When analysing economies the world over, the unemployment rate is arguably one of the most important go-to statistics. It enables comparisons to be drawn and inferences made on the relative health of different economies. Today’s labour market statistics revealed that Northern Ireland’s headline unemployment rate fell to a jaw-dropping low of 2.9% in Q1 2019. This represents the lowest unemployment rate on record and the joint-second lowest of all the UK regions. Not only does it compare favourably with the UK (3.8%), but it is also below the likes of the United States (3.6%), the Republic of Ireland (5.4%) and Germany (3.2%). Japan is one of the few world economies with a lower unemployment rate (2.5%) than Northern Ireland.
An outsider looking at a headline unemployment rate of 2.9% would be forgiven for thinking that Northern Ireland was in some sort of labour market nirvana. Clearly, the reality is somewhat different. Yes the local labour market is in a very good place and has arguably never been as buoyant as it is today. However, the headline unemployment rate significant flatters Northern Ireland’s labour market performance. As far as statistics go, Northern Ireland’s employment rate speaks much louder than the unemployment rate. While the employment rate hit a record high of 71.3% in Q1 2019, it remains the second lowest of all the UK regions. Northern Ireland continues to have the highest economic inactivity rate of any UK region at 26.5%. That means over one-quarter of the local working-age population are neither in work or looking for work.
A more closely watched indicator of Q1 labour market performance – and jobs in particular – will be next month’s Quarterly Employment Survey. This measures the actual number of jobs in the economy rather than the broader Labour Force Survey measure which focuses on individuals working (paid / unpaid, self-employed / employed etc.). Next month’s release is expected to show a fresh record high in the number of employee jobs. However, given the economic headwinds facing the local economy, employment is expected to fall back from these record highs in the second half of 2019.
Notwithstanding the great strides Northern Ireland’s labour market has made over the last decade, particularly in relation to employment growth, significant challenges remain. Alongside tackling economic inactivity, productivity remains a longstanding weakness within the economy. In terms of the latter, Northern Ireland continues to lag well behind the UK, which in turn lags behind its key international competitors. If the Northern Ireland economy managed to secure superior productivity and employment rate performance that would be much more significant, economically speaking, than having a headline grabbing low unemployment rate. Now, achieving that really would be worthy of front-page headlines.