The reality of shutdown towns isn’t breaking news. The economic lockdown has all but turned our local high streets and business parks into ghost towns. So how do we measure the economic impact over such a short space of time in smaller towns where data isn’t so readily available? And what might the data tell us to help prepare urgent restart and revival packages for the local economy?
It comes as no surprise that there is very little data, so far, available for the smaller market towns, partly because they are not covered by the reports from national brand and property industry surveys. And to fill in the gaps by walking the streets with a clipboard collecting data isn’t permitted under the existing restrictions. However, in the months before the pandemic, our team were researching the baseline economy of five market towns in Carmarthenshire (Llanybydder, Newcastle Emlyn, St Clears, Whitland and Laugharne) as part of Carmarthenshire’s Ten Towns Initiative. We found, through combining our business and property survey data with selected census and employment statistics, and online research of business activity during the lockdown, we were able to identify early economic insights for each town.
JOBS MOST ‘AT RISK’
The Institute of Fiscal Studies has identified occupations most at risk and it is almost certain jobs will be lost across most occupation sectors. However, not all business will have been affected equally, some businesses continue to operate but could struggle when government financial support is lifted, others have adapted to work at home, whilst many businesses will have furloughed staff and keeping them in employment for the time being at least.
We calculated 35% people in employment across our five towns are in occupation groups most at risk. These include administrative, sales, leisure and elementary occupations that often employ a higher number of young people, women and low earners. Across the five towns, unemployment would increase by 70% if even one in five of the most at-risk staff lost their jobs. The true impact of job losses may only be seen after the furlough periods ends in July and October.
Our analysis takes into account that some areas of the economy have seen employment growth including distribution, online retail and healthcare. To what extent this is short term growth is also unknown.
HIGHER OCCUPATIONAL GROUPS LIKELY TO WORK FROM HOME
The ability to work from home is likely to have made some jobs less vulnerable. This ability to work from home varies significantly across industries and occupations, and those in higher occupational and professional groups are ten times more likely to be able to work from home: managers, directors and senior officials. The swift adoption of home working by most sectors means the jobs of most professional occupations, between 20% and 27% of employees across the five towns, are likely to have been less vulnerable. Of course, this doesn’t take account of the actual capacity to work digitally from home. Carmarthenshire experiences some of the worst and in some cases non-existent broadband connectivity in Wales where it’s a concern for delivering economic growth under the ‘old normal’ let alone during the economic lockdown. Across the five towns the level of premises unable to get superfast quality speeds ranges between 40% and 70%.
The self-employed have also been hard hit, with many experiencing abrupt and, in some cases, total loss of income. The Governments scheme to provide income support to the self-employed with a taxable grant worth up to 80% of trading profits come into operation later this month. All the towns studied have about one in five of the workforce in self-employment, more than the rural Carmarthenshire as a whole.
THE PROPORTION OF BUSINESSES IN SHUT DOWN SECTORS
In March, the UK Government directed certain sectors of businesses to close. These businesses include restaurants, pubs, café, non-food retail, hotels etc. The businesses that remained open included medical services, garages and petrol stations, banks, hardware shops, tool hire agricultural supplies shops, corner shops and newsagents etc. However, many shops that could have remained open have closed with health concerns for staff and customer taking priority. Some businesses have only been able to reopen in the last few weeks as they have adapted their operations to the new regulations.
Using the data from our business premises research and surveys we have estimated the number of businesses located in shut down sectors located by town. We estimate 42% of businesses across the town centre, business parks and wider hinterland are in shut down sectors. We are cautious about these figures because they include all retail and services when in reality some retail businesses have remained open. However, the figures indicate a large variation of between 42% and 67% closure across the five towns reflecting the diversity of their economic base. Towns with a higher proportion of leisure/retail and service businesses are worse-off compared to those with a larger industrial base.
The Impact on Retail, Leisure and Hospitality has been widely reported and using our latest business surveys we estimate 82% of town centre businesses may have closed due to the pandemic.
For many retail businesses, with their customers under lockdown, shops shut, cashflow drying up and their staff on furlough, it’s a case of survival. But among all these threats, some companies, big and small, are finding new commercial opportunities. Well run independent convenience businesses have adapted to provide home delivery and takeaway services, where people are unable to leave home or wish to avoid supermarkets. These are habits that might last beyond the crisis. We have gathered online evidence that some 13 businesses in the five towns, notably those selling food and groceries, have adapted quickly and are providing new home delivery services. However, the extent that home delivery has been enough to offset other financial losses being unknown.
There are also some 50 food and drink business located across the five towns and when the restrictions are lifted, there is likely to be sub-economics for many businesses trading with fewer customers under social distancing measures. Local businesses in this sector have claimed that operating under such circumstances is ‘more catastrophic’ than being shut with furloughed staff.
The 100 accommodation businesses located across the five towns are closed until further notice, although our research identified 5% had re-opened for specific purposes such as accommodating key workers. However, all businesses face uncertainty because they have been requested to take no bookings for the lockdown periods, the length of which is currently unknown.
Some 10% of the workforce are employed in agriculture, a higher proportion in the five towns than rural Carmarthenshire as a whole. The pandemic has seen abrupt changes in supply chains and consumer buying patterns that is varied across the different agricultural sectors. Fluctuations in prices have also been damaging with dramatic falls in milk and instability in livestock. The closure of the foodservice/hospitality sector has had a significant impact on both the red meat and dairy sectors which has left supply chains struggling to re-align themselves to retail-led demand. Likewise, innovation and in the growth of veg boxes or milk home delivery is unlikely to have offset losses elsewhere.
However, on a positive note, the livestock markets in Llanybydder, Newcastle Emlyn and Whitland have reopened. Food sales are a mainstay of livestock markets and their continuance will have been key for the sustainability of local farms, local producers and the market operators. With financial uncertainties, markets are important to achieve competitive/maximum prices rather than lower prices often achieved with dead-weight sales. Llanybydder Market returned during April and the auctioneers posted successful reports online with cattle, ewe and lamb sales “demand was very strong and buyers supportive which saw a terrific top price”. Similar reports from Newcastle Emlyn of ‘demand certainly outstripped supply’. Whitland Market returned in mid-April and reported ‘top prices for both steers and heifers’. The return of the markets and strong sale prices experienced are likely to positively impact on the economic, employment and community life of the town and benefit other businesses that remain open such as farm machinery dealers, feed merchants.
OTHERS ‘LOSING OUT’
Our baseline studies of the five towns established an abundance of ‘hidden’ microbusinesses, many in newer ‘lifestyle’, visitor-related and creative industries that combine both living and working in rural areas. The businesses can range from sole practitioners, freelancers to limited companies. The higher than average self-employment levels in the five towns also reflects the foundational side of the economy with people providing essential and day to day local services such as local trades, driving instructors, child and social care. This form of employment is often part-time and with people holding down more than one job. Some of the notable examples of businesses ‘losing out’ are those without premises, company directors, freelancers and the most recently self-employed who have not benefitted from some of the Governments support which has been made available. Some of the specific groups considered to be missing out include: start-ups; directors who are paying themselves via dividends and not wages; non-VAT registered firms; self-catering businesses and home workers/sublets.
And finally, our research established that social care businesses are one of the largest employers and fastest-growing part of the town’s rural economy. Whilst the viability of the private sector provision was known to be quite fragile before the pandemic Care Forum Waleshas recently reported the sector could lose half of its care homes within a year because of rising costs and reduced revenues unless urgent action is taken. And the situation is likely to be exacerbated with coronavirus putting the already fragile sector in jeopardy because of increasing staffing costs; rising overheads such as PPE and falling occupancy. There is a real sense of closures happening within the sector.
The purpose of our analysis has been to provide a greater sense of the economic impact of Coronavirus to inform decisions that help to fire up the economy. The evidence exists that the five towns we have studied have experienced the significant economic shock we thought they had. Most of the data we used for our analysis is readily available and would help you understand the economic impacts on your towns.
If you want to know more about how we did it contact Owen at