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How can we develop renewable heat use in the Western Region?

The WDC has recently published an analysis study of opportunities for the development of the renewable heat sector in the Western Region.  The study ‘A Regional Renewable Energy Analysis: Using Biomass to Contribute to the National Renewable Heat Target’ was under taken as the Western Development Commission (WDC), along with SEAI, were tasked under the Action Plan for Jobs: West Region 2015 – 2017  (Action 134 ) to undertake a Regional renewable energy analysis on the use of biomass as a local contribution to the national renewable heat target and develop a range of actions to support the development of renewable energy in the region”.

The study considers the use of biomass use in the WDC region (Donegal, Sligo, Leitrim, Roscommon, Mayo, Galway and Clare), along with an assessment of the potential contribution to the national renewable heat target.  The analysis focused on ‘solid biomass’ – that is forest derived wood fuels used for energy production[1].

The use of biomass for heat generation is likely to have the greatest potential for the Western Region in the immediate future in achieving the renewables heat target and reducing carbon emissions.  An EU 2020 target of 16% renewable energy is to be achieved by 2020 across the electricity, transport and heat (and cooling) sectors in all member states. Ireland is one of only four countries in Europe expected to miss its renewable energy target[2][3].  Heat is the largest of these three sectors, and Ireland has a target of 12% of final heating demand be derived from renewable sources by 2020.

Between September and December 2017, the survey of biomass deployment in the WDC region was undertaken which found seven large industrial biomass schemes using 110,000 tonnes of wood fuels a year. The installed capacity of these schemes ranges from 2,000kW to 22,000kW (31.2 Kilotonne of Oil Equivalent (ktoe)). The survey also found 43 smaller non-domestic biomass installations with installed capacities ranging from 50kW to 550kW. Only 24 of these are known to be operational, representing 6,600kW of installed capacity using 6,269 tonnes of wood fuel a year (1.74 ktoe).

In the WDC region, total biomass deployment is equal to 32.94 ktoe. This represents 8.1% of the Western Region heat market.  Taking into account the already installed biomass, this means 7.78 ktoe of new biomass deployment is needed by 2020 to achieve a target of 12% renewable heat for the Region.

This would require €35 million of capital investment and would create 70 new full time jobs and save 28,000 tonnes of CO2. As the potential total market is estimated to be 275MW, suggesting that 35MW of new capacity is a viable aspiration.

The WDC proposed 2018 – 2020 Action Programme, which is part of this report, considers how some of these barriers can be overcome and the growth of biomass could be achieved in the Western Region.

 

Helen McHenry

 

[1] There is a modest percentage of non-solid biomass used to generate renewable energy, and this has been commented upon in the report where appropriate.

[2]https://www.seai.ie/Publications/Statistics_Publications/Energy_Modelling_Group_Publications/Ireland%E2%80%99s-Energy-Targets-Progress-Ambition-and-Impacts.pdf

[3] The others are the UK, the Netherlands and Luxembourg

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.

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

Regional GVA (GDP)[1] figures for 2015, and preliminary figures for 2016, were published recently by the CSO.  The 2015 figures are of particular interest as that year (the year of leprechaun economics), there was a level shift in the size of the economy.  The relocation to Ireland by significant Multi National Enterprises (MNEs) of some or all of their business activities and assets (in particular valuable Intellectual Property) alongside increased contract manufacturing conducted abroad (which is included in Irish accounts), all contributed to the very significant growth in GDP.

There has been much discussion of the issue (see here, here and here) and a review of the statistics used to produce the data.  In addition the CSO recently held a seminar on the impact of globalisation on Ireland’s accounts, with papers available here).  The significant change in GDP in 2015 (a 26% rise on 2014) is, of course, played out at a regional levels and is evident in the regional GVA data.  However, because of the significant impact of a few businesses in some figures, for reason of confidentiality the CSO has not published GVA data at regional level for Dublin or for the South West (the ‘invisible’ regions of the title).

This is, of course, very problematic for those seeking to understand the economies of these regions and for those of us interested in comparing regional economic activity.  For regions, measures of progress and disparity and measures of how well they are doing, whether they are catching up or falling behind are all key issues considered using GVA data.  Nationally, other indicators (including GNI*, Modified Domestic Demand and a Modified Current account (CA*)) have been developed to help improve our understanding of growth and change in the domestic economy.  It is to be hoped that consideration will be given to producing other regional economic indicators (such as a regional GNI*) which could add to our understanding of changing regional economies.

This post focuses on the level shift in GVA which occurred in 2015 and its impact in regional statistics, while my next post will examine other (more traditional) aspects of regional GVA in more detail.  In this post Dublin, and the South West are considered together.

The size of the Regional Economies

Much of the dramatic increase in GVA was concentrated in Dublin and the South West (although, as discussed below, it was not confined to these regions), so it is useful to look at how much these regions contributed to Irish GVA in 2015 (See Figure 1).  The two regions of Dublin and the South West together accounted for more than two thirds (67%) of Irish GVA, although, interestingly this was not a dramatic increase on 2014 when the two regions contributed 63% of GVA.  This is partly because most regions experienced level shifts in their GVA between the two years.

Figure 1:  Regional contribution to Ireland’s GVA in 2015

*Dublin and South West are not a ‘region’ but are shown together as data not available for these two regions (own calculation from data).

Source: CSO, 2018, County Incomes and Regional Accounts Table 9   GVA per Region at Current Market Prices (GDP), 2007 to 2016 

Output from these regions over time

It is also useful to look at the changing contribution of the two regions with the largest economies over a longer time period (Figure 2).  In 2000, Dublin and the South West contributed 57% of national GVA.  This has been rising, particularly since 2010, and it reached 67% in 2015 (and remains 67% in the 2016 estimate).  This indicates the very significant concentration of high value added activity in these two regions, a concentration which has been increasing over time.

Figure 2: Percentage of National GVA from Regions 2000-2015

Source: CSO, 2018, County Incomes and Regional Accounts table RAA01

Of course, before 2015, these two regions could be considered separately, and in 2014 Dublin contributed 45% of national GVA while the South West contributed 18%.  In 2002 the South West accounted for 20% of GVA and Dublin 37% (figures for the South West generally varied between 18 and 20% of national GVA over this period).

GVA per person in Regions

While the above discussion has focused on the amount of GVA contributed by the regions it is, in general, more useful to consider GVA per person as a means of comparing regions (because of different regional sizes).  Given the lack of data for two of the NUTS 3 regions, it is easiest to look at (Figure 3) NUTS 2 level regions i.e. the Border, Midland and West (BMW) region and the Southern and Eastern (S&E) region (which includes both Dublin and the South West).  GVA per person has always been significantly higher in the S&E region than in the BMW.  In 2000 it was €28,490 in the S&E and €19,148 in the BMW, a difference of €9,342 per person.  The figures followed a similar pattern (with some minor variation in the disparity) over the year to 2012 when the trends began to diverge, most dramatically in 2015.  In that year GVA per person in the S&E was €63,179 (up from €44,464 per person in 2014), and was only €23,606 in the BMW.  This is a very significant difference of €39,573 in GVA per person.

Figure 3: Gross Value Added (GVA) per person at Basic Prices (Euro) by NUTS2 Region and Year (2000 to 2015)

Source: CSO, 2018, County Incomes and Regional Accounts table RAA01

 

While the difference in GVA is dramatic, it should be remembered that, in relation to household income, which is what is relevant to most people, differences in income from economic activities are, to some extent, smoothed out by taxation and social transfers (see here for discussion of 2015 Household incomes at regional level).  However, the very different output levels among regions are significant and deserve attention.  If high value added activity remains concentrated in a few regions, disparities will continue to widen and there will be an ongoing perception that some regions are ‘dependent’ on others for transfers.  Indeed, without growth in higher value added activity and better quality employment this would become inevitable.  A focus on growing weaker regional economies and increasing higher value added activities (and not just from MNEs) is essential to growing our national economy.

Which regions are most affected by the 2015 level shift?

Although the data for Dublin and the South West has been supressed for reasons of confidentiality, it is clear that these regions experienced a level shift in their GVA between 2014 and 2015 (see Figure 4 below).  But most other regions also experienced a significant increase, or level shift.

It should be noted that, in this post, we are looking at GVA rather than GDP (see footnote 1)[2].  While there was a startling 26% increase in GDP in Ireland in 2015 (published in July 2016), the increase GVA for the State was even bigger in 2015 (37%).  See here for more information on this and on the MNE components of GVA.

As expected, the largest increase (46%) in GVA was in Dublin and the South West (again, these are combined as data for these regions was not published[3]).  But the other regions in the S&E also experienced a significant increase, with the Mid East, Mid West and South East all showing increases in GVA of more than 30%.

Figure 4: Increase in GVA in NUTS 3 regions between 2014 and 2015

Source: CSO, 2018, County Incomes and Regional Accounts Table 9b   GVA per Region at Basic Prices

 

In contrast, the three regions which together make up the NUTS2 BMW region had much smaller increases in GVA.  Between 2014 and 2015 GVA in the Midland region increased by 17%, in the West by 10% and in the Border region by only 6%.  The impacts of globalisation on GVA statistics are significantly less in the BMW region, which is much less dependent on the globalised sectors (though consequently they also have much lower economic output).

Preliminary data for 2016 shows a return to more normal GVA growth rates between 4% (Mid East and West) and 7% in the Border region.  The ‘Dublin and South West group’ shows a modest 5% increase in GVA.

Manufacturing and other sectors affected

Manufacturing is key sector experiencing the level shift in GVA between 2014 and 2015.   Looking at the manufacturing sector in the NUTS 3 regions (Figure 5 below), it is clear that most regions experienced a level shift in GVA from Manufacturing.  Only the Border region showed no discernible change, with a growth of only 5% in Manufacturing GVA.  The West also had a more modest (though still significant) growth in GVA of 25% from Manufacturing in 2014-2015.  With two NUTS regions (Mid West and South East) showing growth in GVA from manufacturing of more than 100% and Dublin and the South West combined showing a 172% increase in GVA from Manufacturing, this is clearly the sector where most of the significant changes between 2014 and 2015 took place.

Figure 5: Increase in GVA in the Manufacturing Sector in NUTS 3 regions between 2014 and 2015

Source: CSO, 2018, County Incomes and Regional Accounts Table 9d and e GVA by sector

 

However, in a number of other sectors different regions showed quite significant changes.  As would be expected these are in the high value sectors with global value chains.  There were significant increases in ‘Professional, Scientific and Technical Activities etc.’ in the Border (43%), the Mid East (50%) and South East (48%), while the Border also showed a 31% increase in GVA from Financial and Insurance Activities in 2014-2015.  Finally, the South East experienced a 39% increase in GVA from Information and Communication.  Not all of these increases are necessarily related to the relocation of IP assets, or to the other factors which underlie the level shift in GVA between 2014 and 2015 but these are all very significant growth figures (the detail of other sector changes in GVA will be discussed in a forthcoming post.)

Manufacturing is the sector where data is suppressed for reason of confidentiality in Dublin and the South West.   It is a key sector in these regions.  In 2014 (the first year for which such regional data was available) the South West accounted for 34% of Ireland’s Manufacturing GVA and Dublin accounted for 29% (63% in total). In 2015, as shown in Fig. 6, the two combined accounted for 73% of Ireland’s GVA from Manufacturing.

Figure 6: Regional contribution to Manufacturing GVA in 2015

Source: CSO, 2018, County Incomes and Regional Accounts Table 9d GVA by sector

 

The dominance of these two regions in the high value manufacturing sector is evident when the contribution of different sectors to regional GVA is considered at NUTS 2 level (Figures 7 and 8 below).  In the Southern and Eastern region manufacturing accounted for 38% of the Region’s GVA, and other high value areas (‘Information and Communications’ (10%), ‘Financial and Insurance Activities’ (7%) and ‘Professional, Scientific and Technical Activities’ (11%) also relatively important (28% of GVA in the S&E came from these three sectors combined).

Figure 7: Gross Value Added by Sector in the Southern and Eastern Region

Source: CSO, 2018, County Incomes and Regional Accounts Table 9d GVA by sector

 

In the Border, Midland and Western region the Manufacturing sector contributed 28% of GVA and the other high value sectors were much less significant in GVA terms.  ‘Information and Communications’ (2%), ‘Financial and Insurance Activities’ (5%) and ‘Professional, Scientific and Technical Activities’ (6%) combined only accounted for 13% of GVA in the BMW region.  In contrast ‘Public Administration and Defence’ accounted for 24% of GVA in the BMW region and only 10% in the Southern and Eastern region.

Figure 8: Gross Value Added by Sector in the Border, Midland and Western Region

Source: CSO, 2018, County Incomes and Regional Accounts Table 9d GVA by sector

 

Conclusions

GVA is essential regional data, despite its limitations.  It is one of the key variables for national and international regional comparisons and, given the paucity of other regional economic data, it is particularly important.  While understanding the necessity of ensuring data confidentiality, the lack of GVA data for two regions limits discussion of regional development significantly.

Given the focus on regional development in government policy (Project Ireland 2040) we need to be able to measure how regions are doing.  Income, Wealth and Consumption data would give a good picture of how households in regional economies are doing, but while we have regional income data, there is no longitudinal data on wealth and consumption for regions.  Similarly we have Survey on Income and Living Conditions (SILC) data at regional level giving a broader picture of income and poverty, and Labour Force Survey data on employment and unemployment.  However, although these are important, each region also needs to have an indicator of economic activity and growth.

Potentially the issue of confidentiality will not affect data for every year, and 2015 (and 2016 preliminary data) might prove to be exceptions, with full regional GVA data available again in the future.  Nonetheless, the difficulties with regional GDP need to be addressed.  Should new NUTS2 regions be agreed with Eurostat (to align with the regional assemblies) GVA data will published for these.  Currently as both Dublin and the South West are in the NUTS2 Southern and Eastern Region, it is only necessary to withhold data for both of these NUTS3 regions and the NUTS 2 data can be published in full.  In future,  if Dublin and the South West will be in different NUTS 2 regions (Dublin in the Eastern and Midland Region, and the South West in the Southern Region, to ensure confidentiality in relation to these regions, it might become necessary to supress detailed NUTS 3 data for some of the other regions.

It is not clear what solutions might be possible in relation to regional GVA data, but good quality regional data is essential both to understand regional economies and to monito the impact of regional and national policy.  Development of the GNI* indicator at regional level could help to understand activities in domestic regional economies.

Improving our understanding of regional economic growth and change is essential if we are to develop policies and actions to ensure that all regions can grow their economies, employment and value add at more comparable rates into the future.

 

 

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] For the purposes of regional accounts GVA is the most common measure of regional growth and regional economic activity. However data in Figure 1 (from Table 9) is GVA at market prices (GDP).

[3] The amount for this ‘combined region’ was calculated by subtracting the other regional data from the total.

Regional Difference, Regional Strategies and a Ratio- employment and residence in towns in Ireland.

The National Planning Framework has a chapter on ‘Making Urban Places Stronger’ which covers settlements from cities to small towns.  In discussing Ireland’s urban structure (p58-59) it looks at population and employment and highlights a ratio of “jobs to resident workforce” as a key indicator of sustainability for a town.  Data is provided (in the NPF Appendix 2) on town population, resident workers and jobs in the town for 200 settlements with a population of over 1,500 people in 2016.  This is the only detailed data provided in the National Planning Framework.  It is useful to look at differences in the ratio across the regions to see if this indicator can help us better understand residence and employment as town functions.

The NPF suggests in the footnote to the discussion of this ratio that:

A ratio of 1.0 means that there is one job for every resident worker in a settlement and indicates a balance, although not a match, as some resident workers will be employed elsewhere and vice-versa. Ratios of more than 1.0 indicate a net in-flow of workers and of less than 1.0, a net out-flow. The extent to which the ratio is greater or less than 1.0, is also generally indicative of the extent to which a town has a wider area service and employment role, rather than as a commuter settlement. (Footnote 22 pg 176).

It suggests that those settlements with a high ratio of jobs to resident workforce are, by reason of accessibility, employment and local services, fulfilling important roles for a wider area.  This, as will be discussed later in this post, is particularly strongly indicated for towns in the North West.  Firstly, however, a scatter diagram (Figure 1) showing town size and the ratio of jobs to resident workers provides a good overview of the data.  For reasons of scale the five cities (Dublin, Cork, Limerick, Galway and Waterford) are not on this diagram but are discussed in more detail below.

Figure 1: Town Size and Jobs to Resident Workers by Regional Assembly Area.

Source: Project Ireland 2040 National Planning Framework, Appendix 2

The very different patterns among towns in the three regional assembly areas is clear in the diagram.  Towns in the Eastern and Midland Region tend to have lower ratios (most less than 1.0) with more workers leaving the town for jobs elsewhere than are travelling to the town.  In contrast towns in the Northern and Western Region, though generally smaller, are more often serving as centres of employment for their wider area.

As the NPF notes in relation to the North West, towns there tend to have ‘more significant employment and service functions relative to their regional and local catchment’ (p 59).  Table 1 below shows the ratio of jobs to resident workers for towns in the three Regional Assembly areas and the Western Region; the differences in the ratios again emphasise the different functions of towns in the Regions.

Table 1: Population, Resident Workers, Jobs and ratio of Jobs to Resident Workers in towns over 1,500 in three Regional Assembly areas and Western Region.

Source: Project Ireland 2040 National Planning Framework, Appendix 2 (Western Region own calculations)

The low ratio for towns in the Eastern and Midland indicates the importance of commuting for many towns and the dominance of the large Dublin City region.  Indeed only 2 towns in EMRA have ratios higher than 1.5.  These are Longford (1.596) and Athlone (1.591) both of which are on the periphery of the EMRA, less under the influence of Dublin, and both have important employment and wider service functions for their hinterlands.  In contrast, 40 towns in the EMRA (just over half) have a ratio of less than 0.5.  In the NWRA area, where there are 44 settlements with a population of more than 1,500,  7 towns have a ratio of more than 1.5 while 4 have a ratio of less than 0,5.  In the Southern Region, with three key cities, a quarter of towns (19) have a ratio of less than 0.5, while 7 towns (9%) have a ratio of greater than 1.5.

Looking at the Western Region (the area under the WDC remit), the overall ratio is very high (1.26) and of the 39 listed 7 have a ratio of more than 1.5 while four have a ratio of less than 0.5.

Cities and Key Regional Centres

Given the focus on the development of cities and a few key regional centres in the National Planning Framework, it is useful to examine the ratios for the five cities and these regional growth centres (Table 2).  Somewhat surprisingly, Dublin City and its suburbs has a ratio of only 0.978 despite being the major centre for the Region.  This is likely to be related to the location of the boundaries of the suburbs and the fact that there is a larger Dublin Region agglomeration which has a spread of job locations and worker flows to towns that are essentially part of a greater Dublin.

As expected, the other four cities have ratios greater than 1.0, with Galway the highest of these (1.302).  Looking at the proposed regional growth centres, Athlone, Letterkenny and Sligo all have high ratios indicating their importance as employment and service centres in their wider hinterlands.  In contrast Drogheda and Dundalk (which are mentioned in the NPF as part of a “Drogheda-Dundalk-Newry” cross border network) both have lower ratios. Drogheda, in particular, has many people travelling to work elsewhere.

Table 2: Population, Resident Workers, Jobs and ratio of Jobs to Resident Workers in Cities and Regional Growth Centres.

Source: Project Ireland 2040 National Planning Framework, Appendix 2, (EMRA towns in purple, NRWA in green and SRA in blue).

 

Patterns of employment and residence in the Western Region

Looking briefly at towns in the Western Region, Table 3 shows the settlements with the highest jobs to resident workers ratios in the Region.  There is no particular pattern relating to town size, but the top five are all ‘county towns’ and have particular local employment and service functions.  Other towns in the top ten often have key employers indicating the importance of employment spread.

Table 3: Population, Resident Workers, Jobs and ratio of Jobs to Resident Workers in ten Western Region settlements with highest jobs to resident worker ratios.

Source: Project Ireland 2040 National Planning Framework, Appendix 2 (NRWA in green and SRA in blue)

In contrast to the towns in the table above, Table 4 below shows the Western Region towns with the lowest job to resident worker ratios.  These are all ‘dormitory’ towns serving Galway, Sligo and Limerick.  These are the only towns in the Western Region which have a ratio of less than 0.5 indicating perhaps, aside from these, a more sustainable region in terms of commuting patterns.

Table 4: Population, Resident Workers, Jobs and ratio of Jobs to Resident Workers in five Western Region settlements with lowest jobs to resident worker ratios.

Source: Project Ireland 2040 National Planning Framework, Appendix 2 (NRWA in green and SRA in blue)

Conclusions

Understanding where people work and where people are most likely to travel to work is essential to our understanding of employment and economic activity in our Region.  The WDC will publish a detailed analysis of travel to work patterns and labour market catchments in the Western Region next month. It is based on data from Census 2016 will also provide a comparison the 2009 WDC study Travel to Work and Labour Catchments in the Western Region which used Census 2006 data.

The use of the jobs to resident workforce ratio in the NPF is interesting.  It is quite a restricted indicator but the variation in the ratio among towns of all sizes and across the different regions serves to emphasise that the individual employment and other characteristics of each town are the key to the town’s pattern of, and opportunities for, development.  Therefore a clear understanding of the functions and areas which each town can develop is important.

For the Western Region, the ratio has served to highlight the importance of towns of all sizes as centres of employment in the region, while in contrast it shows the importance of commuting to many towns in the East.  Thus, there is a need for very different regional strategies in relation to towns in the North West and in areas of other regions where the influence of the cities is not significant.

A strong argument is made throughout the NPF that concentration in larger cities and towns is essential, but this data indicates that, in the Western Region at least, smaller towns often have high jobs to resident workers ratios and they are attracting workers, probably from their rural catchments.  It is therefore important that we consider the case for ensuring a wider spread of employment across towns of different sizes and develop better policies to do so.  If there is too much focus on the largest cities we risk replicating the problems in the East, where many towns have little function other than as dormitories for the cities.

Locating jobs where workers reside, and supporting those urban centres which have important local and regional functions could be a more sustainable approach and perhaps would be easier to achieve than concentrating residence in the largest urban centres.

 

Helen McHenry

 

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.)

Developing a Strategy for the Northern and Western Region

The Regional Spatial and Economic Strategy for the Northern and Western Region will implement the targets set out in the newly published National Planning Framework (NPF) Ireland 2040.  The WDC recently made a submission on the Issues Paper for the Strategy for the Northern and Western region and it can be downloaded here (or you can read the summary here).

The Northern and Western Region probably has the most challenging targets to meet in Ireland 2040 with a target of a population increase of 160,000-180,000 people and 115,000 jobs in the region.  However, when broken down into annual growth rates over the next 21 years (2019-2040) the targets appear more manageable,  For example the target that larger towns should grow by 40% to 2040 is an annualised growth rate of 1.62% p.a. for 21 years while rural population growth of 15% over the period amounts to less one percent (0.67%) annual growth.  Galway, which has the largest growth target of 50-60% to achieve a population of at least 120,000 can do this with an annual growth rate of 1.95%.  Nonetheless, these are ambitious targets and achieving them will need considerable resources and direction.

Ireland 2040 also places a significant responsibility on the Northern and Western Regional Assembly (NWRA) in particular and the urban centres of Galway, Sligo and Letterkenny, as well as other large towns, as the key drivers in the region.  Some of these urban centres, which are targeted for 40% growth in the NWRA area, are not very well connected though they may be well located to serve as a driver for their region. These towns need their connectivity improvements prioritised so that they have some chance to achieve the planned targets.

Successful, sustainable regional growth will require a clear Strategy with strong goals and objectives, appropriate resources, a well-developed implementation process and an implementation body with the capacity, resources and powers to achieve co-ordinated action.

Population & Employment

As was noted throughout the WDC submission, the solution to maintaining and growing the regional population is the availability of employment, which in turn requires supporting policy for infrastructural development, a strategy for education and skills and stimulation of entrepreneurship and enterprise growth.  Infrastructure, the ‘3Es’ (Enterprise, Employment and Education) and Innovation are the key levers for regional development.  When they work together they drive regional growth.  Each has a distinctive role, and needs its own policy focus, but they are most effective when addressed through an integrated policy approach.

The RSES should be explicit on the targeted location of jobs within the Northern & Western Region and the balance between jobs growth in Galway city, large towns and the rest of the Region.  These targets should be supported by a clear statement on how employment growth at different spatial scales will be facilitated and supported through the RSES.  It is important that the Strategy is clearly focused on creating real opportunities to keep people living in the region and to attract more people, whether to cities, towns or rural areas.

It should be remembered that during the early part of this century (2000-2007), when there was rapid economic growth throughout Ireland, rural areas responded rapidly with significant increases in the numbers employed and in workforce participation and, in turn, in local populations.  The region is ready to respond and targeted policies to stimulate employment and entrepreneurship will help to achieve targets.

The urban hierarchy

Specific details of the role to be played by different areas in the Region’s settlement hierarchy and the investments needed for these areas to fulfil their roles must be included in the Strategy.

In order to ensure that Galway city, the strategically located regional centres of Sligo and Letterkenny, other towns and rural areas all fulfil their regional development potential, with service and infrastructure levels appropriate to each type of area, investment at the appropriate scale needs to happen in all these places.  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.

In the Northern and Western Region there are only 5 towns (and Galway city, as well as part of Athlone) which have a population of more than 10,000, yet it is a relatively large region in the Irish context.  Therefore the Strategy should focus on the function of towns and the role they pay in their hinterland, rather than being too concerned with population size as a criterion for investment.

The nature and role of the smaller towns including county towns must be considered in more detail in the RSES and in County Development Plans.  It is important to be aware, in the context of the Strategy that these towns, as well as being important drivers of their local economy, are also essential to those living in other even smaller less serviced towns, in villages or in the wider countryside.

Although smaller towns can face significant challenges they also have key assets such as cultural heritage, historic buildings, local businesses and high levels of social capital.  These all provide opportunities for diversification and adaptation of the town and its social network to embrace future opportunities, whether it is improved tourism product, attracting people to live there, or developing knowledge and sectoral clusters such as creative industries.  Many towns have strong indigenous industries which may be exporting and a substantial number have some small scale foreign direct investment.  There are other enterprises and employers too, and important local services sectors and small scale manufacturing serving a local market.  These are very significant parts of the local economy and important local employers.  All of these can be leveraged to support the development of local communities.

Brexit

Brexit is a key strategic issue for the Northern and Western Region.  Cross-border linkages including cross-border commuting, access to services, retail and trade are areas which will undergo massive changes in the context of Brexit.  Planning for how to mitigate the impact of Brexit on border communities and the economy of the Border region in particular must be a core priority of the RSES.

Conclusions

Development of a strong regional spatial and economic strategy for the Northern and Western region will require coordination with central government, local authorities, enterprise agencies, and alignment with the Action Plan for Jobs and the Action Plan for Rural Development as they are developed over time.   The involvement of education providers, employers and people in the region will all be needed to ensure the targets are achieved.  The Strategy should be appropriately resourced (with money, expertise and time, as well as involvement of key stakeholders).  It would be better to have a more focused, limited strategy that can be implemented than a vision which is beyond the possibility of effective implementation.

Of course, the Issues Paper is just the first stage in the process of developing a Regional Spatial and Economic Strategy for the Northern and Western region.  There are many steps to be gone through, and further consultation, before the Northern and Western Regional Assembly publish a final Strategy, hopefully before the end of the year.

Detailed answers to the questions in the Issues Paper and consideration of specific needs are in the full WDC submission and an overview of key points in the summary.

 

Exploring Energy Infrastructure: Natural gas connections and use

The Department of Communications, Climate Action and Environment has recently commissioned a study of wider costs and benefits of the extension of the natural gas grid (see here for more information).  The WDC welcomes the commissioning of this study, as quality energy networks are important elements of the essential infrastructure required to underpin and stimulate economic development of the Western Region, much of which currently does not have access to the gas network.  Figure 1 below show Gas Networks Ireland’s pipeline map, which highlights the lack of connection to towns in the North West.

Figure 1: Natural Gas Pipeline map

The WDC has long advocated the extension of the natural gas network to towns in the North West of Ireland and made the case in some detail the 2011 study Why invest in gas?.  A natural gas network is, in many situations, an essential infrastructure without which a region may struggle to develop.  Towns connected to the natural gas grid have the reduced energy costs over the longer term resulting in greater competitiveness for businesses, as well as greater attractiveness for new industry which may choose to locate in towns with natural gas.

Where natural gas has become available large users (e.g. Allergan in Westport, Baxter Healthcare in Castlebar) quickly switched to natural gas. As the gas grid expands nationally and more consumers (both industrial and domestic) gain access, the availability of natural gas will be taken for granted. Lack of gas infrastructure may become a disincentive to investment, reducing a region’s competitiveness and increasing existing disparities.  As Gas Networks Ireland notes:

Industry depends on natural gas and gas availability is a key criteria for international companies when they are deciding where to invest. Having natural gas supplied to a town enhances its attractiveness and opportunities for growth and job creation. Many large employers in Ireland are also large users of natural gas.

Thus the WDC sees natural gas as a key enabling infrastructure for economic development of the North West.  It is therefore useful to understand natural gas connections and natural gas consumption in more connected parts of the Western Region and in other parts of Ireland.

Where is networked gas used?

The CSO provides detailed data on networked gas consumption, by type of user and by county.  The map below (Figure 2) shows the locations of residential metered connections across Ireland, and provides a very clear indication of the urban nature of the connections.

Figure 2: Location of Residential meters

Source: CSO 2016 Networked Gas Consumption

Of the seven Western Region counties three (Donegal, Sligo and Leitrim) have no networked natural gas connection and Roscommon only has connections in the Monksland part of Athlone (a total of 72 residential connections and 2 non-residential connections (see Table 1 below, Western Region counties in bold)).  Galway, Mayo and Clare have more extensive networks.  Both Galway (6,795) and Clare (4,797) have significant numbers of residential connections while Mayo has fewer than 713.  Residential connections are most likely to be made when new houses are built, and many of the towns in Mayo were just connected as the rapid housing construction of the early part of the century slowed down.

Table 1: Number of Meters by County for Non-Residential and Residential Sectors 2016

Source: CSO 2016 Networked Gas Consumption

Mayo has a significant proportion of non-residential connections (Figure 1 below); in fact it has the highest percentage of non-residential connections of all counties (with the exception of Wexford where dwellings only began to be connected in late 2016).

The CSO publication shows the proportion of networked gas used in power plants (62%), non-residential (24%) and residential (13%) in 2016.  Details of power plant consumption are not available by county but it is interesting to compare residential and non-residential consumption for each county with the proportions of the two different connection types.  Clearly non-residential consumption per meter will, in most instances, be higher than residential consumption but, as Figure 3 shows, there is significant variation in this across counties (Western Region counties are in green).  This is largely dependent of the type of non-residential users connected in the different counties.  The CSO intends in future to add NACE codes to the non-residential connection records in order to provide a more detailed analysis of non-domestic customers.  This will be very useful giving better understanding of the types of non-residential users.

Figure 3: Percentage meters which are Non Residential Meters and Percentage of consumption which is Non Residential 2016

Source: CSO 2016 Networked Gas Consumption

While a quarter of meters in Mayo are non-residential, they account for 98% of the consumption.  In many more rural counties (Mayo, Cavan, Monaghan, Kilkenny and Tipperary) non-residential consumption can be very significant (over 85% of all consumption in the counties named above).  This is in contrast to Dublin, Laois, Meath and Wicklow where non-residential consumption was 51% or less of total consumption.

Figure 4: Natural gas Consumption by County Non Residential and Residential (Gigawatt Hours)

Source: CSO 2016 Networked Gas Consumption

As these are gross consumption figures, and are of course dependent on the number and type of connections, there is very significant variation.  Not surprisingly the ‘Dublin Postal District’ has the highest level of both residential and non-residential consumption.  This area has more 12,294 non-residential connections (Table 1) which is significantly larger than Cork which has the next largest number of non-residential connections (3,497) and it can be inferred that many of the non-residential connections in this area are smaller commercial premises and not larger process users. This is borne out by average consumption per connection for each county in Figure 5 below. Roscommon (which has very few connections in a very small part of the county (75 in total)) and Wexford, which has very recently been connected (8 connections in this data) have been excluded.

As discussed above, Cork has a very significant total non-residential consumption (3,154 GWh) but only comes in sixth place for average consumption per non-residential connection shown in Figure 3.

Figure 5: Average Non Residential Consumption per meter (2016)

Source: CSO 2016 Networked Gas Consumption

Cavan has only 114 non-residential connections but among them are some very significant gas users.  It has the highest average non-residential consumption per connection, and indeed this has grown significantly (by 53%) since 2011.  Wexford has a small number of large users (whose consumption justified making the network connection in recent years) while other quite rural counties show high levels of consumption per connection (non-residential).  In some cases (Mayo, for example, this is closely associated with high tech industry use of process heat, but significant agri-food processing in other rural counties are likely to contribute to the high average demand per connection.   In contrast, Wicklow, Dublin and Meath have generally low average consumption per connection.

While much of the variation in non-residential consumption will depend on types of connections and the type of activity being carried out, residential consumption levels are more comparable and Figure 6 below shows median consumption by county.

Figure 6: Networked Gas Median Consumption by County for Residential Sector 2016

Source: CSO 2016 Networked Gas Consumption

According to the CSO[1] the median consumption can be regarded as typical usage as it is not influenced by outliers in the same way as the average is.  Median residential consumption varies from 10,910 in Meath to 6,686 kWh in Mayo (Wexford has been excluded from the chart as it has only 3 residential connections).  This large variation suggests that residences in Meath are using 63% more natural gas than residences in Mayo. It is not clear what is causing this variation but lower median consumption in counties like Mayo may indicate a higher proportion of other fuels being used for heating.  Given the very significant variation in median use this is certainly an area for further investigation.

Roscommon which only has 75 residential connections in the west of Athlone also shows high median levels of consumption, but this may relate to the characteristics of the housing connected or the greater incentive for larger residential users to switch to natural gas to save on the cost of energy.

Conclusion

The importance of natural gas connections in many counties is shown by the meter and consumption data.  Clearly there are some very significant natural gas users outside cities often associated with agri food processing.

The IDA has significant targets for investment in the regions and meeting these targets could give rise to additional commercial demand in urban centres not currently connected.  Indeed the IDA strategy notes in relation to its development of utility intensive strategic sites, that these require significant capital investment in utilities including natural gas.  The most recent GNI development plan highlights:

Natural gas as a clean, secure, low cost energy source is a key driver of job creation and economic growth. Industry depends on natural gas and gas availability is a key criteria for international companies when they are deciding where to invest. Having natural gas supplied to a town enhances its attractiveness and opportunities for growth and job creation. Many large employers in Ireland are also large users of natural gas.

This regional development effect needs to be measured when assessing the development of a natural gas network.  Furthermore, in addition to commercial demand, residential users can be important.  The DCCAE study, being carried out by KPMG, is not examining any one particular place, but under the Draft National Planning Framework- Ireland 2040 (NPF) there are targets for significant population growth in larger towns and cities including ones which do not currently have access to natural gas.  Both Sligo and Letterkenny (neither of which have networked gas) are targeted to have 40% increase in population by 2040 (both to increase to 27,000) and, given the emphasis on consolidation of urban centres in the NPF, it is expected that this additional population will be accommodated in these towns and should be ideal for  compact distribution networks.

With this in mind,  it is likely that the important of natural gas as a key regional infrastructure will be recognised in the Regional Spatial and Economic Strategy for the North West Region  (which is currently in preparation by the Northern and Western Regional Assembly).

____________________________________

[1] See Background Notes to Networked Gas Consumption publication (CSO, 2016)

EI and IDA End of Year Results 2017

Two of the main enterprise development agencies in Ireland recently issued their end of year results for 2017.

Enterprise Ireland

Enterprise Ireland issued their end of year statement on 3rd January.  In total, 209,338 people are employed in companies supported by EI.  19,332 new jobs were created by EI-backed companies in 2017.  Enterprise Ireland supports Irish-owned, export focused enterprises.

The end of year results include details at a county level. Fig. 1 shows the total number of jobs in EI-backed companies within the seven counties of the Western Region.  In total there were 23,550 EI-backed jobs in companies based in the Western Region. This represented 11.2% of all EI-backed jobs nationally.

Fig. 1: Total Jobs in Enterprise Ireland backed companies in Western Region counties, 2017. Source: https://www.enterprise-ireland.com/en/News/PressReleases/

The total net change in jobs in EI-backed companies in the Western Region was 1,472 (see Table 1). This represented a 7% net change on job numbers in 2016.  The growth in the Western Region was higher than the national average (5%). This was driven by strong growth in Leitrim, Sligo and Galway, which were the counties with the highest percentage growth nationally. As such, the Western Region accounted for 14.2% of the net growth nationally, higher than its share of total EI-backed jobs, indicating a strong performance in western counties.

Table 1: Net Change (gains less losses) in Total Jobs in Enterprise Ireland backed companies in Western Region counties, 2017

Source: https://www.enterprise-ireland.com/en/News/PressReleases/

While these results are very positive for the region, it is important to put them in a wider context. While the Western Region accounts for 11.2% of all EI-backed jobs nationally, this is below the Region’s 16.6% share of total national employment (Census 2016).  While these figures are not directly comparable (EI figures are based on the location of the firm and refer to 2017, Census figures are based on the location of the individual and refer to 2016) they do indicate that the Western Region’s share of EI-backed jobs considerably lags its share of total employment.

While EI-backed jobs account for approximately 10% of total job numbers nationally, for the Western Region they only account for about 7% of the total (calculated as the number of EI-backed jobs in 2017 as a % of total employment as counted in Census 2016).

This means that Government policy needs to build on and strengthen the very impressive performance of 2017 to ensure a growing role for high-value indigenous companies in the Western Region labour market.

Industrial Development Agency (IDA) Ireland

IDA Ireland issued their end of year statement on 4th January.  In total, employment levels in IDA supported, foreign owned companies reached 210,443 in 2017.  19,851 (net) new jobs were created by IDA-backed companies in 2017.

The end of year results do not include county data, but do include job figures at regional level. Fig. 2 shows the number of IDA-backed jobs in each region. It is important to note that these are based on the location of the firm, so for example some of the people who work in the Dublin & Mid-East region may be living in the Midlands or Border and commuting to work.

Fig. 2: Total Jobs in IDA backed companies by Region, 2017. Source: https://www.idaireland.com/IDAIreland/media/docs/IDA-Results-2017-Presentation.pdf

Nationally the number of IDA-backed jobs grew by 5.2% between 2016 and 2017.  The South-East region experienced the strongest growth at 9.2% with Dublin & Mid-East the second highest (5.7%).

Of the regions relevant to the Western Region, the Mid-West (5.3%) and West (5.1%) experienced job increases similar to the State average, however at just 3.6% the Border region had a weak performance. Brexit presents significant challenges for this region, so its poor performance is a cause for concern.  The Midlands, which has the smallest number of IDA-backed jobs, also experienced the lowest growth at 1.2%.

More detailed data on agency assisted employment in EI and IDA backed companies, as well as those supported by Udarás na Gaeltachta will be published by the Department of Business, Enterprise & Innovation in its Annual Employment Survey later in the year. This will allow differentiation between ‘Permanent Full-time Jobs’ and ‘Part-time/Temporary Jobs’ which are combined in the ‘Total Jobs’ figures here, as well as more detailed sectoral analysis at regional level.

 

Measuring Rural Employment

Much has been said and written about rural decline in Ireland particularly in the last few years. However despite this there are very few measures which capture ‘rural’ change in a statistical sense.

To date rural decline is often described in the context of rural challenges such as out migration, population loss and the withdrawal of services in rural areas but there are few statistical measures capturing trends in rural and urban areas, with the notable exception of rural and urban poverty rates reported in the CSO Survey of Income and living conditions (SILC).

Measuring rural employment – Regions

Measuring rural change in the context of job creation has focused on the observable change at NUTS3 level with the fortunes of the 8 regional authority areas reported regularly in the Regional Action Plans for Jobs. However, each of these 8 regions (Dublin, Mid East, West, South West, Midlands, North East/North West and South east), comprise both urban and rural areas of varying degrees.

It is clear that much of the recent job creation has been focussed on the cities and by only examining regional figures the significant differences between urban and rural areas are not captured. So for example in the case of the West region, much job creation is located in Galway city while counties Mayo and Roscommon would not have experienced the same degree of employment growth.

Rural Employment

Realising our Rural Potential Action Plan for Rural Development, download here published in January 2017, is the Government’s action plan aimed at ‘ensuring the success of vibrant rural communities’ and provides for 276 targeted actions across five themes. One of the main targets is the objective to support the creation of 135,000 jobs in rural Ireland.

However in monitoring the success of rural job creation, the measure reported is employment creation across the 8 NUTS3 regions, with rural classified as the 7 NUTS3 regions – excluding the Dublin region and as such is essentially a regional measure.

Defining rural

Possibly part of the reason for the lack of a measure of rural employment or unemployment is the difficulty in agreeing a measure of rural. Rural is defined in many ways – succinctly summarised in a recent WDC Insights blogpost What is Rural?

The CSO measure of Rural used in the CSO SILC since 2014 defines urban as areas with a population density of greater than 1,000 and rural as those areas with a population density of 999 or less.

Rural employment

Very recently the CSO have provided data from the Quarterly National Household Survey (QNHS) on employment and unemployment by NUTS3 region and broken down by densely, intermediate and thinly populated areas.  This is based on a Eurostat definition based on degree of urbanisation, with three categories, densely, intermediate and thinly populated areas. See here for the detailed definition.

Under this measure, the entire Dublin region is all classed as densely populated, while the Border region for example has no densely populated category and is only composed of intermediate and thinly populated areas.

The Table below shows the unemployment rates for the Border and State by type of population area in 2014 and 2017.

Table 1. ILO unemployment rates, Border region and State and type of Population Area, 2014 and 2017

Source CSO, QNHS Q2 2014 and 2017, Special run.

Nationally the unemployment rate in 2014 was 10.9% in densely populated areas, compared to 12.2% in thinly populated areas, but the highest rate is in the intermediate area – 12.4%.

With the exception of the densely populated area in the South-East, the intermediate area in the Border region has the highest unemployment rate in 2014, 16.2%, compared to 12.0 % in the thinly populated area. There is no densely populated category within the Border region- counties Donegal, Sligo, Leitrim, Cavan, Monaghan and Louth.

By 2017 there is some evidence of convergence across regions and areas, with unemployment rates declining across all categories. Nationally the rate is 6.4%, while the unemployment rate for the Border region is 6.6%. However the intermediate area in the Border remains the area with the highest levels of unemployment across all categories with 9.6%.

The intermediate areas, broadly defined as Towns and suburbs (see here for the detailed definition), are the areas most impacted by unemployment, though there are regional differences.

As such this CSO measure of economic status based on the QNHS data with trend data at NUTS3 and with a rural/urban dimension is a valuable tool. It provides a measure of rural change which is more nuanced and which can provide better insights than relying exclusively on the NUTS3 Regional measure.

 

Employment by economic sector in western counties: what’s happening?

A few weeks ago, the WDC published eight new WDC Insights publications.  Each examined the labour market of a Western Region county, with Galway City and County examined separately. The analysis is based on data from Census 2016.

Each of the WDC Insights outlines the Principal Economic Status and Labour Force status of the county’s adult population (15+ yrs). This data was the focus of a previous blog post.  They also examine the sectors where the county’s residents work, compared with the national average, and how this has changed since 2011.

In this blog post, I’ll focus on the sectoral pattern of employment in each of the western counties.  It is important to remember that this data counts a person where they live rather than where they work, so it measures what sectors the residents of a county work in, even though some may commute to another county (or country) to work.  Analysis of commuting patterns in the Western Region will be published very shortly.

Scroll down to find your county! (Apologies for any repetition, assuming most readers will only pick a county or two …)

1.  Clare

Total employment in Clare grew by 8.6% between 2011 and 2016, below the 11% State average.  The top three sectors for employment of Clare residents are: Industry, Wholesale & Retail and Health & Social Work, which together account for 36.5% of all jobs.

Industry employs a significantly higher percentage of the workforce in County Clare than nationally.  Numbers working in Industry have risen by 10.4% — or 723 people — in the past five years, outperforming the national average growth. This means that today 15.5% of Clare’s residents who are in employment are working in Industry, which includes sectors such as manufacturing, energy generation, waste and water. This compares to the national average of 11.4%.

Wholesale & Retail includes wholesale, the motor trade, all retails shops, with supermarkets forming the biggest sector. Employment in Wholesale & Retail in Clare, at 11.2%, is lower than the national average of 13.3%.

A 12.4% growth in the Health & Social Work sector in Clare was just slightly below the national average (12.9%). Health & Social Work includes residential care and social services – including child care, nursing and care homes – as well as hospitals, dental and medical practices.

A growth in tourism is reflected in employment in the Accommodation and Food Service sector, which is up 13.5%, the second highest growth sector in the county. It is also seen in a 10.1% growth in employment in the Transport and Storage sector, influenced by Shannon Airport and Shannon Foynes Port. It places Clare well above the national average growth of 4%.

The biggest increase in employment was in the Information and Communications sector – which includes areas such as computer programming and consultancy as well as telecommunications — which grew by 13.9% in the past five years.

Employment in agriculture has declined by 8.7% in the county, compared to a national drop of 2.6%.  Administrative and Other Services — including leasing activities, business operations processing and personal services — accounts for just over 7% of Clare’s employment, slightly below the national average but the highest in the Western Region.  An 8% drop in numbers employed in financial services, is being linked to the closure of banks and other financial institutions.

2.  Donegal

Total employment in Donegal grew by 9.5% between 2011 and 2016, below the 11% State average.  The four top employers of Donegal residents – accounting for more than 46% of all jobs are: Wholesale & Retail, Health & Social Work, Education and Industry.

The Wholesale & Retail sector, which grew by just 0.9% in the past five years, is the principal employer of Donegal residents, employing 13.5% of working adults, with supermarkets the largest employer in this sector.

Some 12.7% are employed in Health & Social Work compared to 11.1% elsewhere. Health & Social Work includes residential care and social services – including child care, nursing and care homes – as well as hospitals, dental and medical practices.

A total of 10.8% of workers are employed in the Education sector compared to the national average of 8.8%. Between pre-school, primary, secondary and higher education, there are 6,328 people working in Education in county Donegal.

Unlike other western counties, Industry is substantially less important in Donegal than nationally, with just 9.2% of workers employed in this sector compared to 11.4% nationally.

Donegal’s strongest employment growth was in the Information and Communications sector, increasing by 39%, compared to national growth of 31.4%. This sector includes computer programming, computer consultancy, telecommunications, as well as radio broadcasting.

Benefit from the Wild Atlantic Way is reflected in an impressive growth of 19.9% in the Accommodation and Food Service sector compared with a 12.9% national growth, giving Donegal the third highest share working in this sector nationally, after Kerry and Galway City. In the past five years, there has been an additional 764 people employed in the hospitality sector, mainly in restaurants and hotels.

The data also shows a 9.3% growth in employment in Construction — significantly lower than the national average growth of 16.6%. The largest decline in employment over the past five years was in Public Administration (local authority, civil service, defence etc.) which dropped 14.2% compared to a national decline of 6.3% although it remains a more significant employer than elsewhere. There was a decline of 9% in employment in financial services compared with a national average decline of 1.3%. This is linked to the closure of banks and other financial institutions.

3.  Galway City

Total employment in Galway City grew by 10.8% between 2011 and 2016, close to the 11% State average.  Industry, Health & Social Work, and Wholesale & Retail are the top three employers, accounting for almost 40% of jobs for Galway City residents.

Industry is the most significant employer.  There was a 15.4% growth in Industry employment among Galway City residents since 2011, substantially higher than the national average of 9.4%. Industry accounts for a significantly higher proportion of jobs than nationally, 14.6% compared to 11.4% nationally.  In the single manufacturing field of medical devices, jobs for Galway City residents rose by 543 to 2,873 in the past five years.

Jobs in Health which include child, elder, residential care as well as hospitals and medical practices, also outperformed, growing by 16.4% for the City compared to a 13.4% national growth.

The Wholesale and Retail sector grew 2.4% in the City between 2011 and 2016 higher than the 1.7% national growth, though it only employs 12.3% of workers compared to a national average of 13.3%.

Although the 11.1% growth in the Accommodation and Food Service sector in the City was below the 12.9% national average in the past five years, Galway City is second only to Kerry when it comes to the share of residents working in hospitality. Almost 10% work in this sector compared to the national average of 5.8%.

Galway City’s strongest employment growth in the past five years was in Information and Communications — up 36% compared with 31.4% nationally — bringing it up to 6.1% of total employment, greater than the national average share of 4.5%.

Jobs in Public Administration declined by 12.5% in Galway City compared to a national average decline of 6.3%. Decline of 10.7% in employment in Financial, Insurance and Real Estate compared to a 1.3% decline nationally, is being linked to the closure of banks and other financial institutions.

4.  Galway County

Total employment in Galway County grew by 8.5% between 2011 and 2016, below the 11% State average.  Industry, Health & Social Work and Wholesale & Retail are the top three employers, accounting for almost 43% of jobs for residents of Galway County.

Industry has emerged as the most significant employer for Galway County residents which has the fourth highest share working in Industry nationally.  The 20.7% growth in employment in the sector over the past five years is more than twice the national average (9.4%).  Industry accounts for a significantly higher proportion of jobs for Galway County residents than nationally, 16.3%, compared with 11.4%.  In the single manufacturing field of medical devices, jobs for Galway County residents rose by 1,173 to 4,951 in the past three years.

Jobs in Health which include child, elder, residential care as well as hospitals and medical practices, also outperformed, growing by 17.4% in the County, compared to a 13.4% national growth.

The Wholesale and Retail sector declined by 0.4% compared to a national increase of 1.7% and employs 12% of workers in Galway County.

Tourism activity is increasing in Galway County which registered a 13.3% growth in employment in the Accommodation and Food Service sector, slightly above the 12.9% national growth.  The Information and Communications sector accounted for Galway County’s second strongest employment growth of 18.7%.

A decline of 7.6% in employment in Financial, Insurance and Real Estate compared to a 1.3% decline nationally, is being linked to the closure of banks and other financial institutions. Galway County experienced a 6.8% decline in employment in agriculture compared to a 2.6% national decline.

5.  Leitrim

Total employment in Leitrim grew by 6.3% between 2011 and 2016, substantially below the 11% State average and the fifth lowest growth of any county in Ireland. The top three employment sectors for Leitrim’s residents are: Health & Social Work; Wholesale & Retail; and Industry, which account for 37.1% of all jobs.

Employment in Health grew by 10.6% since 2011, below the national average of 13.4%. Health and Social Work includes residential care and social services — including child care, nursing and care homes — as well as hospitals, dental and medical practices. Reflecting the county’s aging population, the biggest growth area was in residential care where an additional 207 jobs were created.

Employment in the second largest sector of Wholesale and Retail is less important to the county than elsewhere at 12.1% and grew marginally since 2011 by 0.6%. Wholesale and Retail includes wholesale, the motor trade, all retails shops, with supermarkets forming the biggest sector.

Meanwhile, Industry employment rose by 21.1%, more than double the national average of 9.4%.  Industry includes manufacturing, energy generation, waste, water – with manufacturing the largest element. Some 127 additional jobs were created in the medical devices field alone in the past five years. Some 11.4% of the county’s workers are working in Industry.

Agriculture’s share of employment in Leitrim is double the national average, contributing to the county’s higher self-employment, but the numbers are on the decline. It was one of four sectors that experienced employment decline in the county since 2011, down 8.6% compared with a State average decline of 2.7%.

Leitrim’s largest employment decline was in the Administrative and Other Services sector, which includes call centres.  Construction jobs rose by 7.2%, significantly lower than the national average increase of 16.6%. Leitrim performed on a par with other counties in the Accommodation and Food Service sector, which enjoyed Leitrim’s second highest growth of 12.4%.  There was a 10% drop in numbers employed in financial services.

6.  Mayo

Total employment in Mayo grew by 4.8% between 2011 and 2016, substantially below the 11% State average and the second lowest growth of any county in Ireland. The top three employment sectors for Mayo residents are: Wholesale & Retail; Industry; and Health & Social Work, which account for 36.5% of all jobs.

Topping the list with a 14.4% share of employment is the Wholesale & Retail sector. However, this sector has been performing poorly and declined 2.7% in Mayo compared with a 1.7% growth nationally between 2011 and 2016.

But Industry grew strongly in the county over the same period, increasing employment by 14% since 2011, compared to the 9.4% growth nationally. Industry currently accounts for a 14.2% share of Mayo’s workers, compared with an 11.4% share nationally.

Employment in the Health sector grew by 15.7% compared with a national rise of 13.4%, the county’s strongest growing sector. An additional 593 jobs in the residential care field during this period reflects the county’s older age profile.

Almost twice the national average (8.5% compared with 4.4%) are employed in agriculture but employment in this sector has plummeted. There are over 1,000 fewer farmers now than five years ago, representing a decline of 17.9%, compared to an average State decline of 2.6%.

Since 2011, employment in the Accommodation and Food Service sector is up 11.7%, now representing 7.6% of the total workforce, compared to a national average of 5.8%.

Employment in Public Administration declined more in Mayo than elsewhere, dropping 10.1% in five years compared to a 6.3% national decline.  Construction jobs were up by 8.4%, compared to a national increase of 16.6% but it still remains a significant employer in the county, accounting for 6.3% of all jobs. Mayo saw its biggest jobs loss, an 18.8% decline, in financial services, compared to a national decline of 1.3% in the same sector. This is linked to the closure of bank branches and other financial institutions.

7.  Roscommon

Total employment in Roscommon grew by 5.9% between 2011 and 2016, substantially below the 11% State average and the fourth lowest growth of any county in Ireland. The top three sectors for employment of Roscommon residents are: Wholesale & Retail, Health & Social Work and Industry, which account for 40% of all jobs.

Wholesale and Retail at 13.9% is the most significant employer but jobs in this sector have declined slightly (0.9%) in the past five years compared to a national increase of 1.7%.

Industry, which was up by 15.9%, outperformed the national average increase of 9.4%. Included here was an additional 228 jobs in the manufacture of medical devices.

Employment in the Health and Social Work sector in Roscommon grew by 24.4% in the past five years, compared with a national rise of 13.4%.  As this sector includes child and elder care, the county’s age profile could be a factor. An additional 539 jobs were created in the residential care branch of this sector during the period 2011 – 2016.

Agriculture’s share of employment in Roscommon is close to double the national average, contributing to the county’s higher self-employment. However, employment in agriculture was down 3.9% in the past five years, higher than the State average decline of 2.7%.

Employment in Public Administration is down by 7% while a 13% decline in jobs in Financial Services is linked to closures of local banks and other financial institutions. Jobs in the Accommodation and Food Services sector grew only marginally by 1.4% compared to a national growth of 12.9% indicating that the county is not benefitting from a growth in tourism.

Though the smallest sector, employment in Information and Communications grew by 20.1%, while Professional Services employment was up by 13.2%.

8.  Sligo

Total employment in Sligo grew by 2.2% between 2011 and 2016, substantially below the 11% State average and the lowest growth of any county in Ireland.  The top three employment sectors for Sligo residents are: Health & Social Work, Wholesale & Retail and Industry, which account for 40.7% of all jobs.

Health is considerably more important to the county than elsewhere and Sligo has the highest share working in this sector in the State. This sector – which includes residential care and child care as well as hospitals — employs 15.5% of Sligo’s workers, compared to a national average of 11.1%.

Employment in Wholesale and Retail, the second largest employer at 12.7%, performed poorly, declining by 5.9% since 2011, in contrast to a national average growth of 1.7% in this sector. It accounts for a lower share of jobs than elsewhere.

At 12.5%, Industry accounts for a higher share of jobs than in neighbouring Leitrim and Donegal, but its growth of 0.3% in the past five years falls significantly below the national average growth of 9.4%.  Industry includes manufacturing, energy generation, waste, water – with manufacturing the largest element.

Agriculture performed strongly with jobs in this sector growing by 8.5% compared to a national decline of 2.6%. This was in part due to an additional 162 jobs created in the animal and mixed farming sector.

Employment in Education was up by 4.7%, while jobs in the Accommodation and Food Service sector grew by 7.8%, compared with a 12.9% national growth.  Employment in Public Administration was down by 4.5%, a better performance than the national drop of 6.3%.

Sligo saw a decrease of 0.3% in jobs in the Construction sector, compared to a strong national growth of 16.6%.  Sligo’s highest employment growth was in the Administrative and Other Services sector at 9.2% with arts and entertainment, as well as hairdressing and beauty, the main drivers.  A 14.1% drop in numbers employed in financial services, compared with a 1.3% decline nationally, is being linked to the closure of banks and other financial institutions.

 

All eight WDC Insights can be downloaded here