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'The gap in household income in Dublin versus rural Ireland is widening'

The government’s objective of delivering growth in rural areas still remains a challenge that remains to be overcome.

AFTER ONE OF the deepest economic crises in Ireland’s history, the economy is well and truly in recovery, with levels of economic activity higher now than during the economic boom.

Employment has also increased, particularly in the agriculture, construction, technical, industry, and hotel and food sectors. However, the availability of jobs has grown more slowly than the economy as a whole.

While there are 238,000 more jobs than at the lowest point in 2012, the increase of 115,000 in the working age population since 2007 means that there remains a gap of 55% or 189,000 jobs, to achieve the same employment rate as the previous peak.

Rural unemployment rate was twice urban

We know from earlier analysis that the economic crisis affected rural areas to a greater degree than urban areas, with an increase in the rural unemployment rate of nearly twice that of urban areas, with the most severe effects evident within rural towns.

Recent data made available by the Central Statistics Office has allowed researchers in NUI Galway and Teagasc to study how the economic recovery has impacted differentially on urban and rural areas.

In the 2016 Census, 36% of the population lived in cities, 34% lived in rural towns and 30% in the countryside. Ireland is thus a very rural country. The education level tends to be lower in rural areas with a higher share of graduates in the cities, while the unemployment rate tends to be higher in rural towns than the cities, with the exception of Waterford city which has the highest unemployment rate.

Employment growth is localised in Dublin

Within rural areas, there is a marked difference between the most remote rural areas and those closer to cities. The unemployment rate in the countryside is lower than that observed in towns, reflecting the fact that many unemployed in rural areas migrate, particularly in more remote areas.

There is clear evidence that the recovery is operating at different speeds in urban and rural areas. Since 2012, employment growth as measured by the Quarterly National Household Survey, has been localised in Dublin (which has seen 16% growth in employment) and in surrounding regions (Midlands 19.3%; South-East 18.2%).

The lowest growth occurred in the West (6.1%). Live register statistics indicate that in general there is a smaller decline in areas furthest from the cities (except Kerry), while the largest declines in unemployment occurred in proximity to the cities.

Turning to the regional distribution of economic activity and income, for over a decade, the gap in economic activity between Dublin and the rest of the country has been widening as economic activity became more concentrated in Dublin and the other cities. However, commuting and redistribution through public expenditure saw a narrowing of the gap in household income.

However since the previous peak in 2007, only Dublin (which grew by 10%) had seen a higher level of economic activity by the time of the most recent data in 2014. At the other extreme, economic activity in the Border area was 32% lower than peak levels.

Household income per person in 2014 had improved most in Dublin, increasing by 5% relative to 2011, with the next highest improvement of 3.9% in the South East. However in both the West and the Border area, average disposable incomes were lower than in 2011.

Regional and rural development

This divergence of economic activity between Dublin and the rest of the country has accelerated during the economic recovery as Dublin bounced back sooner due to agglomeration effects and the fact that some of the fastest growing multi-national tech sector and tourism businesses chose to locate there. And more significantly, the gap in household income in Dublin relative to the rest of the country has been widening.

While there has been renewed emphasis on balanced regional and rural development with the establishment of a Department for Rural and Community Development, the appointment of a Senior Minister and the roll out of Regional and Rural Action Plans, more concentrated efforts are required particularly in the West, where private sector job creation efforts are substantially weaker than the rest of the country.

It is evident that job creation initiatives like the Food Wise 2025 strategy for the food sector or the success of the Wild Atlantic Way for tourism in the South West, can deliver for rural areas. However greater efforts are needed to regionally nuance these strategies to bring their benefits further north along the Western seaboard.

There is political will to do this, but it needs improved coordination of rural enterprise and support agencies and focusing of policy to deliver more targeted economic development. Agencies too easily count development in the regional cities as sufficient. The objective of delivering growth in rural areas still remains a challenge that remains to be overcome.

Prof Cathal O’Donoghue teaches at NUI Galway and Paul Kilgarriff and Dr Mary Ryan work for Teagasc. Further detail on this report can be found here.

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Prof Cathal O’Donoghue, Paul Kilgarriff and Dr Mary Ryan
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