‘Substantial strides’ but economy still limping behind most of UK

Events such as this which saw 100 jobs created in Londonderry as part of a combined �5.6m investment have become more commonplace in the province but economist and former UUP MLA Esmond Birnie says Economy Minister Simon Hamilton and the Executive must do more to tackle the issue of lower productivity
Events such as this which saw 100 jobs created in Londonderry as part of a combined �5.6m investment have become more commonplace in the province but economist and former UUP MLA Esmond Birnie says Economy Minister Simon Hamilton and the Executive must do more to tackle the issue of lower productivity

Northern Ireland made “substantial strides forward” last year Economy Minister Simon Hamilton has claimed but as productivity continues to trail the rest of the UK economist Esmond Birnie says the Executive must work harder to bring the province level with the rest of the country in 2017.

In a statement today the former UUP MLA says the province will continue to be characterised by high rates of low pay and poverty as the workforce as a whole fails to keep pace with other regions.

Now based with the Business school at the University of Ulster, he says the Executive needs to move away from political issues and concentrate on growing skills and better commercialisation of innovation.

Mr Birnie’s comments come as Mr Hamilton hailed lower unemployment and growth of 1.6% last year driven by the private sector.

With employment at its highest ever and economic inactivity at an historic low, he said earnings rose by more than the rate of inflation for the second year running.

“Research & Development expenditure grew by an incredible 24% in the past year and now stands at an all time high of £750million.

“Exports by locally based businesses increased by the highest percentage of any UK region in the last year, and we welcomed the most external visitors to Northern Ireland in our history.

“This strong and sustained progress in our economic performance bodes well for 2017 and will assist us in dealing with whatever challenges and uncertainties the year ahead will bring.”

Acknowledging those achievements, Mr Birnie said they failed to mask the fact that productivity in the province remained historically low.

“Office for National Statistics figures published at the end of last week confirm that Northern Ireland remains one of the lowest productivity levels within the UK,” he said.

“In 2015 output (Gross Valued Added/GVA) per hour worked was 80.9% of the UK average- only Wales (80.6%) had a lower level.

“Northern Ireland, similarly, had the second lowest level of GVA per job filled; 83.5% of the UK average, the level in Wales was 79.1%.”

At the same time, he said the ONS data also indicated a trend of decline in Northern Ireland’s comparative productivity during 2007-2015; GVA per hour was 84.3% of the UK average in 2007 but fell to 80.9% in 2015, GVA per job filled was 89.7% of the UK average in 2007 but fell to 83.5% in 2015.

“In other words, whilst it is now well known that UK-wide productivity growth has been very slow since 2007, the Northern Ireland regional growth rate has been even lower.

Asking whether the detailed statistics matter the acadaemic also noted that the issue is a longstanding one; datinf back to the 1950s.

However he said a serious effort was required to restore balance.

“Without higher productivity businesses may struggle to be profitable and, in the long run, may not survive,” he said.

“A quick fix may not be possible but we should at least take the first steps. Notwithstanding some recent progress, more needs to be done.”

From a policy point of view, he said it was strange that neither the previous Programme for Government (2011-15) nor the proposed draft Programme for 2016-21 included an explicit productivity outcome measure.

“The RHI issue continues to attract attention but a low and declining level of comparative productivity remains the most fundamental economic challenge facing both the Executive and the Northern Ireland economy.

“I look forward to a year of continued growth and improvement across all aspects of our economy. 2017 will not be without challenges to our economy and I know it won’t always be good news.

“But I believe that we can reflect on 2016 as a year when our economy moved forward and I hope that 2017 will see us make yet further progress in creating a globally competitive economy that works for everyone.”