Recent changes in the Northern Ireland labour market

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An image of Titanic Quarter in Belfast
Titanic Quarter, Belfast (image by Mehlauge, used under Creative Commons)

Northern Ireland (NI) was impacted heavily by the global recession that began in 2008. The recovery since has been slow in the United Kingdom (UK) and even slower in NI. With heavy job losses in industries such as construction, the shape of NI’s labour market has changed, with the services sector now of increased importance. In addition, the balance between the private and public sectors is beginning to shift due to the ongoing Voluntary Exit Schemes (VES) operating across the public sector.

Background to the current situation

Following the 2007 financial crisis, and the subsequent 2008 global recession, NI’s economy contracted, with companies closing across the region. This resulted in a number of large scale job losses, with the construction and manufacturing sectors particularly affected.

NI has subsequently had a slow recovery. Employment has gradually improved in a number of industrial sectors. In broad terms, the private sector has had a large increase in employee jobs (with 11,590 new employee jobs added between December 2014 – December 2015). However, the number of jobs in the public sector has fallen, due to the ongoing VES. This is largely a result of the Executive receiving a reduced block grant from the UK Government.

Characteristics of the NI labour market

The total population aged 16+ has increased from 2012 – 2016, whilst the number of people who are economically active (i.e. employed or unemployed) reached a high in 2016 of 890,000, up by 4,000 on the previous year. The below table shows a year on year comparison for December to February of the NI labour market since 2012:

Dec to Feb

Total Aged 16+ In Employment (16+) Unemployment (16+) Unemployment (16+ rate)

Economically inactive (16+)

2012 1,418,000 805,000 58,000 6.8% 555,000
2013 1,426,000 788,000 70,000 8.2% 568,000
2014 1,435,000 811,000 67,000 7.7% 556,000
2015 1,443,000 833,000 53,000 6.0% 556,000
2016 1,450,000 834,000 56,000 6.3% 561,000

The number of employed people has increased since 2012, with 834,000 people employed in December – February 2015/16. This is a year on year growth of 1,000 posts. This growth in employment is reflected in the falling figures for those in unemployment. Unemployment has a series of peaks and troughs. As the above data reveals, having dropped from 70,000 in 2013 to 53,000 in 2015, it has increased between 2015 and 2016.

This can be partly explained by the number of people who are economically inactive in NI. As the data highlights, it reached a peak of 568,000 people from December to February 2013 and whilst it has fallen in 2014 and 2015, the number of people who are economically inactive increased between 2015 and 2016.

Consequently, NI has a high portion of its population which is economically inactive (26.3% of the working age population in comparison to the UK average of 21.7%). Although it should be noted that this is the lowest it has been since it began to be recorded in 1995. Some of this inactivity is a result of people becoming students or retiring. However, a large portion were people without access to the labour market due to being long-term sick or having a disability (30%) or family commitments (26%).

The Department for Employment and Learning developed a ten-year strategy to tackle economic inactivity, but was unsuccessful in securing funding from the Executive to deliver its targets, such as those relating to skills development.

Key potential issues

Skills development

The NI Skills Barometer, compiled by Ulster University’s Economic Policy Centre, found that the largest net requirement for skills in NI comes from the graduate level, with 25,394 jobs vacancies from 2015 to 2025. Of these, the Barometer forecasts that NI’s existing and projected graduate levels will fill 13,979 posts and a further 11,415 will be in need of appropriately qualified graduates.

The Barometer also identified an existing and future under-supply of Science, Technology, Engineering, Arts and Mathematics (STEAM) graduates and an over-supply of more traditional subject graduates, such as Law, Education and Architecture. Tackling this skills gap would promote NI’s economic growth and overall productivity.

Competitiveness and productivity

NI’s high level of economic inactivity has been an issue for a number of years. In particular, it affects women who make up the majority of the lone parents and carer groups. Arguably, reducing the number of economically inactive people would increase NI’s competitiveness and productivity.