Productivity ‘the key issue facing NI economic growth’

A number of factors contribute to Northern Irleand's low productivity levels despite notable success stories
A number of factors contribute to Northern Irleand's low productivity levels despite notable success stories
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Northern Ireland must tackle the issue of low productivity if its economy is ever to grow at a comparable rate with GB and Europe a leading economist has claimed.

Dr Esmond Birnie, who has just taken up the post of senior economist at the Ulster University Economic Policy Centre, said the province had historically lagged behind the rest of the UK.

Dr Birnie’s comments came in the wake of national figures for 2015 confirming the UK’s “substantial” gap relative to most of the other major Western economies which has widened during 2007-15.

“Northern Ireland’s productivity shortfall compared to Great Britain and international best practice has existed for decades,” he said.

“That shortfall is partly a result of lower productivity in most economic sectors and also the preponderance of sectors, which generally have relatively low productivity levels.

“Changing this position will be a long run challenge, it cannot be completed over the life time of a single Assembly or Programme for Government.”

According to available data he said that in 2015 the level of output per hour worked in France, Germany and the US was about one-quarter/one-third higher than the UK average.

Northern Ireland had imitated this relatively poor performance to the point where, according to the most recent data from August 2016, the comparative level of productivity in Northern Ireland declined relative to the UK average- from 85% to 81% during 2007-14.

“Productivity is a key driver of Northern Ireland’s overall competitiveness and so relatively low levels and rates of growth are concerning,” said Richard Johnston, deputy director of the centre.

“Examining productivity data further reveals that lower productivity is a mix of what we do in Northern Ireland, the range of sectors which are represented, and also how we do it, productivity within each sector compared to the rest of the world or elsewhere, but also, more importantly, that relatively low productivity is a key explanation of the relatively low level of income or Gross Value Added per head in Northern Ireland.

“So, if Northern Ireland’s aspiration is for a wealthier society and for that wealth to be shared more evenly, then boosting productivity must be a priority.”