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‘A deep and prolonged downturn’

Minister for the Economy Diane Dodds MLA has unveiled the details of her plan to rebuild the Northern Ireland economy after the damage wrought by the Covid-19 pandemic. The medium-term plan covers the next 18 months and the other challenges, such as rising unemployment, reduced foreign direct investment (FDI) and Brexit complications, that are expected to come.

“It is now inevitable that we are facing a deep and prolonged downturn,” the ‘Rebuilding a Stronger Economy’, plan begins. Within, it is written that there is a “need to develop a plan to respond to this reality, and take action to rebuild a more competitive, inclusive and greener economy”. Dodds admits that this will require a change in tack for the Northern Ireland economy, with an acknowledgement that returning to the pre-pandemic economy will not deliver the levels of recovery needed.

The Minister writes that “rebuilding our economy will only be possible if we successfully adapt to the new normal created by Covid-19 and EU Exit and deliver change with constrained budgets”. The Minister’s strategy sets out a framework with three key pillars to steer this new normal: higher paying jobs; a highly skilled and agile workforce; and a more regionally balanced economy.

The report comes at a time when unemployment figures for Northern Ireland have reached their highest in the post-Good Friday Agreement era. The number of those accessing unemployment benefits more than doubled from March to May 2020, rising from 29,700 to 65,200. The majority of the new claims occurred between March and April, with almost 30,000 new claimants registering in that time, and a further 5,700 registering from April to May.

These figures are the highest recorded since 1997, with the most recent peak being 64,800 in February 2013. The unemployment rate now stands at 7 per cent. The Labour Force Survey, which thus far has only covered the early stages of the pandemic, reported 350 proposed redundancies in May, but predicted almost 1,500 over the first two weeks of June.

Set against this bleak backdrop, Dodds’s report says that “we can expect to see more damaging impacts in the near future with a real risk of long-term scarring of our economy and society”. The key issues currently facing the Northern Ireland economy as stated in the report are: a decline in output more severe than the rest of the UK; a higher share of food manufacturing, life sciences and public sector workers “indicating the potential for future sheltering”; the undoing of six years of labour market recovery being undone in one month and the expectation of a sharp rise in redundancies; areas that had already had high claimant rates seeing further increases; retail sales declining and the reality of social distancing meaning consumer spending will continue to fall; “the risk that these economic issues could be further compounded by the operation of the Northern Ireland Protocol and EU Exit”; the combined pressures of Brexit and Covid-19 depressing rural employment; and a likely reduction in levels of FDI, upon which Northern Ireland is so dependent.

In order to address these myriad concerns, the report outlines plans to address the structural weaknesses of a lack of high-paying jobs, a skills gap and the regional imbalance.

To address the problem of low-paying jobs, the report says that Northern Ireland “must have a pathway to ensure that those currently in lower paying jobs can transition to better jobs”. Productivity is also singled out, with Northern Ireland having consistently lagged behind the rest of the UK in this area, where the UK itself is not a world leader. The report proposes a focus on four sectors “where we are already global leaders, and which have potential in providing more higher paid jobs”: life and health sciences; advanced manufacturing; clean energy; and digital.

In terms of skills, Northern Ireland currently possesses qualifications to degree level in 34.9 per cent of 16 to 64-year olds, with 14.7 per cent of the same age bracket possessing no qualifications at all. In comparison, the UK rates for these figures are 39.2 per cent and 8 per cent respectively. Northern Ireland also consistently ranks as the UK country with the highest levels of economic inactivity.

Northern Ireland currently possesses qualifications to degree level in 34.9 per cent of 16 to 64-year olds, with 14.7 per cent of the same age bracket possessing no qualifications at all. In comparison, the UK rates for these figures are 39.2 per cent and 8 per cent respectively.

The report speaks of a need to develop skills interventions to assist those employed in sectors likely to face redundancies and unemployment to gain skills for the sectors likely to continue to provide employment. The Department for the Economy has been developing a new Skills Strategy for Northern Ireland, with key principles of investing in digital skills, creating a culture of constant learning and upskilling and reducing the skills imbalance. The recent removal of barriers such as age to access to apprenticeships is also pointed to as an area of potential for skilling and reskilling as the economy rebuilds.

Transport infrastructure and rural broadband provision are cited as the greatest impediments towards achieving the regional balance that has for so long been a goal of the Executive. While Project Stratum is designed to address rural broadband needs, the report concedes that the FDI upon which Northern Ireland is so dependent is “unlikely” to address regional disparity, making this the responsibility of indigenous industry, which require the consumer confidence the pandemic has made so scarce.

Dodds has also announced the makeup of the Department’s Economic Advisory Group, which will be chaired by Ellvena Graham, the former head of Ulster Bank in Northern Ireland. The 11-member group is made up of board members of EY, Glanbia, Ulster Carets, Bombardier, Catalyst, Invest NI, Herbert Smith Freehills, Matrix, Grafton Recruitment and Kainos. The Minister said that “their combined business expertise will lead to expertise and advice which will be extremely valuable”, but the makeup of the group has been criticised by Sinn Féin, the SDLP and the Alliance Party.

Criticism centred on the absence of trade union representatives and community and voluntary sector representation in the group. Chair of the Economy Committee, Sinn Féin MLA Caoimhe Archibald called for the membership to be widened to “deal with longstanding problems of the past”, while the SDLP MLA Sinead McLaughlin called it a “missed opportunity”.

Alliance MLA Stewart Dickson called for “participation from everyone involved” in the recovery, saying: “Workers will obviously be a key part, so trade unions should have a voice in this group to advocate for workers’ rights.”

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