RURAL TOWNS HAVE been affected the most in economic crisis. Recent Teagasc research has shown that while unemployment increased in rural areas at nearly double the rate of the cities, within rural areas, the highest rate of increase in unemployment has increased in the small and medium sized towns around the country.
There is huge interest in this topic – within three hours of a report on TheJournal.ie, 100,000 people had viewed the story.
From John Healy’s No One Shouted Stop, the cliché is that these places have been places in decline; the One Horse Town, the Garrison town, the Seaside town. Rural towns have been a relatively low priority in national development planning, reflecting this cliché. For example our National Spatial Strategy (NSS) selected a number of larger towns as hubs, with little to say about the vast majority of towns around the country.
The Teagasc analysis reflected on some of the underlying economic structural problems in these towns. Education levels are lower than the national average. They are disproportionally reliant on declining industrial sectors (construction, manufacturing industry). Consistent poverty rates are double relative to the cities. The share of working age households with no one in work is 20% higher than the national average at 31%. Given the hit in terms of unemployment, these towns have also seen local consumption fall by a greater rate than consumption elsewhere, even when account for income losses.
However this pattern is not consistent across the country. Towns can broadly be classified into two types; those that are satellite towns of larger settlements and those that are the hubs for remoter rural areas. Typically, the towns closer to the cities have lower unemployment are economically stronger.
The challenge remains what to do. Given the relatively young population in these towns, and people locked into mortgages with negative equity, this is not a problem that will go away.
The recently published report by the Commission for the Economic Development of Rural Areas, chaired by Pat Spillane developed an economic development strategy for these towns and wider rural areas. It recognises that in the majority of cases it will be private sector, bottom up solutions will be the successful ones.
It also recognises the resilience and energy of local communities and businesses in being able to make changes. For example, my nearest town, Gort, in South Galway has captured a lot of public attention as it was the town that fell the most in the Teagasc Rural Towns index over the course of the crisis. However the response of the local community has not been to roll over and die, but to stand up and do something about it.
About 200 locals turned up to a meeting a meeting on April 7 – not to whinge and demand politicians to sort it out, but rather the meeting was infused with positivity and ideas on how to make things better. Tourism is an area that has been identified, given the rich cultural and ecological heritage associated with the Celtic Revival and its position in the Burren Lowlands. A local businessman offered his vacant property to the town to establish a tourist office. Locals queued up to volunteer to help and another businessman has put up some of the start up costs.
On Friday last, nine weeks after this meeting, the community-run tourist office opened promoting the interesting things to do and visit in the Burren Lowlands, without a cent of public money, building upon the time, effort and resources of the local community.
Central to the CEDRA towns strategy is a targeted stimulus programme. The Commission called for a programme, where towns that have been most affected by the downturn would be helped to get back on their feet. Rather than spreading resources lightly everywhere with low impact it called for a targeted programme that would have maximum impact. Rather than dolling out money, CEDRA called for a competitive programme, rewarding towns with the plans that could do most with available resources to do this.
The programme would focus essentially on four things:
As public finances improve, so is consumer sentiment. Given the fall in spending was greater in rural towns, the bounce back could be greater too, if the right confidence and conditions prevail. The aim of the targeted stimulus would be get demand going again in these towns. However to be sustainable, in general it will need to be private sector led.
As Pat Spillane and I criss-crossed the country talking to local communities like CEDRA and business and community leaders, we had the good fortune to speak to Edmond Harty of Dairymaster; a fountain of good sense, who left us with the simple message – help take some of the risk out of doing business.
With the cost of rent and labour relatively low in these towns now, some of the underlying cost base is relatively good if the demand is there. However, key to making it easier to do business and to take advantage of the bounce back is to take some of the fixed costs out of starting up (or keeping going). An example is an incentivised profit sharing rental scheme for private landlords in stimulus towns.
Rates came up as a constraint in every public meeting we held. As the private sector cost of doing business in these towns, the cost of the public sector is a potential barrier. Part of the stimulus programme could be targeted at turnover based rates for small businesses in stimulus towns. Regulatory burdens were a recurring theme.
The Taoiseach has called for Ireland to be the best small country in the world in which to do business. We could well do with applying this objective our towns that become the best small towns in which to do business.
Prof Cathal O’Donoghue is Head of Teagasc’s Rural Economy and Development Programme and was CEO of CEDRA. Cathal.ODononghue@teagasc.ie.
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