2009 and 2012, it fell in 2013 but 2014 shows some recovery while recovery in the Midland and Border regions has been sluggish.

 

Figure 6: GVA per person 2006-2014 (Basic Prices) NUTS3 Regions.

Source:  CSO, 2017, County Incomes and Regional GDP 2014, Table 9c

These differing patterns of change can also be seen clearly when GVA per person is shown as an Index where the State =100 (Figure 7).  This allows us to consider the GVA per person in each region compares with that in the state over time (2006 to 2014).

The relative decline (compared to the State) in 2014 for all regions except the South West and Dublin plus the Mid East is worrying and the widening of disparities among the regions since 2006 is very clear.  In 2006 the gap between the lowest GVA per person (Midland 70.0 points) and the highest (Dublin plus Mid East 124.7 points) was 54.7 index points, but by 2014 the gap had increased very significantly to 87.8 index points (Border 48.2, Dublin plus Mid East 136.0).  In 2014 the Border (48.2) and Midland (51.9) were very low compared to the state, but even the South East (67.0), West (71.3) and the Mid West (75.9) have low GVA per person compared to the state average.

 

Figure 7: Indices of GVA per person 2006-2014 (Basic Prices) NUTS3 Regions (State=100)

Source: CSO, 2017, County Incomes and regional GDP 2014, Table 10

 

How do Irish Regions compare to the EU average?

It is useful to look at how Irish regions (at NUTS 3 level) compare to the EU average.  This is shown in Figure 8 with Indices of Irish regions between 2006 and 2014 with the EU average equalling 100 in each of those years.  The disparities discussed above are also clear relative to the EU average GVA per person.

In 2014 two of the regions (Dublin plus Mid East (179.5) and South West(159.2)) were significantly above the EU average while the Mid West, which was consistently above the EU average from 2006 to 2013 was just barely above for 2014 (100.1).  The State itself was also above the EU average (132.0).

In contrast, the West, which was briefly above EU average in 2012 and 2013 has again fallen below the EU average (94.1), while the South East was 88.5 in 2014.  The other NUTS 3 regions (Midland (68.5) and Border (63.6)) were both considerably below the EU average and both less than 75% of the EU 28 average.

 

Figure 8: Indices of GVA per person 2006-2014 (Basic Prices) NUTS3 Regions (EU28=100)

Source: CSO, 2017, County Incomes and regional GDP 2014, Table 11

Most EU structural funds  are directed to NUTS 2 level regions where GDP per capita is less than 75% of the EU28 average.  While both the Midlands and Border regions are well below this, when combined with the West the NUTS2 Border, Midland and West (BMW) region was just above the cut off for structural funds at 75.7% of the EU average in 2014[2].  By comparison, in 2006 the BMW region was 106.1% of the EU28 average.

 

Labour Productivity at Regional Level

Within regional accounts, labour productivity is defined as GVA at basic prices per person employed.  It should be remembered that in the regional GVA data for Ireland the ‘person at work’ statistic is related to the region of residence rather than of employment and so the gaps in GVA among regions can appear even wider.  This is shown in Figure 9.

GVA per person at work is, as expected, highest in Dublin at €116,112 per person at work while in the Midland region it is €49,863.  High levels of labour productivity are linked to the efficient use of labour (without using more inputs) and to the mix of activities in the regional  economy (some activities, such as financial services, have higher levels of labour productivity than others).  The South West also shows a very high level of labour productivity. At €111,600 per person at work the South West is only slightly below that of Dublin and the Mid East.  This is also likely to be due to the sectors in the region, especially pharmaceutical and other multinational manufacturers.

 

Figure 9: GVA per person and GVA per person at work (labour productivity) in 2014

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 13

Where a region has a higher proportion of older people, children, or people not in work for other reasons, the GVA  produced is being divided among relatively fewer people at work and so the figures for GVA per person at work appear better.  This is the case in the Border region most significantly, where only 36% of the population is classified as being at work, but also applies to those for the Midland region (39.7%) and the Mid West (39.4%) all of which have a lower proportion of people at work than the state average (41.7%).  In contrast Dublin (45.2%) and the Mid East (43.2%) have much higher proportions of people at work in their populations.

Figure 10 below shows the proportion of the population at work in each of the regions in 2014 as estimated by the CSO.

 

Figure 10: Proportion of the population in each region classified as persons at work, 2014

Source: CSO, 2017, County Incomes and Regional GDP 2014, Table 13

 

Conclusion

Dublin and the Mid East had the highest GVA per person in 2014 (€51,799), while the South West also had high output (€45,956).  In contrast the Border (€18,371) and Midland (€19,778) were much lower, the Border region only 35% of that in Dublin and the Mid East and the Midlands 38%.

The Border is the only region to still have a lower GVA per person in 2014 than it did in 2010.  All other regions are now above the 2010 level, (though only by small amounts in the Midland and West).  However, only Dublin plus Mid East and the South West had higher GVA per person in 2014 than in 2006 and other regions have not yet returned to the 2006 level.

The differences in GVA growth among regions are partially the result of increased productivity and concentration in high value sectors in the wealthier regions, and partly relate to different commuting patterns and the worker to population ratios.

The variations underline the importance of ensuring that there is a focus on regional development needs and a policy of investment and promotion of higher value sectors in all regions, so that the benefits of the recovery are felt more widely.

 

Helen McHenry

 

[1] 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 

[2] The allocation of cohesion funds is currently based on a decision referring to average GDP per capita during the three-year period from 2007 to 2009; a mid-term review of cohesion policy allocations is taking place during the course of 2016 and will likely result in some changes to the system — more information is provided in an article on regional policies and Europe 2020.  See here also .

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

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

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

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

 

What should the NPF achieve?

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

Developing Cities

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

Developing Towns

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

Rural Areas

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

Employment and Enterprise

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

Location Decisions

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

Infrastructure

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

Climate Change

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

How should the NPF be implemented?

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

 

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

 

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

 

 

Helen McHenry

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