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Industry’s role in total ‘agency assisted’ jobs declining nationally but remains highly stable in Western Region

In a recent post I outlined some of the main findings from our analysis of Census employment data on the Industry sector in the Western Region.   Our recent report ‘Industry in the Western Region: Regional Sectoral Profile’ also examined agency assisted Industry jobs and they are the subject of this post.

Each year the Department of Business, Enterprise & Innovation (DBEI) (and formerly Forfás) conducts a survey of all firms in Ireland who have ever received assistance from IDA, EI or Udarás na Gaeltachta.  This is published as the Annual Employment Survey (AES) and these firms are referred to as ‘agency assisted’.  They are limited to Industry or International Services firms currently or with the potential to export.  For Industry this would include most enterprises.   Unlike Census data, which is based on where a person lives, AES data is based on where the company is located, so is the location of the job, even if the person travels from another county.

Agency assisted jobs in Industry in the Western Region

The latest AES data is from 2017 when there were 49,435 agency assisted Industry jobs in the Western Region.  From a low of 38,000 in 2010, assisted Industry jobs have grown steadily, accelerating since 2013.

Of total assisted Industry jobs in the region, 87.6% are Permanent Full Time (PFT) with the rest ‘Other Jobs’ (temporary, part-time or contract).  The share of PFT jobs in the region is lower than nationally (89.5%) indicating that other forms of employment are more common in the region’s industrial sector.   The share of jobs that are PFT declined over the decade from 92.2% in the state and 90% in the region in 2008 indicating a rising prevalence of other forms of employment.  Every western county, except Donegal, had a lower share of PFT assisted Industry jobs in 2017 than a decade earlier.

Industry’s share of total assisted jobs

In the Western Region, the share of total assisted jobs (Industry + International Services) accounted for by Industry has remained extremely stable at around three-quarters over the past decade (Fig. 1). This contrasts strongly with a steady decline nationally from 64.2% in 2008 to 55.6% by 2017.  International services account for a far higher and growing share of assisted jobs nationally than in the region, where Industry continues to play a greater role.

Due to confidentiality reasons, data on assisted jobs at county level is combined for Leitrim, Roscommon and Sligo.  In 2017, this is where Industry accounts for its highest share of assisted jobs (88.6%). There has been a considerable increase in Industry’s importance, partly due to substantial job losses in international services over this period.[1]  Mayo has the next highest share (87.3% in 2017) in Industry with a number of significant Irish and multinational manufacturing plants but limited international services activity.

In Galway, Industry’s share declined markedly between 2009 and 2012 but has remained relatively steady since as its growth in Industry and international services jobs has been similar (29.2% in Industry and 25.2% in international services during 2012-2017). While there has been fluctuation in the relative importance of Industry in Clare, by 2017 73% of Clare’s assisted jobs were in Industry, the same share as a decade earlier.  Industry’s role in Donegal declined throughout the period, partly due to very strong growth in international services as well as manufacturing job losses.  At 61.8% Donegal has the lowest share of Industry jobs in the region but is still above the state average.

Fig. 1: Industry as a percentage of total assisted jobs in Western Region and state, 2008-2017

Source: Department of Business, Enterprise & Innovation (2018), Annual Employment Survey 2017, special run. Note: For ease of interpretation the vertical axis starts at 50%.

Assisted jobs in Industry sub-sectors

MedTech dominates assisted Industry jobs in the Western Region (Fig. 2) accounting for 29.7% of all such jobs in the region compared with 13.3% nationally.  For the country as a whole, Agri-food is by far the largest assisted Industry sector.  As well as Agri-food, the region also has a notably lower share involved in the high-tech Chemicals & Pharma and Computer & Electronic sectors.

Fig. 2: Percentage of total assisted jobs in Industry in each sub-sector in Western Region and state, 2017

Source: Department of Business, Enterprise & Innovation (2018), Annual Employment Survey 2017, special run

During 2012-2017 the region performed considerably better than nationally in the region’s three strongest growing sub-sectors (Fig. 3).  Valeo in Tuam would be a key factor in the strong growth in Transport Equipment, while recovery in the building industry drove the next highest growing sub-sectors.  In many other sub-sectors, jobs growth in the region was relatively similar to the national experience.  It did have a notably stronger performance in Clothing & Textiles while there was a decline in Mining & Quarrying jobs in the Western Region compared with growth nationally.

Fig. 3: Percentage change in assisted jobs in Industry sub-sectors in Western Region and state, 2012-2017

Source: Department of Business, Enterprise & Innovation (2018), Annual Employment Survey 2017, special run

Assisted Industry jobs by ownership

Of total assisted Industry jobs in the Western Region in 2017, 55.1% (27,214) were in foreign owned companies, higher than the 45.3% share nationally.

During the early years of the recession (2008-2012), the share in foreign ownership increased substantially (from 52.7% to 55.8%) due to large job losses in predominantly Irish owned sectors supplying construction, as well as jobs recovery beginning earlier in the foreign owned sector, strongly influenced by the performance of MedTech.  While jobs growth has extended more widely in the Irish owned sector, the share jobs in foreign ownership remains at a higher level than pre-recession.  Foreign ownership is not only more important to Industry in the Western Region, but the recession further strengthened its role.

The ownership pattern differs across Industry sub-sectors.  At 96.8% of assisted jobs in foreign ownership MedTech is very heavily reliant on FDI companies with large employers such as Medtronic, Boston Scientific and Abbot.  Transport Equipment, which has shown strong jobs growth, has the next highest level of foreign ownership at 84.4%.

In terms of Irish ownership, all assisted jobs in Mining & Quarrying and practically all (98.2%) in Clothing & Textiles, is in Irish owned firms.  For Clothing & Textiles, the loss of previous foreign owned jobs in the sector e.g. Fruit of the Loom in Donegal, and the changing character of the sector to focus on high value, hand crafted products e.g. Magees of Donegal, Foxford Woollen Mills, means it is now largely an indigenous industry.  Agri-food has the next highest level of Irish ownership at 85% of assisted jobs.

Conclusion

Industry plays a considerably more significant role in agency assisted employment in the Western Region accounting for 3 in 4 of all assisted jobs.  While Industry’s share is declining nationally, it is highly stable in the region with its strong Life Sciences cluster a contributing factor.

While Industry’s share of assisted jobs has remained highly stable, there have been many changes within the sector over the past decade including a growing share of non-permanent jobs and the increased significance of foreign owned employment.

Greater diversity in the industrial profile of a region increases its resilience and capacity to withstand external shocks.  The region’s greater reliance on foreign ownership and the dominant role of Life Sciences (while a key regional asset) could increase the region’s exposure to risk.  There needs to be a strong policy focus on further embedding existing regional strengths while also developing new areas of growth e.g. Energy, Transport Equipment, advanced engineering, to further diversify the region’s industrial profile and increase its resilience.

More detailed analysis of agency assisted employment in Industry in the Western Region is provided in Section 3 of ‘Industry in the Western Region: Regional Sectoral Profile’.

Pauline White

[1] The numbers employed at the former MBNA (now Avantcard) call centre in Carrick-on-Shannon reduced substantially over this period, as well as a number of call centre closures in Sligo.

How important is Industry as a regional employer?

We’ve just published the fourth of our ‘Regional Sectoral Profiles’ analysing employment and enterprise data on specific economic sectors. The latest report examines Industry which is the Western Region’s largest employment sector, with 45,754 working in it.  Industry includes mining, utilities and waste management but by far the largest element is manufacturing.  Three publications are available:

Trends in Industry employment in the Western Region and its counties

Industry’s share of total employment has changed considerably over the past two decades (Fig. 1).  Ireland’s move to a more service-based economy, with substantial losses of traditional, lower skilled Industry and a growing focus on high value, high-tech manufacturing, has substantially changed the significance and nature of industrial activity in Ireland and the region.

In 1996 21% of total employment in the Western Region was in Industry, the share declined in every Census to a low point of 13% in 2011, increasing somewhat to 13.7% by 2016.  The state showed a similar pattern declining from 20.4% in 1996 to 11.4% by 2016.  While both region and state followed similar patterns, the gap between them widened over the period so that in 2016 Industry was notably more important as an employer in the Western Region.

Fig. 1: Percentage of total employment in Industry in Western Region and state, 1996-2016

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

At a county level, the most dramatic change occurred in Donegal; from over 1 in 4 working in Industry in 1996 to less than 1 in 10 twenty years later.  Donegal’s economy has been dramatically restructured, with a strong shift from manufacturing to services.  At just 9.2% of all employment, Donegal has the smallest share working in Industry in Ireland, outside of Dublin.

In 1996, Clare had the second highest share in the region working in Industry, largely due to the Shannon Free Zone. With the dramatic decline in Donegal, Clare had the region’s highest share for much of the period but was overtaken by Galway County in 2016.  From having the region’s second lowest share in 1996, Galway County now has the highest share working in Industry in the region at 16.3%.  Industry is the single largest employment sector for Galway County, Galway City and Clare.

At town level, Ballyhaunis in Co Mayo has the highest share of its employment in Industry among Ireland’s 200 towns and cities, where it accounts for 41.9% of total employment.  Shannon in Co Clare is fourth highest nationally at 31.9% with Tuam also in the top 10 towns at 25%.  The region is also home to the two towns in Ireland with the lowest shares working in Industry in Bundoran (3.5%) and Carndonagh (4.9%), both in Co Donegal.  It must be noted that this refers to the town where a person lives though they may work elsewhere.

Employment in Industry sub-sectors in the Western Region

The Medical & Dental Instruments (MedTech) sector is by far the largest industrial activity in the Western Region accounting for 27.7% of the region’s total Industry employment (Fig. 2), more than twice the national average (12.1%).

The region’s second largest (14.1%) is Chemicals, Pharmaceuticals, Rubber & Plastics (Chemicals & Pharma) which is the largest in the country (18.4%).  The manufacture of pharmaceuticals is the main activity.

Food, Drink & Tobacco (Agri-food) is the region’s third largest sub-sector with meat processing, bakery/confectionary, seafood and beverages the main activities. Agri-food’s share of industrial employment in the region (11.2%) is considerably smaller than nationally (17.1%). This is partly due to the strong concentration of such activity in the other regions and the nature of the Western Region’s farming.

There are differences across counties in the relative importance of the sub-sectors. For Galway City, Galway County and Leitrim, the MedTech sector is the largest industrial employer.  For Sligo and Mayo, it is Chemicals & Pharma, while for Donegal and Roscommon Agri-food is largest.  Computer & Electronic Equipment is Clare’s main industrial employer. Further detail on the industrial profile of the western counties can be found here.

Fig. 2: Percentage of total Industry employment in each sub-sector in Western Region and state, 2016

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

Transport Equipment experienced the largest percentage growth in employment in the Western Region between 2011 and 2016, increasing by 52.7% (+451 people).  The region had far greater growth than nationally (15.5%). This sector includes companies such as Valeo Vision Systems in Tuam, Mirror Controls International in Leitrim, McHale Engineering in Mayo and Lufthansa Technik Turbine in Clare.

The next highest growth was in the region’s largest sub-sector, MedTech where employment grew by 30.2% (+2,935 people), followed by Computer & Electronic (21.2%, +633 people).  Very strong growth in these three high-tech manufacturing sectors contributed substantially to the region’s stronger than average performance, with total Industry employment growing by 13.7% compared with 9.4% in the country as a whole.

Key Policy Issues

Industry plays a considerably greater role in the region’s economy and labour market than nationally.  Its performance, and future trends in manufacturing, will have a greater impact in the region.  Given the growing role of services nationally, and increasing policy focus on attracting and growing international services, it is vital that manufacturing’s central role in the Western Region’s economy is fully recognised and supported in policy decisions.  There also needs to be a strong focus on developing new growth areas to increase industrial diversification.

The region has a higher reliance on foreign owned firms.  Global developments which impact on the extent and nature of foreign owned investment in Ireland would have very significant knock-on impacts on the regional economy, not only for direct jobs in foreign owned manufacturing, but also Irish owned sub-suppliers.

Digital transformation poses a threat to certain jobs but also creates new occupations and activities.  Manufacturing has already evolved substantially and adopted many digital technologies.  Processing and operations jobs, especially manual work e.g. packing, are now most at risk from automation.  Upskilling of the current industrial workforce should be a key regional priority.

The nature of work and skills needs are changing.  The share of jobs that are permanent full-time is declining and it is important that policy adapts to ensure that the rights and obligations of individuals and employers are clearly outlined and protected, for example in relation to training and upskilling. Industry’s skill needs are changing with areas of current demand including science and engineering, craft skills and operatives with digital skills.  As Ireland’s manufacturing sector continues to evolve there will be growing demand for STEM qualifications.

The Western Region is a global location for MedTech. The cluster includes multinationals and Irish start-ups supported by a strong skills base and research infrastructure. Life Sciences, including MedTech and Chemicals & Pharma, is present in all counties but strongest in Galway, Sligo and Mayo. It is a key regional asset but its dominant role presents some risk. Opportunities for convergence with other sectors and dissemination of its expertise should be supported to promote industrial diversification.

Activities which rely on domestic demand or the UK market face challenges. These sectors play a larger role in rural counties, have high levels of Irish SME activity and are important for male employment.  Manual tasks are vulnerable to automation and Brexit presents a threat, especially for Agri-food.  Improving the competitiveness, as well as market and product diversification, of such firms will be important to sustaining the regional and rural economy.

The region has an emerging strength in Transport Equipment. For Galway County, Mayo and Roscommon it was the strongest growing sector and Leitrim has the highest share in the country.  Many of the companies are located in medium-sized or small towns and opportunities to further embed and strengthen this emerging cluster should be supported.

For more detailed analysis see ‘Industry in the Western Region: Regional Sectoral Profile

Data on agency assisted jobs in Industry in also analysed in the report, and will be the topic of a future blog post.

Pauline White