Strong recent growth in overseas & domestic tourism in the Western Region, but considerable variation across counties

Given that it’s mid-term break and the summer season is fast approaching, this is a good time to look at the role and importance of the tourism sector in the economy of the Western Region.

Because of its importance as a source of demand for the hospitality industry, though the balance between tourist and local demand varies considerably across the region, our recent publication ‘Accommodation & Food Service Sector in the Western Region: Regional Sectoral Profile’ included a section examining tourism data.  This post looks at visitor numbers and revenue from both overseas and domestic tourists visiting the Western Region.  The data is from various Fáilte Ireland reports on regional tourism performance.

Overseas tourist revenue in western counties

In 2016[1] overseas tourists visiting the Western Region generated total revenue of €838m.  This was 18.1% of total overseas tourism revenue[2] generated in the state in that year.

The largest source of overseas tourism revenue for the Western Region is North America (35.4%), considerably higher than this market’s share nationally (Fig. 1).  The next largest is Mainland Europe which accounted for a somewhat lower share in the region than nationally.

The region differs considerably from the state in the lower share coming from ‘Other Areas’ (e.g. Asia, Australia).  It seems that visitors from emerging and long-haul markets are less likely to visit the region than elsewhere in Ireland. A key factor in this is access.  As international air carriers from these locations fly in to Dublin Airport, increasing road, rail and bus accessibility from Dublin to the region is vital to growing visits from these new markets.

Fig. 1: Percentage of total overseas tourism revenue by market in Western Region and state, 2016

Source: Fáilte Ireland, Regional tourism performance in 2016 (revised March 2018); Fáilte Ireland, Tourism Facts 2016 (August 2017)

The relative importance of different markets varies across counties.[3]  Britain is the largest source of overseas tourism revenue for Roscommon, Leitrim, Donegal and Mayo.  This is influenced by their large diasporas in the UK as well as direct UK flights to Ireland West Airport Knock, Donegal Airport and City of Derry Airport.  For Roscommon and Leitrim it may also reflect their lower profile among visitors from the US or Europe.  The tourism sector in these four counties is therefore quite exposed to the impact of Brexit.

North American visitors are the largest source of revenue for Galway and Clare (jointly with Mainland Europe) reflecting these counties’ position as international tourist destinations, with direct flights to Shannon Airport playing a role.

Change in overseas tourist revenue and numbers

Between 2011 and 2016, total overseas tourism revenue generated in the Western Region grew by 35.8% compared with 58.9% nationally (Fig. 2) showing a somewhat lower level of recovery.  While it is not possible to calculate total overseas tourist numbers for the Western Region as a whole due to double-counting, all western counties experienced growth in visitor numbers.

Overseas visitor numbers grew by 38%-58% in Donegal, Clare, Galway and Leitrim and these four counties also showed the strongest revenue growth.  They also had the strongest hospitality jobs growth over the same period clearly illustrating the strong link between overseas tourism and hospitality employment.

Donegal experienced substantially greater revenue growth than numbers growth indicating that each visitor spent more per trip (perhaps by staying longer) with Leitrim and Clare also seeing higher spend per overseas visit.  In contrast, Galway had lower growth in revenue than numbers with its growing popularity as a ‘city-break’ destination leading to more, but shorter, visits.

Fig. 2: Percentage change in overseas tourism revenue and overseas tourist numbers in Western Region and state, 2011-2016

Source: Fáilte Ireland, Regional tourism performance in 2016 (revised March 2018); Fáilte Ireland, Tourism Facts 2016 (August 2017); Fáilte Ireland, Overseas Visitors to Counties in 2011 and Associated Revenue (revised July 2013); Fáilte Ireland, Tourism Facts 2014 (revised February 2016)

Mayo was the only county to experience a fall in overseas tourism revenue (-13.9%) despite growth in tourist numbers, indicating that average spend per visit declined.  The ageing of the large Mayo diaspora in the UK, reducing revenue from ‘visiting friends and relatives’, could be a factor.  Roscommon and Sligo also saw a decline in spend per visit.  The substantial reduction in average hotel prices during this period would have contributed and this may have been more prevalent in these counties.

Domestic tourist revenue and numbers in western counties

Domestic tourism plays a key role in the region.  In 2016 Galway received over 1 million domestic trips with Mayo and Clare next highest (Table 1). Given low numbers, data for some counties is amalgamated in the published data and Roscommon & Longford received 136,000 domestic trips in 2016, the lowest number in Ireland.  The revenue generated from domestic trips ranged from €17.5m in Roscommon & Longford to €193.9m in Galway.

In terms of the average expenditure per trip, counties Clare and Donegal generate notably higher spending per domestic trip.  This might be because domestic trips to these counties tend to be for a longer duration and/or people engage in more activities (are holidaymakers).  The more inland areas (Roscommon & Longford and Leitrim & Cavan) have lower average spend per trip which could be because stays in these areas tend to be shorter, are more commonly to visit friends or family and/or costs are lower.  Galway’s relatively low spend per trip is likely influenced by short ‘city-breaks’.

Table 1: Number of domestic trips and revenue in Western Region and state, 2011 and 2016

Source: Fáilte Ireland, Regional tourism performance in 2016 (revised March 2018); Fáilte Ireland, Tourism Facts 2016 (August 2017); Fáilte Ireland, Regional tourism performance in 2014 (February 2016); Fáilte Ireland, Tourism Facts 2014 (revised February 2016

Change in domestic tourist revenue and numbers

As economic conditions improved and disposable income recovered, the number of domestic trips taken in the state grew by 30.5% between 2011 and 2016 with the revenue generated by such trips increasing by 27%, indicating some reduction in spend per trip (Fig. 3).  Except for Mayo, all western counties had the opposite pattern, with greater revenue growth than growth in domestic trips with higher spend per trip.  Clare, Leitrim & Cavan and Sligo in particular had notably higher revenue than numbers growth.

Roscommon & Longford had the strongest growth in both numbers and revenue, though from a very low base.  This growth was far stronger than the performance of overseas tourism over the same period in Roscommon[4] meaning Irish tourists now play a larger role in Roscommon’s tourism activity.

Galway and Mayo had the next strongest growth in tourist numbers influenced by Wild Atlantic Way marketing, initiatives such as the Mayo Greenway and the popularity of Galway City and Westport in particular for short breaks.  For Mayo, domestic trips out-performed overseas, again indicating an increased role for the Irish market, while Mayo’s lower revenue growth is consistent with the pattern for overseas tourists where spending per visit also declined.

Fig. 3: Percentage change in domestic tourism revenue and tourist numbers in Western Region and state, 2011-2016

Source: Fáilte Ireland, Regional tourism performance in 2016 (revised March 2018); Fáilte Ireland, Tourism Facts 2016 (August 2017); Fáilte Ireland, Regional tourism performance in 2014 (February 2016); Fáilte Ireland, Tourism Facts 2014 (revised February 2016)

Key Policy Issues

Tourism marketing brands are critical to attracting domestic and overseas visitors: The Wild Atlantic Way brand has increased tourist numbers and hospitality employment in counties along its route with Donegal, Clare and Galway seeing particularly strong jobs growth.  The continuation, strengthening and extension of the WAW marketing brand is important for sustaining and growing the sector along the western seaboard.

The 2018 launch of the new Ireland’s Hidden Heartlands marketing brand is hoped to increase tourist numbers and revenue to the more inland areas of the Western Region.  While Leitrim has performed well in recent years with strong employment and visitor growth, Roscommon has performed quite poorly; both rely heavily on the UK market.  Careful monitoring of the impact of the Ireland’s Hidden Heartlands marketing will be required to judge its effectiveness, with adjustments made as needed.

Need to adapt to tourism trends: A number of trends will impact on the future of tourism in the Western Region.  For example the emergence of ‘sharing economy’ models such as Airbnb is already having an impact.  This can facilitate visitors to stay in more rural areas where there may be insufficient demand for other types of accommodation but where visitors can bring benefits to the wider economy.  This trend however may also impact on the employment levels of accommodation providers.

Changing demographics such as the ageing profile of the European market as well as the UK and US based Irish diaspora, alongside strong global tourism growth from Asian markets, will alter the profile, nature and requirements of overseas tourists to the Western Region and its hospitality sector will need to adapt.

The transition to a low carbon economy will also impact on tourism with potential reduction in air travel, increased focus on the use of public transport by tourists and a demand for higher environmental standards within the sector.   The Western Region’s ‘green’ image provides an important marketing tool, however Ireland’s island location and reliance on air access means that any reduction in air travel to mitigate its negative climate impacts could have a significant impact on tourism in the region.

Pauline White

 

[1] Latest data available. While some topline county data is available for 2017, it does not include a breakdown by market.

[2] Not including revenue from Northern Ireland, carrier receipts (payments to Irish airlines/ferry companies by tourists coming into the country) or overseas same-day visits.

[3] County data is based on a three-year rolling average so the figures for a particular year represent their ‘average’ performance for the previous three years.

[4] This was also the case for Longford.

 

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Changes and Trends in Disposable Incomes in Western Region Counties

The CSO has recently published data on Household Disposable Incomes at county level as part of the ‘County Incomes and Regional GDP 2016’ release.  This release contains useful trend data on incomes for counties as well as information about the levels of different household income components for each county.  Data on regional GDP, which is also part of this release, will be considered in a future post.

Here I give an overview of the 2016 Disposable Income data (and the estimates for 2017) before considering some of the changes over time.  It should be remembered that the ‘Disposable Incomes’ as discussed in this post are calculated at a macro level and the county data is most useful for comparison among counties and over time.  Indeed the CSO notes that “While the county figures involve uncertainty, they do provide a useful indication of the degree of variability at county level.”

The map from the CSO below gives a quick overview of Household Disposable Income per person in 2016.  It shows, unsurprisingly, that the highest disposable incomes are in the east and south, while counties in the west and north have the  lowest disposable incomes.   Dublin, Limerick and Kildare are the only counties where per capita disposable income exceeded the state average in 2016 although Wicklow, Cork and Waterford, were just below (see Figure 2below for more detail).

Source:  CSO, 2019, County Incomes and Regional GDP 2016

A summary of key data for the Western Region is provided in Table 1 below.  The data for 2016 can be regarded as more robust than the 2017 estimates and so it is used for most of the comparisons in this post.  In 2016 Disposable income per person in the Western Region was €17,934 and in 2017 it had increased to €18,128 (I have calculated the Western Region figures using inferred population estimates).

Table 1: Disposable income data for Western Region counties

*CSO Estimate  ^Own calculations

Source:  CSO, 2019, County Incomes and Regional GDP 2016  and CSO Statbank Table CIA02

Disposable income per person in Donegal is consistently the lowest in the region (and nationally) and estimates for 2017 show a small decline (-0.6%) in incomes in Donegal between the two years.  Disposable Incomes in Donegal in 2016 were only 77% of the state average.  Only three Western Region counties (Sligo, Galway and Leitrim) had disposable incomes of more than 90% of the state average, while Clare had a disposable income of 88% of the state average, Mayo 86% and Roscommon 83%.  The Western Region as a whole had a disposable income per person of 87% of the state average in 2016.

The small changes in disposable incomes between 2016 and the 2017 estimates are shown in Figure 1 below.  As noted, there was a decline in Donegal, and in Leitrim, Mayo and Roscommon the growth was less than 1%.  The most significant growth between 2016 and 2017 was in Clare (2.4%).  For the Western Region as a whole, disposable incomes showed a growth of 1.1%.  Disposable income per person in the State was €20,638 in 2016 and is estimated to have grown by 3.7% to €21,397 in 2017.  As noted, however, the 2017 data is estimated.  All counties showed more significant growth in Disposable Incomes between 2015 and 2016 (Table 1 above).  The largest growth in the region that period was in Mayo (4.6%) and Roscommon (4.4%).

Figure 1: Disposable Income per person for Western Region counties and the State, 2016 and 2017 (€)

*CSO Estimate  ^Own calculations

Source:  CSO, 2019, County Incomes and Regional GDP 2016

Disposable income per person for all Irish counties is shown in Figure 2 below.  Disposable income per person in Donegal is lowest in the state, and it is third lowest in Roscommon (Offaly is second lowest).  In contrast, Sligo has the tenth highest disposable income per person, and Galway is in eleventh place.  The highest disposable incomes nationally are in Dublin, Limerick and Kildare.   These, along with Wicklow, Cork and Waterford, all have Disposable Income per person of more than €20,000 per annum.

 

Figure 2: Disposable Income per Person for all Counties, Western Region and State.

Source:  CSO, 2019, County Incomes and Regional GDP 2016

 

Trends in Disposable Incomes over time

It is also interesting to look at changes in disposable incomes over time.  Figure 3 shows trends in disposable incomes in the Western Region between 2000 and 2016.  All of the counties show a very similar growth trajectory with rapid growth to the 2008 peak followed by rapid decline.  There was a small peak in 2012 followed by a fall in 2013 which related to a decline in social transfers as discussed here.  This decline between 2012 and 2013 which occurred in all counties, has mostly been followed by a period of growth to 2016.

Figure 3: Disposable Income per Person for Western Region Counties 2000-2016 (€)

Source:  CSO, 2019, Statbank Table CIA02

 

Disposable Incomes in the Western Region compared to the State

While Figure 3 shows the actual Disposable Incomes per person, when considering the trends among counties it is helpful to use indices so that county figures can be examined relative to the State (State=100).  Thus Figure 4 provides a contrast to the more positive growth trend indicated above in Figure 3 which showed growth in disposable incomes in Western Region counties between 2013 and 2016.  Growth rates in the Western Region were lower than for the state as a whole and so Figure 4 shows that Disposable Incomes in Western Region counties are declining relative to the state average (although there is some recovery relative to the State indicated between 2015 and 2016).  Figure 4 also reminds us that Galway was the only Western Region to have had a Disposable Income of higher than the state average during this period and this was only for one year in 2010.

 

Figure 4: Index of Disposable Incomes per person in Western Region counties 2000-2016, State=100

Source:  CSO, 2019, Statbank Table CIA02

 

Have Disposable Incomes Recovered?

Given the significance of the peak in Disposable Incomes in 2008 it is interesting to examine how Disposable Incomes performed in 2016 relative to that peak.  Although there has been some recovery in Disposable Income since their lowest point in 2013, Disposable Income per person in 2016 was below that for 2008 in all of the counties in Ireland (Figure 5).   Indeed for seven of the counties Disposable income was over than €4,000 per person less in 2016 than it had been in 2008.  Two of these counties (Roscommon and Clare) are in the Western Region.  As was shown in Table 1 above Disposable Income in 2016 was more than 20% lower in Roscommon (€4,401) in 2016 than it had been in 2008, while in Clare it was more than 19.1% less (€4,277).  Most significantly, in Meath incomes were €5,544 higher in 2008 than in 2016.

Figure 5: Difference in Household Disposable Income per person in 2008 and 2016

Source:  CSO, 2019,  Statbank Table CIA02

In contrast, Limerick is the county showing least difference in disposable income per person in 2008 compared with 2016 (- €321).  Dublin and Kerry have also recovered relatively well, although there is still a significant difference between Disposable Incomes in these counties in 2016 and 2008.  Of the Western Region counties Sligo has recovered best, with disposable incomes only 8% below that in 2008 (€1,746).  Interestingly, Donegal (14% less) and Mayo (13%), which are among the Western Region counties with the lowest Disposable Incomes per person, also show a less significant gap to 2008 than other Western Region counties.  However, it is of concern that disposable incomes in all counties are still considerably lower than they were in 2008.  While the Irish economy has recovered well in the last few years, this has not fed through to disposable incomes as measured in this data.

The differences in disposable incomes among counties can be explained by the changing patterns in the components of household incomes (as was discussed here and here).  I will examine trends in these in the most recent data on income components in a future post.  The growth and change in the regional economies as shown by the Regional GVA data will also be examined in a future post.

 

Helen McHenry

 

 

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Galway as a Key Regional Driver

The WDC recently presented to Galway Chamber (presentation available here), noting some of the work they have recently undertaken and highlighting some policy implications for the Region as well as the city.

Galway – which Galway?!

Galway city and its reach goes well beyond the city boundary, but measuring this is complicated. In part because there are different measures depending on the role performed by the city, for example as a centre of excellence for health it has an extensive regional remit. More recently there is consideration of the Galway Metropolitan Area Spatial Plan (MASP) as part of Ireland 2040 and the National Planning Framework.

Travel to Work Areas

Another way of examining the impact and influence of Galway is examining its labour catchment. The WDC has analysed labour catchments, based on Travel to Work Areas, which in turn are based on the commuting patterns of workers resident in the Western Region. The WDC first undertook this exercise based on Census 2006 data and has completed the same analysis 10 years later with the most recent Census in 2016. This provides useful trend data, which shows a growth in the size of the Galway city labour catchment over the period. The Galway city labour catchment and the extent of commuting to the city highlights the extensive reach of the city across the entire county and beyond into parts of Galway and Mayo.

Highlights from 2016 Census

The recent Census data shows that between 2011 and 2016 the number of people living in Galway city grew by over 4% (4.2%), and by 2.4% in County Galway. Both the city and county had much higher population increases than anywhere else across the Western Region, (Mayo and Donegal recorded slight declines).

When examining the socio-economic profile of residents, the figures for Galway city are generally very similar to the state average, for example, in terms of the employment (53.4%) and unemployment rates (7.9%) and the share not economically active (38%) the Galway city figures and the State are the same.

NPF and RSES

There was a discussion on the National Planning Framework and the Northern & Western Regional Economic and Spatial Plan. While the NPF is to be a move away from ‘business as usual’, from a regional perspective the focus is on the five cities. A concern is implementation and the importance of sectoral policy as an instrument of change for both capital & current spending. Sectoral polices need to be aligned to support the move ‘away from business as usual’. However, there is little evidence of this in the NPF, so for example, policies such as the National Aviation Policy devised well before the NPF now need to be reviewed to support the regional population and employment targets.

On the Northern & Western Regional Economic and Spatial Plan, while the WDC welcomes regional population targets there needs to be more commitments to help deliver. There is much potential in the regional centres but there needs to be better links and investment, however much of this is at the back end of the programme rather than being front loaded. As we know from previous spatial planning exercises (e.g. National Spatial Strategy), implementation is key. What happens if priorities of a Government Department or sectoral agency conflict with RSES?

Policy implications for Galway

Better intra-regional transport links e.g. M18 have extended labour catchments & opened up new opportunities, for example there is now more commuting for work between Galway, Ennis, Shannon and Limerick. This can be a key asset for large employers looking to access the skills they need. The Galway-Ennis-Shannon- Limerick may currently be the most cohesive element of the Atlantic Economic Corridor and it illustrates how good transport links are critical.

Employment and good job opportunities are important in ensuring skilled people will stay in the region and Galway needs to attract new and dynamic enterprises. Employment is very important but Galway as a place to live is equally, if not more important. Place of residence is usually more stable than place of employment, therefore retaining the good quality of life available in Galway and improving on it should also be a policy priority.

Galway City and Chambers city Regions Conference

The idea of the regional cities working together more cohesively was a key theme discussed at the conference on urban development hosted by the Chambers of Commerce in the five cities – Cork, Dublin, Galway, Limerick and Waterford, held in NUI Galway on 28th March. The conference, entitled ‘Ireland’s Cities – Powerhouses of Regional Growth’, explored how Ireland’s five cities can fulfill the goals of economic development for their regions set out in the National Planning Framework (NPF) and Project Ireland 2040.

The Minster for Housing, Planning and Local Government, Eoghan Murphy TD, opened the conference and welcomed the initiative, pointing to the opportunities for urban growth and regeneration without urban sprawl. John Moran, Chair of the Land Development Agency pointed to the opportunities for the four regional cities to work together to create a counterbalance to the East and to combine capacities to create more opportunities. Other speakers included Anne Graham, CEO of the National Transport Authority.  John O’Regan, Director of AECOM discussed the results of their Survey on Our Cities’ Infrastructure Needs and Dr. Patrick Collins from NUI Galway discussed a Vision for Galway as an example of urban regeneration highlighting issues and opportunities. The presentations will be made available on the Galway Chamber website shortly.

 

Deirdre Frost

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Hospitality plays a larger role in employment & enterprise in the Western Region

The WDC has just published its latest Regional Sectoral Profile which examines the region’s fifth largest employment sector – Accommodation & Food Service.  Both the detailed report ‘Accommodation & Food Service Sector in the Western Region: Regional Sectoral Profileand a two-page summaryWDC Insights: Accommodation & Food Service Sector in the Western Region’ can be downloaded here

Accommodation & Food Service includes all those working in hotels, guesthouses, pubs, clubs, restaurants, takeaways, coffee shops, catering companies and mobile food / coffee vans.  Essentially it is the hospitality industry.  The Western Region is home to 19.7% of everyone working in hospitality in Ireland and 23.7% of all of the sector’s enterprises.

Accommodation & Food Service as a share of total employment 

According to Census 2016, 23,038 people were employed in Accommodation & Food Service in the Western Region.  It plays a greater role in the region’s labour market than nationally (Fig. 1) accounting for 6.9% of total employment compared with 5.8%.  Among western counties, it is most important in Galway City at 9.9%, followed by Donegal and Mayo.  These three counties are among the top five in Ireland in terms of the share of their workforce engaged in hospitality.  Roscommon has the lowest share in the region and is fourth lowest in the state.

Fig. 1: Percentage of total employment in Accommodation & Food Service in Western Region and state, 2016

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

At 27.6% of total employment, Clifden has the highest share working in hospitality of Ireland’s 200 towns and cities (1,500+ population) with Bundoran (21.7%), Westport (21.1%), Donegal town (20.3%) and Carrick-on-Shannon (15%) also among the top 10 towns in Ireland.   At under 6%, Ballyhaunis, Ballymote and Boyle have the lowest shares working in the sector in the region.

Employment by gender 

Hospitality is a more important employer for women than men (Fig. 2) with 8.2% of all working women and 5.8% of all working men in the Western Region working in the sector.  The sector plays a more significant role in both female and male employment in the region than nationally, most notably for women.

Galway City, Donegal and Mayo are where hospitality is most important for female employment employing close to 1 in 10 of all women.  In the case of Donegal and Mayo the sector is considerably more important for women’s jobs than men’s.  Galway City is the only area where hospitality is more important to male than female employment however the shares are quite similar indicating the sector is more gender-balanced, as it also seems to be in Sligo.

Fig. 2: Percentage of total male and total female employment that is in Accommodation & Food Service in Western Region and state, 2016

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

Self-employment in Accommodation & Food Service

14.1% (3,237 people) of people working in the sector are self-employed (employer or own account worker). The Western Region has a considerably higher incidence of self-employment than the national average (11.5%).  This could indicate that hospitality operations in the Western Region tend to be smaller in scale with fewer employees and that owner-manager/family-run businesses are more common.  The extent of self-employment declined between 2011 and 2016, most strongly in more rural counties.

Accommodation & Food Service Enterprises

In 2016 there were 4,358 Accommodation & Food Service enterprises registered in the Western Region which was 23.7% of all such enterprises in the state.  This is the sector where the region accounts for its highest share of all enterprises nationally.

Hospitality accounted for 10.2% of all business economy[1] enterprises registered in the Western Region 2016.  Donegal, Leitrim and Mayo have the highest share of enterprises in the sector at 11+% showing the importance of the sector in their overall enterprise profile.

Key Policy Issues for the Western Region’s Hospitality Sector

Accommodation & Food Service plays a larger role than nationally in the Western Region’s economy, in terms of its employment profile and enterprise base.  Any changes in demand for this sector e.g. from Brexit, an economic downturn, will have a particularly large impact on the region and national policy needs to address issues specific to the region such as improved accessibility for visitors and the viability of rural hospitality businesses relying on local demand.

As it is quite widely distributed, hospitality helps to sustain the regional and rural economy and is becoming an increasingly important reason for people to visit town centres. Therefore it is a critical element in town centre renewal efforts.  It is also an important source of jobs for those with lower skills or limited experience, whose rights need to be protected, as well as providing highly skilled occupations and considerable opportunities for entrepreneurship.  Self-employment, while still higher in the region than elsewhere, is declining and it is important to support and encourage self-employment to maintain the diversity of the region’s hospitality offering.

Hospitality is highly sensitive to changing economic conditions which influence both the level of disposable income of local residents and overseas and domestic tourism activity. The balance between local and tourist demand in sustaining the hospitality sector varies considerably across the region (from tourism ‘hotspots’ to small rural towns depending on local custom) and policy aimed at strengthening the sector needs to be tailored to the specific circumstances of different areas.  Rural and border counties are particularly exposed to Brexit while the sector as a whole needs to adapt to emerging trends e.g. Airbnb, changing demographics, low carbon economy.

Download Accommodation & Food Service Sector in the Western Region: Regional Sectoral Profile and WDC Insights: Accommodation & Food Service sector in the Western Region . Both are also available here

The report also examines data on overseas and domestic tourism revenue and numbers to the Western Region, which will be the subject of a future post.

Pauline White

[1] Business economy includes all economic sectors except Agriculture, Forestry & Fishing, Public Administration & Defence, Education, Health & Social Work and Other Services.

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

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

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

Agency assisted jobs in Industry in the Western Region

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

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

Industry’s share of total assisted jobs

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

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

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

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

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

Assisted jobs in Industry sub-sectors

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

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

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

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

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

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

Assisted Industry jobs by ownership

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

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

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

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

Conclusion

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

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

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

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

Pauline White

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

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A Tale of Three Regions: GDP in the new NUTS2 Regions

Regional GDP for 2017 has recently been published by Eurostat for 281 NUTS2 regions in the EU28.  This data shows how the different EU regions compare in terms of GDP and how they rank in relation to each other and to the EU average.  This data is of particular interest in Ireland as it is the first data on regional GDP available for the new Irish NUTS 2 regions.  As discussed here and here, instead of two NUTS2 regions in Ireland (the Border, Midland and West (BMW) region and the Southern and Eastern (S&E) region) there are now three regions: Northern and Western, Southern, and Eastern and Midland.  The Northern and Western region is very similar to the Western Region under the remit of the WDC[1].  While this is the first GDP data available for the three regions it is expected that the CSO will shortly publish regional GDP data in Ireland for the same years, at both NUTS2 and NUTS3 level, though there may be some issues relating to confidentiality at NUTS3 level which could delay the publication.

Regional GDP over the last decade

Eurostat has published the data for 2006 to 2017 (although for Ireland the 2017 data is an estimate) allowing for a good examination of the changing output of the three regions, as measured by GDP.  Figure 1 below shows regional GDP (€million) in three NUTS2 regions for that period, highlighting the very different growth trends in the regions in the last decade.

Figure 1: Regional GDP (€m) for Ireland’s NUTS2 regions, 2006-2017.

In 2006 the Northern and Western region accounted for 12% of the national economy, but by 2017 it was estimated to account for only 8%.  GDP in the region had grown by only 5% in that period.  In contrast the Eastern and Midland region economy grew by 47% between 2006 and 2017, while the Southern region’s economy had more than doubled in size (101% growth).  The Irish economy as a whole, as measured here, grew by 59% over that time. The Eastern and Midland has the largest regional economy, accounting for 56% of the national economy in 2006.  This fell to 51% in 2017.  The Southern region accounted for 32% of the economy in 2006 and 41% by 2017.

The level shift in the size of the economy Ireland in 2015 discussed in detail here, is shown clearly in the chart.  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 this shift in GDP.  It is evident that the most significant shift was experienced in the Southern region, previously with the Southern and Eastern regional data combined this was less obvious.  Nonetheless growth in the Eastern and Midland region from 2013 onward was also very significant while the Northern and Western region GDP does not appear to have been affected by the factors which gave rise to the level shift, or to have achieved steady economic growth.

While Figure 1 shows the actual GDP, Figure 2 below shows GDP per person in each of the regions, a format which is more comparable across regions within Ireland and Europe and highlights the very significant widening of disparity among Ireland’s regions.

Figure 2: Regional GDP per inhabitant in PPS for Ireland’s NUTS2 regions, 2006-2017

It should be noted that Figure 2 shows the data from 2006 to 2017 in terms of in terms of purchasing power standards (PPS)[2] rather than euro.  The disparity in GDP per person has grown significantly since 2006.  In 2006 GDP (PPS per inhabitant) in the Northern and Western region was 69% of the national average, by 2017 it was only 46%.  Meanwhile, in 2006 in the Eastern and Midland region GDP per person was 115% of the national average and 104% in 2017.  The most rapid change has been in the Southern region where GDP per person was 95% of the state average in 2006 and 122% in 2017.

Data for 2017 was also provided in euros.  The GDP per person in 2017 for the Northern and Western region was €28,400, for the Southern region it was €74,700 (163% higher), for the Eastern and Midland it was €64,000 per person, 125% higher than the Northern and Western region.  Nationally GDP was €61,200 per person.

Comparison with EU28 Regions

The GDP per person in the Southern region is 3rd highest (63,000 PPS) of the 323 regions for which there is NUTS2 regional GDP 2016 data, after Inner London West (185,100 PPS) and Luxembourg (76,200 PPS).  The Eastern and Midland region is 8th (54,000 PPS) while the Northern and Western Region lags considerably, in 181st place (23,900 PPS).

Given that the eligibility for the European Regional Development Fund (ERDF) and the European Social Fund (ESF) is calculated on the basis of regional GDP per inhabitant (in PPS and averaged over a three year period) this rank is important.  The NUTS 2 regions will again be split into three groups for the programming period 2021–27:

  • less developed regions (where GDP per inhabitant was less than 75% of the EU average);
  • transition regions (where GDP per inhabitant was between 75% and 100% of the EU average); and
  • more developed regions (where GDP per inhabitant was more than 100% of the EU average).

For the programming period 2021-2027, the Commission envisages the continued use of the NUTS classification for determining the regional eligibility and co-financing rates for support from the ERDF and the ESF.

In the Southern region in 2017 GDP was 220% of the EU28 average (see Figure 3 below) and the Eastern and Midland region GDP was 189% of the EU average neither region will qualify as transition regions for the ERDF or the ESP, but would be classified as ‘more developed regions’.

Figure 3: NUTS2 Regional GDP per person as percentage of the EU average (EU=100)

Source: Eurostat Table tgs0005 Regional Gross Domestic Product (PPS per inhabitant in % of the EU28 average) by NUTS 2 regions. 2017 estimated. https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tgs00006

The Northern and Western region, however, had a GDP of 82% of the EU average in 2016.  It was more than 90% of the EU average in only two of the last ten years (2011 and 2012), although in 2006 it was greater than the EU average at 102%.  It is estimated at 84% of the EU average in 2017 and so the Northern and Western region would qualify as a ‘transition’ region in the programming period 2021-2027.

Edited to add: Despite publication of GDP data for the new NUTS2 regions it appears that for the next round of cohesion policy funding (2021-2027) the old NUTS 2 regions will be used (BMW and S&E) rather than the three new regions (including the NW).  This means the BMW will have Transition Region status and the Southern and Eastern Region will be classified as a ‘more developed region’.

Conclusion

There are of course difficulties with the use of GDP as a measure of regional disparities and regional well being (see here and here) but despite these concerns it remains the most important statistic for regional economic activity.  It is essential to our understanding of the changes taking place in Irish regions, although, in order to fully understand regional growth and change, it is important to use GDP in combination with other data such as that on employment, enterprise activity, income, wealth and consumption.

The rapid growth in GDP in the Southern region and in the Eastern and Midland region contrasts sharply with the very significantly slower growth in the Northern and Western region.  The substantial differences in regional GDP per person in 2017 in the three regions, when compared to that in 2006, should be of great concern for Ireland as a whole and for the Northern and Western region in particular.

 

 

Helen McHenry

[1] The WDC remit covers Donegal, Sligo, Leitrim, Roscommon, Mayo, Galway and Clare.  The Northern and Western region is similar, but includes Cavan and Monaghan and excludes Clare (which is part of the Southern Region).

[2] PPS is the technical term used by Eurostat for the common currency in which national accounts aggregates are expressed when adjusted for price level differences using PPPs.  Basic figures are expressed in PPS, i.e. a common currency that eliminates the differences in price levels between countries allowing meaningful volume comparisons of GDP between countries.

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WDC Submission on Draft RSES for Southern Region

This week the WDC made a submission to the public consultation being held by the Southern Regional Assembly on their Draft Regional Spatial and Economic Strategy.  The submission is available here.

As we’ve provided substantial input previously (available here) to the preparation of the Draft RSES, in this submission we mainly comment on the specific text and content of the Draft RSES document.

County Clare is the only county within the Southern Assembly region that is also under the remit of the Western Development Commission, therefore this submission largely focuses on the questions as they pertain to County Clare.

Some of the general comments contained in our submission include:

Role of Ennis

Apart from Ennis being a key economic and residential centre, Ennis is the county capital and link to rural parts of County Clare. This role is clearly evident in the extent of the Ennis labour catchment which extends across much of the County, with the exception of the Kilrush labour catchment to the south west of the county and the Shannon labour catchment to the south, see Travel to Work and Labour Catchments in the Western Region (WDC 2018) here. This role should be maintained and harnessed to support the growth and development of Rural County Clare.

Our Region’s Economic Engines

Discussion of ‘achieving convergence between where people live and work’ needs to recognise the opportunity of remote working, either for people to work from home or a hub located close to their home.  It also needs to be recognised that job creation in smaller towns, villages and rural areas is another route to such convergence and pursing such convergence should not solely focus on building more houses in cities and other large urban centres.

Galway-Ennis-Shannon-Limerick (GESL) Economic Network

The Galway-Ennis-Shannon-Limerick Economic Network is actually a segment of the Atlantic Economic Corridor. It may currently be the most cohesive segment, given the proximity and strong ties between the centres, especially Limerick-Shannon and Ennis centres, with increasing economic activity between Galway, Ennis and Limerick supported by recent investments in improved transport connectivity especially the M18. This network can help support regional growth in both the Southern and Northern and Western Regions. In addition this segment of the network can point to how to improve and develop the cohesiveness of the broader Atlantic Economic Corridor.

Shannon Airport

The role of Shannon Airport needs to be further supported and enhanced. Though the National Aviation Policy (2015) does recognise the key role of Shannon Airport, the policy was developed well before the National Planning Framework which attempts to redirect growth away from ‘business as usual’.  However since then, there is ever greater concentration of international traffic at Dublin Airport. The RSES should advocate for a revised National Aviation Policy so as to fully support the regional population and employment targets. In the absence of a change in policy it is not clear how the Airports and Ports in the Southern Region can realise a stable or ideally a growing share of traffic.

 Limerick-Shannon MASP

The Limerick-Shannon MASP is different to others in that it is connecting two separate urban centres, albeit economically interdependent urban centres. As Limerick is the larger centre there is understandably much focus on it. The focus is also on connecting Limerick and Shannon Airport/Free Zone. The development and transport requirements of Shannon town itself should also be prioritised, to promote Shannon as an attractive place to live as well as work.

The full submission is available here.

Following the public consultation (which closed on 8 March) the SRA will prepare a report on issues raised in submissions/observations and recommend whether the RSES should be made with or without amendments. It may necessary to hold another phase of public consultation before the RSES can be finalised. You can check for updates on the process here.

 

Deirdre Frost

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