42% of NI labour market growth from outside UK

Chart showing NI's ILO unemployment trend

The latest batch of labour market statistics signal encouraging trends relating to unemployment.  The number of individuals claiming unemployment benefits continued its downward trajectory last month with a further 600 people dropping off the register. Over the course of the last 12 months Northern Ireland’s claimant count has fallen by almost 7,000.  This represented a decrease of 16% and lowered the number of unemployed claimants to 36,100 – its lowest level since November 2008.

Northern Ireland’s claimant count troughed at 23,500 nine years ago. The subsequent recession that followed saw the number of unemployed rise by 41,200 to a peak of 64,700 in February 2013.  Since then over two-thirds of this rise, amounting to some 28,600 individuals, have dropped off the register.  Looking at the wider measure of unemployment – i.e. beyond those entitled to means tested benefits – it fell from 55,000 in Q1 to 53,000 for Q2.  The corresponding ILO unemployment rates eased from 6.2% to 6.0%.  The latter compared with 4.9% for the UK. Northern Ireland’s unemployment rate has remained relatively stable over the last two-and-a-half-years, averaging 6.4% in 2014 and 6.1% in 2015. Encouragingly, the local youth unemployment rate has fallen from 17.4% in Q1 to 13.9% in Q2 and is down 5.6 percentage points over the year.  Despite this fall, Northern Ireland’s youth unemployment rate compares unfavourably with the equivalent UK rate (11.5%).

Turning to employment, the Labour Force Survey revealed a slight fall in employment in Q2 relative to the record high achieved earlier in the year. Similarly, Northern Ireland’s economic inactivity rate edged up from its recent record low of 26%. However, the latest survey did reveal some fresh record highs. Self-employment rose to a record high of 132,000 in Q2, up 11,000 q/q (+9%) and increased by 21,000 y/y (+19%).

Following the Brexit vote in June, attention in recent weeks has turned to the economic impact of the result. Given that labour market statistics are a lagging indicator of economic activity, no significant impact in terms of statistics is anticipated until 2017 at the earliest. A key determinant of Northern Ireland’s longer-term labour market performance (and wider economic performance) concerns the access to the Single Market for labour. Indeed, last week the First and deputy First Ministers wrote to the Prime Minister Theresa May stressing the importance of retaining access to labour – “Policies need to be sufficiently flexible to allow access to unskilled as well as highly skilled labour”.

Chart showing that those born outside the UK account for a large part of employment growth in Northern Ireland

Northern Ireland’s recent record highs in employment and labour market recovery would not have occurred without access to labour from beyond these shores.  The number of people in work in Northern Ireland has risen by 83,000 since the depths of the recession in Q2 2009, and some 42% of this rise, amounting to 35,000 people, were born outside the UK. The number of people working in Northern Ireland who were not born in the UK has risen by almost two-thirds over the last eight years. This is almost 10 times the growth rate in the number of Northern Ireland workers born in the UK. In Q1 2016, over one in 10 workers in Northern Ireland were born outside the UK.

Changes in terms of access to the Single Market for labour will require local policy-makers and businesses to redouble their efforts in investing in home-grown skills and labour. It is worth remembering that Northern Ireland has a significant stock of unskilled labour on its doorstep. Mobilising and motivating the current stock of economically inactive individuals is rapidly rising up the list of economic development priorities.

Bar chart showing the growth in the number of workers in NI from outside the UK

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