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Why Broadband is so Important – Insights on the Digital Economy

Insights from the Digital Economy Conference, May 2016

The Digital Economy Now

The WDC has consistently argued for improved broadband infrastructure and services for the Western Region and indeed all rural areas. The WDC believe that broadband is the single most important infrastructure priority and has advocated investment in next generation broadband over the last few years in various reports, submissions and blog posts.

A conference in Dublin earlier this month provided a useful reminder – beyond Netflix and Youtube – of why broadband services are so important and will become even more so. Organised by Eolas, the conference highlighted the potential of the Digital Economy both in terms of the applications that are and will be available, as well as other countries’ experiences.

Digital Engagement

Some notable highlights included a presentation by the chief digital adviser to the Irish Government, Dr. Stephen Brennan who outlined the Government’s National Digital Strategy. This is aimed at facilitating citizens to get online and he cited some interesting facts, for example;

  • While 75% of the population uses the internet daily, 65% are concerned about data privacy. This is one of the key challenges of the Digital Economy (and Society), where digital communications is so pervasive but there is also widespread concern about the uses to which data is put.
  • 45% of those over 50+ years of age are online daily, again demonstrating how pervasive digital communication is, but also how important it is as a method of communication and that the various barriers to access; lack of broadband, access to devices and lack of technical know-how/ skills, are overcome.
  • Another interesting finding is that 9% of adults run a business from home and close to 2 in 5, 39% of the population, do some work at home. This highlights the importance of adequate telecommunications infrastructure at home, so as to enable self-employment and home-working on a frequent basis. The WDC is examining eworking/ teleworking, the extent to which it is occurring and the policy implications (forthcoming).

Dr. Brennan also highlighted the benefits of the Government’s Trading on-Line scheme which has supported over 4,000 participants and issued over 2,000 Trading Online vouchers, supporting small businesses to develop their online presence. This has led to a 20%+ increase in sales.

Lessons from Norway

There was a particularly interesting presentation on Digital Government in Norway. Heather Broomfield, a Senior Adviser to the Norwegian Agency for Public Management and eGovernment (Difi) outlined the progress of the Digital Economy in the Norwegian public sector.

Norway is not dissimilar to Ireland in that it has a population of 5 million people, yet digital engagement by the average citizen is much more widespread than in Ireland. This is despite its geography which is not conducive to high speed fixed line broadband deployment. Norway has a very long coastline, extending into the Arctic circle and is very mountainous.  Norway has a very low population density, with 13 persons per km2, compared to Ireland’s 65 km2. It is also interesting that much economic activity is dispersed and located around the coastline, with oil and gas exploration important sectors as well as the fishing industry.

Another important difference between Norway and Ireland is the greater degree of decentralisation in Norway which devolves power to 19 counties composed of 422 Municipalities.

In Norway in 2014 there were 38.8 fixed broadband subscriptions (per 100 people), compared to Ireland’s 26.9%. Close to 90% of Norwegians access the internet daily and there is very extensive online engagement with public services. For example, over 80% of individuals interacted online with the public authorities in the last year, compared to a European average of just over 40%.

Digital Inclusion

The importance of good design in promoting online engagement was highlighted by Dónal Rice of the National Disability Authority. In a survey it was found that 42% do not use or have difficulties engaging with public sector websites. Key factors are age and disability with the survey showing that persons with disabilities are three times more likely to encounter difficulties using public sector websites. However if basic good design is used in creating websites it can help ensure more efficient service delivery with more citizens self-serving online compared to queries by phone.

Another example of online service delivery promoting inclusion are some of the services delivered by Local Government.  Ruth Buckley, Head of ICT and Business Services at Cork City Council highlighted some new developments including a new online service for those on the housing list, where they can search online themselves for appropriate properties. Another innovation is the operation of litter management services which are now done electronically. This has been more effective in identifying offenders as well as significantly reducing the administrative burden.

Of particular interest is the extent of innovation occuring at individual local authority level in online service delivery, but more importantly the extent of collaboration and sharing of ideas across Local Authorities.

Michael Bunyan, from the Department of Social Protection outlined some significant developments in the delivery of public services. The Department of Social Protection is one of the largest Government Departments, engaging with most citizens at one point or another. It is also widely located with 400 locations across the country. The rollout of a new smartcard, the Public Services Card was described as well as the development of MyGovID which is designed to provide safer, simpler and faster access to multiple government services. Both of these initiatives are in the early stages of rollout.

In Autumn 2015, the Department of Social Protection was tasked with administering delivery of the Water Conservation Grant to individual households on behalf of the Department of the Environment. There was a very short timeline and online communication was a key delivery channel. Of nearly 900,000 applications, 77% were made online, with the remaining 23% by phone. There were no ‘paper’ based applications. The grant payment was mostly paid electronically, with 85% of payment by electronic fund transfer, and the remaining 15% by cheque. The extent of online engagement illustrates that this is now the communication method of choice.

The potential for delivery of health care using online access was described by Prof. Neil O’Hare, of St James’s Hospital. The ability to access online health records can provide for more effective delivery of health care as well as giving individuals greater ownership of their records. This can reduce the administrative burden as well as reduced costs for filing space in cramped hospitals! There are various developments across the health sector developing more efficient delivery across Ireland but the need for improved rural broadband now was emphasised by Prof. O’ Hare.

Conclusions

The conference highlighted that there are huge potential savings and benefits to be realised via online engagement and service delivery. This will benefit all who have access. The widespread deployment of  next generation broadband as well as supports for those who find online engagement challenging are needed so as to ensure these savings and benefits can be realised by all. The Norwegian case study clearly demonstrates that very low population density and difficult geographic terrain are not significant barriers to effective high speed broadband deployment and large scale online citizen engagement.

Deirdre Frost

Public Policy Priorities in 2016 and Beyond

A seminar entitled Ireland’s Policy Priorities after the next General Election, on November 2nd provided a welcome break from the recent talk of Budget giveaways and election promises. Organised by the Policy Institute, Trinity College Dublin, in association with the Public Policy Advisors Network, the aim was to discuss what are and what should be the policy priorities of the next Government.

Some interesting contributions included that from Dan O’Brien, in which he examined medium term policy challenges, noting the ageing demographics generally as well as a sharp decline, over the last five years, in the number of those aged in their twenties. This is attributed to the birth rate as well as emigration and the ageing of that cohort of East European migrants that came here before the crash.

Another key policy theme which is likely to become a policy priority is Ireland’s response to the EU’s 2030 energy and climate change targets. The recent recession, which gave rise to a reduction in emissions (purely because of a contraction in economic activity), relegated the urgency of this policy priority. The return to economic growth will ensure that this is likely to become a more important policy priority. It was proposed that the next Government should appoint a senior Minister with responsibility for the low carbon agenda.

Considering the economics of the next programme for Government, Stephen Kinsella and Ronan Lyons examined the patterns of national economic growth since 2002 – characterised initially from 2002-2007 by a rapidly growing economy, followed by the economic crisis of 2007-2011 which in turn was followed by a period of readjusting public spending and restoring economic confidence in 2011-2016.

It is suggested that the period from 2016 could be that of ‘coming full circle’, with a rapidly growing economy and a need to manage expectations. In learning from our past mistakes, fiscal policy is key and the authors advocate the use of the concept of the Social Return on Investment (SROI). This differs from the current cost based accounting approach to public spending to a more holistic economic approach where the wider costs and benefits of a proposal would be measured. In doing, so the full implications of a cut are captured e.g. €100 cut to caregivers allowance, which then drives people into the public health system thereby negating any ‘savings’. This is arguably a more useful way of evaluating public policy instruments, allowing a more holistic measure of the effects of policies.

Examining Local Government and Spatial Planning, Seán Ó’Riordáin and John Martin point to the need for a new  long-term spatial plan for Ireland (the National Planning Framework) and the need to learn lessons from the National Spatial Strategy. The role of local government in supporting long term development of both rural and urban areas needs to be addressed.

Bringing the concept of Social Return on Investment to the debate on spatial planning, regional, rural and urban development might help advance this debate and the policy choices which arise. In considering investment decisions to support development of the regions, both urban and rural, measuring the Social Return on Investment might lead to different outcomes when considering cuts to or additional investment in various services in regional and rural locations.

For example, decisions on the closure of public services offices in regional and rural locations such as post offices, government outreach offices, garda stations etc. are usually based on cutting operational expenditure, including staff costs or economies of scale.  These cuts can deliver immediate financial savings for the organisation but this narrow view does not take account of the accumulated long term impact on the local economy, the overall needs of society and the disabling impact on local communities.

Taking account of the social rate of return allows for a more holistic economic and societal perspective, rather than solely on the efficiencies and financial savings generated for the individual organisation.  In doing so, the wider impacts beyond a particular locality can be captured, for example, unemployment and migration from rural areas and other regional centres can add to already significant pressures on housing and transport services in the capital. This in turn requires additional investment in infrastructure and services, which is often more expensive to deliver in congested urban areas. Examining all costs and benefits and the social rate of return could help us to make better, more informed choices.

 

The presentations are available at the PPAN website http://www.ppan.ie/latest-news/

Deirdre Frost

The Western Region’s Labour Market

The WDC has just published a new analysis of the Western Region’s Labour Market. This is based on a special run of data from the CSO’s QNHS for the period 2004-2014 for the seven-county Western Region. Understanding the region’s labour market is important for effective job creation, enterprise and skills policy.

In 2014 the Western Region’s adult population was just over 600,000 with 350,000 active in the labour force. Its labour force has contracted since 2012, largely because of outward migration, and is characterised by higher part-time, under- and self-employment, for both men and women. These are distinct differences in the nature of the region’s labour market that may point to certain weaknesses which need to be addressed by tailored job creation actions for the region.

Western Regions adult populatin diagram

 

Some of the key findings of the analysis are:

  1. Lower labour force participation in the Western Region: A smaller share of the Western Region’s adult population is engaged in the labour market and therefore economically active. The region’s participation rate in 2014 is 57.7% compared with 60.1% in the rest of the state. As human capital is among the most critical factors for regional economic development, this has negative implications for the region’s economic growth and viability. The higher level of economic dependency, resulting from the larger proportion of the population outside of the labour force, also has important social impacts and increases the need for state transfers.
  2. Higher share of self-employment: The region has a higher share of self-employment (without employees) than the rest of the state – 16.3% of all employment in the region compared with 11.4% in the rest of the state. This increases the importance of policy and supports to facilitate the self-employed to establish and sustain their businesses, such as soft business supports, quality broadband, networking, etc. Many may work from home or are mobile and are engaged in local services and therefore outside the remit of the enterprise agencies. They play a particularly significant role in sustaining rural communities and economies. This role, and their needs, requires further investigation and policy focus.
  3. Higher share of part-time working and recent jobs growth more likely to be part-time: There is a higher degree of part-time working in the region with 25.7% of all jobs in the region in 2014 part-time, compared with 23.5% in the rest of the state. Recent jobs growth has also been more likely to be part-time in the region than elsewhere. While part-time working can play an important role for those with caring and other commitments, the greater share of recent jobs growth in the region that is part-time raises some concerns over the nature of employment and the quality of recent jobs growth. A focus on stimulating more full-time jobs should be built into job creation policy for the region.
  4. Lower employment growth: Employment in the region grew over 2012-2014 by 1.4% but this was less than in the rest of the state (3.9%). The jobs recovery in the region is lagging that elsewhere. Initiatives to stimulate and facilitate job creation in regional locations are required to address the region’s weaker jobs performance.
  5. Declining unemployment influenced by out-migration: Unemployment has declined by 28.4% since 2012 but this has only partially been caused by jobs growth. The greater part is due to the loss of unemployed people from the region, either overseas or to other parts of Ireland. The decline in unemployment in the region has been stronger than elsewhere, leading to its unemployment rate dropping below that in the rest of the state (11.5% compared with 12.1% in 2014), reflecting the significant impact of out-migration on the region’s labour market.
  6. Higher youth unemployment rate: The Western Region has a higher youth (15-24 yrs) unemployment rate, 29.2% compared with 24.6% in the rest of the state. As the region has a lower total unemployment rate, this indicates that youth unemployment is a more serious challenge for the region. High youth unemployment can have very significant long-term impacts, as a period of unemployment at a young age can hinder the person’s career prospects and earnings potential. The needs of young jobseekers in the Western Region should be a key policy priority, nationally and for the region, both to prevent them from falling into long-term unemployment and also to reduce out-migration.

These aspects of the Western Region’s labour market should inform the development of the upcoming Action Plan for Jobs for the West, Border and Mid-West regions. The distinctive characteristics of the region’s labour market profile should influence which policies are prioritised for the region and the sectors of focus for job creation strategies. A new WDC Insights on the Western Region’s sectoral profile will be published in coming weeks.

Download two-page WDC Insights WDC Insights-The Western Region’s Labour Market-April 2015 (PDF 0.2MB)

Download full WDC report The Western Region’s Labour Market 2004-2014-WDC Report March 2015 (PDF 2.5MB)

Pauline White

Trends in Agency Assisted Employment in the Western Region

The WDC has today published a new WDC Insights Trends in Agency Assisted Employment in the Western Region as well as a county profile for each of the seven western counties.

Employment in businesses which have received support from one of the main enterprise agencies, which are usually export oriented, is termed agency assisted employment. The WDC has published its analysis of data on these businesses for the Western Region for 2004 to 2013.

Our analysis has found that:

  • Lower recent growth: There was less volatility in assisted job numbers in the Western Region over the period. Assisted jobs in the region have not grown as strongly as in the rest of the country since growth resumed in 2010.
  • More permanent full-time employment: Recent assisted jobs growth in the Western Region is more likely to be permanent full-time with the share of temporary/part-time jobs lower now than at the start of the period.
  • Concentrated by sector: Assisted jobs in the Western Region are more concentrated by economic sector than in the rest of the state and manufacturing activities continue to dominate.
  • Foreign owned sector driving growth: The strongest recent assisted jobs growth has been in the modern manufacturing and information and communication sectors which are the sectors with the highest shares of foreign ownership. The foreign owned sector has driven recent growth in the Western Region to a greater extent than in the rest of the state.
  • Irish owned sector performing less well: There has been much greater volatility in the Irish owned sector over the ten year period and the region’s Irish owned sector is not showing as strong a recovery as in the rest of the country.
  • Urban concentration: Urban concentration, especially in the cities, is a feature of assisted jobs. The resumption of growth does appear to be spreading across the Western Region to some degree, although Clare and Leitrim have seen no increase in assisted employment.

Agency assisted employment is a key policy tool for job creation and unemployment reduction.  Recent growth in assisted jobs in the Western Region has not been as strong as elsewhere, particularly among Irish owned businesses.  Agency assisted job creation in the Western Region needs to focus on increasing sectoral diversity and strengthening the Irish owned sector.  Addressing the lower levels of assisted employment in the counties of the North West should also be a policy priority.

Download the two page WDC Insights, full WDC Report and/or 7 county profiles here

Business Demography

The WDC has just published its analysis of the CSO Business Demography data (2011) which shows there were nearly 31,000 active enterprises operating in the Western Region. At 0.057 the average number of enterprises per working age person in the region was lower than that in the rest of the state (0.062).

Overall the Western Region’s enterprise base was more significantly damaged by the recession than elsewhere. Between 2006 and 2011 the decline in enterprise numbers in the Western Region was nearly twice that in the rest of the state (-18.4% compared with -9.8%).  The region’s largest enterprise sectors experienced the greatest declines.

Some sectors did show growth. Enterprise numbers in ‘education’, ‘information and communications’, ‘real estate’ and ‘professional, scientific and technical activities’ increased. While growth in these knowledge intensive sectors is very welcome, they continue to be less important to the region’s enterprise profile.

The Western Region has a less diverse enterprise profile than the rest of the state. It has a higher share of enterprises in sectors that mainly serve local, domestic or tourist markets, while knowledge intensive services account for a lower share of the region’s businesses. The region’s more urban counties tend to have greater enterprise diversity, with rural counties’ economies more concentrated by sector.

A WDC Insights summary or a more detailed WDC Report on the Business Demography data can be downloaded from https://www.wdc.ie/publications/reports-and-papers/

Pauline White

Note: This report was completed in late July, prior to the very recent publication of the data for 2012. The WDC’s analysis of the 2012 Business Demography data will be published soon.

County Incomes and Regional GDP

The WDC recently published its analysis of the latest County Incomes and Regional GDP data for 2011 produced by the CSO.

Our analysis shows that regional income disparities began to widen again in 2011 and that the West, Mid-West and Border regions had the largest declines in disposable income per person between 2010 and 2011.

At the same time national output is becoming more regionally concentrated in the stronger regions and the share coming from Dublin and the South West combined rose from 57.2% in 2002 to 59.9% in 2011.

The West has performed relatively well and its national position has strengthened to become the third largest contributor to national output. The Border region however has seen its national role decline, to the second smallest region in output terms.

Download  a two page WDC Insights summary here

A more detailed WDC Report, including analysis of county level income figures, is also available here

Pauline White