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How important is Industry as a regional employer?

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

Trends in Industry employment in the Western Region and its counties

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

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

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

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

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

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

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

Employment in Industry sub-sectors in the Western Region

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

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

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

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

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

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

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

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

Key Policy Issues

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

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

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

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

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

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

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

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

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

Pauline White

Even Nuttier about NUTS!

Last July I published a blog post Nuts about NUTS! where I discussed the introduction of the new regional classification for statistics in Ireland.  Briefly, a new regional classification for collecting statistics in Ireland was approved by the EU in 2016, following the Local Government Act 2014 and the establishment of three new Regional Assemblies.  The CSO first used this new regional classification in the Labour Force Survey for Quarter 1 2018.  It has since used the new regional classification in any data release which includes regional data.

The new structure involves three NUTS2 level regions (replacing the two previous NUTS2 regions (Southern & Eastern and Border, Midland & West)) and eight (revised) NUTS3 level regions as follows:

  • NUTS2 Northern & Western: Composed of NUTS3 West (Galway, Mayo, Roscommon) and NUTS3 Border (Donegal, Sligo, Leitrim, Cavan, Monaghan).
  • NUTS2 Southern: Composed of NUTS3 Mid-West (Clare, Limerick, Tipperary), NUTS3 South East (Wexford, Waterford, Carlow, Kilkenny) and NUTS3 South West (Cork, Kerry).
  • NUTS2 Eastern & Midland: Composed of NUTS3 Dublin, NUTS3 Mid-East (Wicklow, Kildare, Meath, Louth) and NUTS3 Midlands (Offaly, Laois, Westmeath, Longford).

The changes at NUTS3 level are the transfer of South Tipperary from the South-East NUTS3 region into the Mid-West NUTS3 region (following the amalgamation of North and South Tipperary Councils) and the movement of Louth from the Border NUTS3 region to the Mid-East NUTS3 region.  Therefore four out of the eight NUTS3 regions changed and four (West, South West, Dublin and Midlands) remained the same.  The CSO published an Information Note on the revisions.

Transition Period

Like the UK leaving the EU, we are currently in something of a ‘transition period’ when it comes to regional statistics in Ireland, and while nowhere near as traumatic, it is causing a few problems and some confusion, namely:

Which NUTS3 regions? It is easy to tell the ‘new’ classification when it includes the NUTS2 regions.  If you see Northern & Western, Southern and Eastern & Midland you know it is the ‘new’ one.

However as the names of the NUTS3 regions remained unchanged, when you just see a list of the NUTS3 regions, it is not clear if the ‘old’ or ‘new’ classification is being used. A good example of how this can be confusing was the recent Census of Industrial Production 2016.  In this release data was provided for five NUTS3 regions (Border, Dublin, Mid-East, Midland and West) as the data for the South West, South East and Mid-East were suppressed for confidentiality reasons. No data was therefore given in the release publication for the NUTS2 regions. Reading the release it was not clear which regional classification was used and it was not included in the Background Notes to the release.  Only by going into Statbank to download the data, and seeing the NUTS2 regions of Northern & Western etc. listed was it clear that the ‘new’ classification was used.

When using the CSO’s Statbank system, a ‘Note’ will usually appear in a dialog box at the top of the page (see below), and also at the bottom of the spreadsheet you download indicating if the new regional classification is used.  If you are looking at a published CSO ‘Release’ such as the Adult Education Survey 2017, then the regional classification is usually included in the ‘Background Notes’.

Fig. 1: Screengrab from CSO Statbank

Different CSO data sets: As mentioned above, any new data (which includes a regional breakdown) issued by the CSO since mid-2018 uses the new regional classification.  However data sets published prior to that use the older classification.  So for example the most recent Labour Force Survey data, which measures employment and unemployment, uses the new regional structure but the County Incomes and Regional GDP 2015 data issued last February uses the older classification.  Therefore a report or analysis drawing on a number of different CSO data sets may find that the regional classifications are not necessarily comparable.

Different data sources: While the CSO has adopted the ‘new’ regional classifications for all releases, this may not be true of all data providers.  Earlier this year the IDA issued its end of year results for 2018.  The results included data for the number of jobs in IDA-backed companies by region and the annual change.  The release did not specify which regional classification was used, so it was unclear if their ‘Border’ was the ‘old’ region including Louth or the ‘new’ region without Louth.

I got in touch with IDA and they confirmed they were continuing to use the ‘old’ regional structure as it aligned with their regional office structure, the regional targets set in their Strategy and current EU State Aid regulations.  Their intention is to switch to the new structures from 2020.

While this is very understandable, it does raise the possibility for some confusion and misunderstanding.  For example someone may compare total employment in the Border region in 2018 (derived from the LFS and using the ‘new’ regions) with employment in IDA companies (derived from IDA results and using the ‘old’ regions) without realising the two ‘Borders’ are not the same region.  This clearly illustrates the need for all data providers and users to state which regional classification is being used.

Time series: When releasing new regional data with the ‘new’ classifications, the CSO are (where applicable) issuing ‘backdated’ results for the ‘new’ regions to 2012, so for example in the CSO’s Statbank if you go to the Labour Force Survey, you can download data for the ‘new’ regions for each quarter from Q1 2012 to Q3 2018 (latest).  Clearly, recoding and backdating massive data sets with new classifications is a time-consuming task and providing six years of time series data is very welcome.

However it does mean conducting time series analysis at regional level (except for the four ‘unchanged’ NUTS3 regions) further back than 2012 involves a break in the data at 2012.  This break in the time series can cause some confusion, an example was the Survey on Income and Living Conditions (SILC) published late last year. The CSO used the new classification for the 2017 release and backdated to 2012, with the data prior to that (2004-2011) using the old classification.  They noted this in the dialog box (see below) and download in Statbank and in the ‘Information Note’ for the release.  However, there was some commentary by people comparing the regional poverty data from 2008 and 2017 without making reference to the fact that for four of the eight regions, the data for the two periods was not directly comparable.

Fig. 2: Screengrab from CSO Statbank

Also, while the CSO have committed to providing backdated time series for the new regions to 2012, it is not clear if all data providers will do the same.  Therefore it is important to check.

Coping with the transition!

Obviously over time this issue will largely resolve itself as the revised classification becomes the norm for all data and we move further away from the ‘break’ in the time series.  In the meantime however here are a few suggestions for coping with the transition:

  1. Check: When looking at or downloading any data at regional level, check which regional classification is used. For CSO data, it is usually included in a ‘dialog’ box in Statbank and the Background/Information Note for the release or if the data includes NUTS2 data it is easy to tell. In general any CSO data issued since June 2018 uses the ‘new’ classification and anything issued before that will be the ‘old’.  Also be sure to check if (and how far) any backdating of the data has been done, for CSO it will generally be to 2012. Other data sources would need to be checked on a case by case basis.
  2. Ask: If it is not stated or clear from the release or data, contact the data provider to check. The more people who make a query, the more conscious all data providers will be to clarify which classification is used.
  3. Say: If you are a data provider and publishing data at regional level, be conscious to explicitly state which regional classification is used. If you are a data user and are publishing analysis or commentary using regional data, clarify which classification you are using. This is particularly critical if multiple data sets or sources are used with different regional classifications.

While this may all seem a little pedantic, given the current interest in the impact of Brexit on the border economy, knowing if someone discussing data for the Border is discussing a Border including Louth (with Dundalk and Drogheda) or a Border excluding Louth, could make quite a lot of difference.

Pauline White

Nuts about NUTS!

Anyone not familiar with regional policy or regional statistics always gets a bit of a laugh when we start talking about NUTS. It actually stands for Nomenclature of Territorial Units for Statistics (NUTS) and this system of defining territorial units for statistics across the EU was created by Eurostat. The NUTS classification got legal status in 2003.

The concept of NUTS is that each country in the EU is divided into different territorial areas at descending levels. So in the case of Ireland, the country as a whole is classified as NUTS Level 1, this is then broken into a number of large regions which are NUTS Level 2 (or NUTS2), these are further broken into smaller regions which are NUTS Level 3 (or NUTS3) and then local authority areas are below that (called LAU, or Local Administrative Unit).

In 2003, when the NUTS categories were introduced, Ireland was divided into two NUTS2 regions – the Southern & Eastern region and the Border, Midland & West region (called the BMW which also raised a few laughs). These two larger regions were further sub-divided into eight smaller NUTS3 regions.

When the 2014 Local Government Act was introduced, which made a number of changes to administrative boundaries in Ireland, the Government through the CSO applied to Eurostat to revise Ireland’s NUTS2 and NUTS3 statistical regions to match these new boundaries. The changes to the NUTS boundaries were given legal status in 2016.

The Labour Force Survey for Quarter 1 2018, published on 20 June, was the first time that the CSO published regional statistics based on these new regional divisions. For the Labour Force Survey they published backdated data, using the new regional boundaries, back to 2012.

Much of the data published by the CSO does not include any regional breakdown, but gradually the CSO will begin to apply the new regional classification to data which it does publish on a regional basis. One of the most anticipated will be the County Incomes and Regional GDP data which we have blogged about previously.

What are the new NUTS?

Instead of two NUTS2 regions, Ireland is now divided into three NUTS2 regions. These correspond to the areas covered by the three Regional Assemblies established under the 2014 Act – Northern & Western, Southern, Eastern & Midland . In the Map below these are coloured in blue, red/orange and green respectively.

Each of these three NUTS2 regions is composed of groups of NUTS3 regions, shown by different shades in map below. The main changes at NUTS3 level are the transfer of South Tipperary from the South-East NUTS3 region into the Mid-West NUTS3 region (following the amalgamation of North and South Tipperary Councils) and the movement of Louth from the Border NUTS3 region to the Mid-East NUTS3 region.

 

Map of new NUTS2 and NUTS3 regions in Ireland. Louth and Tipperary are cross-hatched to indicate their move from one NUTS3 region to another. Source: Reverb Studios/NWRA https://blog.reverbstudios.ie/2016/04/27/ireland-regions-map-vector/

 

The new structure is:

NUTS2 Northern & Western composed of NUTS3 West (Galway, Mayo, Roscommon) and NUTS3 Border (Donegal, Sligo, Leitrim, Cavan, Monaghan)

NUTS2 Southern composed of NUTS3 Mid-West (Clare, Limerick, Tipperary), NUTS3 South East (Wexford, Waterford, Carlow, Kilkenny) and NUTS3 South West (Cork, Kerry)

NUTS2 Eastern & Midland composed of NUTS3 Dublin, NUTS3 Mid-East (Wicklow, Kildare, Meath, Louth) and NUTS3 Midlands (Offaly, Laois, Westmeath, Longford).

The CSO has published an Information Note on the revisions.

Implications

The introduction of the new regional statistical areas has a number of implications. As the three Regional Assemblies are responsible for developing and implementing new Regional Spatial & Economic Strategies (to give effect to the National Planning Framework at regional level), having access to official statistics which align with this regional structure will be invaluable in the finalisation of the RSES and their ongoing monitoring.

As the three NUTS2 regions are now smaller than the previous two NUTS2 regions it may be easier to identify and understand differences and comparisons among the regions. Some statistics are only published at the NUTS2 level, such as expenditure on Research & Development, and previously interpretation of this data was somewhat meaningless given the huge disparity between the BMW region (with one university) and the Southern & Eastern region (with all the others). The three new regions may provide additional insights.

At the same time, looking at the NUTS2 level can hide very considerable inter-regional differences probably most apparent in the Eastern & Midland region. The latest Labour Force Survey showed an unemployment rate of 5.3% in Dublin compared with 8% in the Midland region. This highlights the value of analysis at the NUTS3 regional level.

The movement of county Louth from the Border NUTS3 region to the Mid-East NUTS3 region is probably the most significant change. Given Louth’s location on the Dublin-Belfast corridor and its key role within Dublin’s catchment, it always made sense to include it, along with Wicklow, Kildare and Meath, as part of the Greater Dublin Area, however statistically this was not possible as it was included in the Border region which stretched across to Donegal. Louth’s inclusion in the Border region made this one of the most heterogeneous NUTS3 regions, and its statistics among the most difficult to interpret at times. It will be interesting to see the impact of Louth’s move on both regions.

Pauline White

Educational attainment in the Western Region

A recently published ESRI Research Bulletin, ‘The local factors that affect where new businesses are set up’ summarises their analysis of new firms setting up in Ireland. Data from the Department of Business, Enterprise and Innovation (DBEI) on the number of start-up firms each year in 190 localities, all outside of the Greater Dublin Area, is linked to data on local characteristics thought to be important to business location. This data is used to develop models of how much each factor (or combination of factors) contributes to the number of business start-ups in a given place and time.

The authors state that the results of this analysis show that

‘Educational attainment of local residents is highly attractive to start-ups; we use the share of the population with a third-level qualification as an indicator for this, and it has the largest effect of the factors in our models.’

The analysis also shows that broadband access is a significant factor

‘However, a key finding is that broadband’s effect on start-ups depends on the education level of an area’s population. Only areas with enough highly qualified staff seem to enjoy a boost in start-ups when they have broadband network access.’

This analysis clearly points to the importance of human capital in the location decision of new business start-ups. Of course the direction of causality is a challenge, new businesses are attracted to areas with a highly skilled population, but highly skilled people will only remain/move to an area if suitable job opportunities exist.

The latest WDC Insights, published by the WDC last week (27 March), ‘Census 2016: Education Levels in the Western Region’ is therefore very timely, as it examines the level of educational attainment of the adult population of the Western Region and its seven counties.

Highest level of education completed

Overall, the Western Region displays a lower educational profile, with a smaller share of its adult population (aged 15+ years and who have ceased education) having third level qualifications and a greater share having low levels of education (Fig. 1) than the rest of the state. 13.4% of adults in the Western Region have only completed primary education compared with 11.1% in the rest of the state. The region’s older age profile contributes to this.

At the highest levels of education the difference between the Western Region and the rest of state is quite substantial e.g. 8.5% in the Western Region have a postgraduate degree/diploma compared with 11.7% in the rest of the state. Given the importance of third level education for business location and stimulating overall economic growth, this presents a challenge for the region.

Fig. 1: Percentage of population (aged 15+ years and whose full-time education has ceased) by the highest level of education completed in the Western Region and rest of state, 2016. Source: CSO, Census 2016 Profile 10 – Education, Skills and the Irish Language, Table EA003

Highest level of education completed in western counties

There are significant differences across western counties in the share of the population with a third level qualification (Fig. 2).  At 55.2%, Galway City has the second highest share of residents with a third level qualification (Advanced Certificate/Completed Apprenticeship and higher) in Ireland. It is behind Dún Laoghaire-Rathdown but ahead of Fingal, Dublin City and Kildare. Within the region, Galway County, Clare and Sligo have the next highest shares of third level graduates, illustrating a strong concentration around Galway / Limerick and also in Sligo, clearly showing the influence of larger urban centres.

Donegal has the highest share of its population with no formal education or primary only (21.9%) in the State, with Mayo, Leitrim and Roscommon next highest in the region. This is partly due to greater reliance on sectors traditionally associated with lower qualifications.

In general, the counties offering fewer graduate employment opportunities tend to have weaker educational profiles, with many of those with higher qualifications having left these areas. This presents a double challenge for such areas – the weaker educational profile makes it more difficult to attract new business start-ups, while the lack of suitable job opportunities makes the area less attractive to those with higher qualifications. Often in such areas, it is the public sector (education, health, public administration) which presents the most significant graduate employment opportunities. Stimulating greater demand for highly qualified staff among private enterprise in these areas, as well as supporting opportunities for self-employment is required.

Fig. 2: Percentage of population (aged 15+ years and whose full-time education has ceased) in western counties by highest level of education completed, 2016. Source: CSO, Census 2016 Profile 10 – Education, Skills and the Irish Language, Table EA003

Conclusion

Overall the Western Region continues to display a lower educational profile than the rest of the state. Given the key role of human capital in regional development, this is a significant challenge for the region and in particular more rural counties.  A number of factors including the region’s older age profile and its sectoral pattern of employment – smaller shares working in sectors which demand higher qualifications (e.g. professional services, ICT, finance) and more working in sectors traditionally characterised by lower qualifications (e.g. hospitality, agriculture) – strongly influence its educational profile.

Galway City shows a very different educational pattern however with the second highest share of third level graduates in Ireland. This is both cause and effect of its recent strong economic performance. The sectoral pattern of employment in Galway City differs from the rest of the Western Region with a high share working in ICT and medical devices manufacturing which demand higher qualifications, the presence of NUI Galway is another key contributor.

Download the latest WDC InsightsCensus 2016: Education Levels in the Western Region