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South East Economic Monitor shows Waterford being left behind, while the rest of the country recovers

Most of the key economic indicators show that the south east region is growing, but much more slowly than the State and the other eight regions of Ireland according to the latest South East Economic Monitor. As a result, Waterford is in relative economic decline.

The 2nd annual South East Economic Monitor published on 1 July has been prepared by academic faculty in the Waterford Institute of Technology (WIT) School of Business, Dr Cormac O’Keeffe, John Casey and Dr Ray Griffin.

The South East Economic Monitor tracks key economic indicators, capturing data on the economy of the five counties (Carlow, Kilkenny, Tipperary, Waterford and Wexford).

The South East Economic Monitor 2017 shows that despite some signs of improvement, Waterford continues to be left behind and is not enjoying a fair share of the national recovery.

Despite steady decreases in the Live Register in Waterford (14.5% year-on-year decrease), Census 2016 shows that of the cities, Waterford City had the highest unemployment rate at 18.8%. The rate of unemployment in the county as a whole was 15.4%, the eighth highest in the country and significantly higher than the State average of 12.9%. Waterford accounted for more than one in nine of the unemployment blackspots in the country (areas with more than 27% unemployment rate).

Waterford is home to 2.4% of the population of the State but 3.3% of those on the Live Register.

Despite some welcome successes in 2016, Waterford continues to be home to less than its fair share of IDA jobs. From 2011-16 the IDA created 51,793 net jobs. Waterford accounted for a mere 0.14% of these net additional jobs despite being home to 2.44% of the Irish population. Despite this, the number of IDA visits to county decreased significantly in 2016 to 17, from 31 in 2015. There is also evidence of low job quality as the returns for taxes on work (PAYE, USC, and self-employed taxes) in Waterford are 58% of what one would expect based on population share.

Dr Cormac O’Keeffe, lecturer in Finance and Economics at WIT Business School, says that the national policy approach is focused on the crisis being over; as regards the economic crisis there is still unfinished business in the South East. “The South East region is home to 10.7% of the national population, yet it is clear there is no plan to turn the regional economy around,” he says.

The region has seen a large drop in unemployment (from 12.5% in Q1 2016 to 9.3%) with 9,900 net new jobs and this is the first time unemployment is below 10% in eight years. However the quality of jobs in the South East is dramatically lower than the national average, and there is no evidence of this improving. This means incomes, disposable income and consumption in the South East is lower than the rest of the country.

“Low income, low skills jobs are driving the employment growth; it is pretty simple, the good jobs lost in the recession are being replaced by poorer jobs,” Dr O’Keeffe continues.

While there has been a drop in unemployment the south east is the only region not meeting the Government’s Action Plan for Jobs target.

Lecturer in Strategy at WIT Business School, Dr Ray Griffin, says that the improvement in unemployment masks significant relative economic decline. “Waterford is part of the only region (of the eight) not meeting the Government’s Action Plan for Jobs target (to have regional unemployment less than 1% of national rate). There is very little variation between the counties in the region.”

“The Government’s Action Plan for Jobs commitment to bring every region’s unemployment rate to within 1% of the national average has been achieved everywhere but the South East. We cannot see any Government action aimed at closing that gap,” he says.

In relation to property the South East Economic Monitor Property authors say Waterford now has an established recovery underway, the number of sales increased over the past 4 years, but now prices are progressing. Residential rents continue to climb from YoY growth of 6% in Waterford.

John Casey, lecturer in the Department of Accounting & Economics at WIT notes that nationally it is clear that the agencies charged with economic development, IDA and Enterprise Ireland, are underperforming with regards to the South East. “They now have specific objectives to promote a more regional distribution to their activities, however we do not see any evidence of this in the South East. We can see what these highly effective organisation can do when they put their mind to it. They need to give more support to their regional offices and target this gap in their activities,” he says.

The publication also explores higher education capacity. Casey adds that the South East’s economy will not get back into step with the rest of country while there continues to be a cap on higher education capacity. “Investment in higher education is key to closing the gap by raising job quality and supporting the IDA in bringing knowledge economy jobs into the region. It beggar’s belief that €1.7bn was spent on new university buildings over the past five years, and not one of these state supported investments was made in the South East. As currently proposed, the technological university will not add any educational capacity unless it is accompanied with significant investment to address the deficit caused by many years of under-investment.”

Download the report at https://www.wit.ie/witsoutheastmonitor

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