Damning new report on the region's economy

Published 18/06/2016 | 00:00

Dr Ray Griffin and Dr Cormac O'Keeffe.
Dr Ray Griffin and Dr Cormac O'Keeffe.
Dr Ray Griffin and Dr Cormac O'Keeffe.
Dr Ray Griffin and Dr Cormac O'Keeffe.

Wexford unemployment continues to be at crisis levels, according to a damning report on the South East economy written by WIT lecturers.

The South East Economic Monitor is critical of the government's South East Action Plan for Jobs.

In its key points, it says:

l Unemployment in South East rose by 0.6 per cent to 12.5 per cent in the first quarter of 2016, against the downward national trend (8.4 per cent, down 0.3 per cent; the South East has experienced an employment crisis since 2002.

l The quality of jobs in the South East is dramatically lower than the national average, and continues to decline.

l There are bright spots in property market and new car sales.

Among the reasons for the situation, the report cites:

l Lower educational attainment, a problem built up over a long-term by lower investment in higher education. The South East is missing 7,260 higher education places.

l Lower activity by the IDA in the region over the past 25 years; the South East is missing 6,312 IDA-supported jobs.

The authors of the report, the academic faculty in the Waterford Institute of Technology (WIT) School of Business, say it is clear there is no plan to turn the economy of the South East around.

In the report Dr Cormac O'Keeffe and Dr Ray Griffin say the national policy approach is focused on the crisis being over, however, it is clearly still under way in the South East.

'We have had five quarters of worsening unemployment data since the government's South East Action Plan for Jobs was launched. The Government launched the South East Action Plan for Jobs on 7 September, 2015 promising an extra 25,000 jobs in the region and 10-15 per cent employment growth over the coming years,' said Dr O'Keeffe.

'The government's Action Plan for Jobs does not address the root cause of the South East's economic stagnation, it says nothing about adding higher education capacity to improve educational attainment; the kind of sensible investment that would support the IDA's marketing of the region,' said Dr Griffin.

'The recession took hold of the South East in 2002, five years before the end of the Celtic Tiger. It became dramatically worse with the national crisis; and now the regional recession has re-asserted as the dominant economic trend,' said Dr O'Keeffe.

On a more positive note, the report says the South East is experiencing improving consumer and business sentiment with a broad increase in employment driving healthy improvements in regional consumption and a renewed demonstration of willingness to spend on things like cars and housing.

However, when compared to national economic performance, and peer regions in Ireland, the data illustrates how the South East's economy continues to be characterised by persistently high levels of unemployment, deprivation and significantly lower job quality. Two data points explain why this might be the case.

One is low education attainment and low higher education capacity within the region and the paucity of new MNC-/IDA-supported jobs over the past 25 years - the kind of jobs that are crucial to Ireland's economic development and growth. It says regional stagnation has reasserted itself as the dominant economic trend.

The unemployment rate in the region peaked at 20.1 per cent, compared to 15.1 per cent nationally, and currently stands at 12.5 per cent, in contrast with the state-wide rate of 8.4%. The South East currently has the highest rate of unemployment in the country.

Other measures for unemployment broadly corroborate this trend. So live register figures for April 2016 stand at 40,954, or 8.1 per cent of the population of the region, compared with 6.6 per cent for the State.

Despite the long-term unemployment trend illustrating the relative underperformance of the region, over the last three years the employment in the South East has increased at a faster pace than the national increase.

There has been impressive performance in the broad sectors of construction and services, where growth rates in the South East have comfortably out-stripped those nationally. The broad industry sector has notably struggled in the South East with a 12.9 per cent drop in employment, compared to a 4.7 per cent increase nationally.

Employment growth in agriculture in the South East has lagged significantly behind the national increase; which suggests a more productive industrialised agricultural sector relative the rest of the state.

Since 2012 employment has grown but is far below the 2008 peak in terms of volume; and the data suggests that the new jobs are of a lower quality than the jobs that were lost.

Some notes of optimism are present in the data; with the rise in employment in professional, scientific and technical jobs of 25.3 per cent over the last three years, compared to a national increase of 6.2%, albeit from a low base and a 14.3 per cent (1,500 additional jobs) increase in employment in the accommodation and food service sector.

Taken together, the long-term trends in both unemployment and job quality point to a significant economic malaise in the region.

As measured by Gross Value Added per capita (GVA) and Disposable Income, job quality in the South East is far below the national average.

The GVA in the South East is approximately 71 per cent of the national average, declining from a peak of 89.3% in 2002. In 2004 the

GVA index in the South East was 117.8 per cent of the EU average; it has since declined to 91.9 per cent. In a similar vein, the index of Disposable Income is 93.5 per cent of the state average, declining from a peak of 98.1 per cent in 2007.

Given the population of the South East (10.8 per cent) one would have expected an additional 6,312 IDA- supported MNC jobs; and a further 4,000 additional indirect jobs; suggesting an overall shortfall of approximately 10,000 jobs.

Were such a distribution of IDA supported jobs to have happened over the last 20 years, the South East unemployment rate and job quality would not be materially different from the national norm.

The South East accounted for approximately four per cent of the new IDA-supported jobs created over the period 2011-15.

Two developments hint at a new seriousness in the IDA's South East mission; but the scale of the employment deficit and the lead time of the IDA marketing process suggest it will take many years to unwind this legacy.

Last year, however, saw two positive developments - a noticeable increase in IDA visits to the region (but it still lags behind the national average) and a new IDA regional manager was appointed.

The IDA de-emphasised its South East regional office in 1992-1995, since then servicing the region from Cork.

This coincided with a marked divergence between the IDA's regional and national performance.

The South East has a natural capacity for 7,260 additional higher education places in the near term; and the absence of this capacity has three clear manifestations.

First, the South East has lower education attainment than comparable regions, partially explaining the lower job quality and higher unemployment.

This is particularly acute at the higher reaches of the National Framework of Qualifications (NFQ) - level 8 degree, level 9 postgraduate and level 10 doctorate; these three levels being key to the knowledge economy. Second is the strong trend to emigrate

from the region for education, and the universities drain young people from the counties across the South East region.

Third is overclocking of the higher education institutions where with 5 per cent of the national budget they have 6.5 per cent of the system's enrolments.

Usefully this points to the root cause of the South East's economic malaise, poor job quality and unemployment is directly related to underprovision and investment in education.

ABOVE AND LEFT: Extracts from the report, including a graph comparing national and South East unemployment since 2003

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