Why is Derry So Poor, and Why is Nothing Being Done About it ? (Part I)

Twenty years after the Good Friday Agreement – whilst Belfast experiences a construction boom and tourists flock to the Titanic, Giants Causeway and Dark Hedges – a part of Northern Ireland is being increasingly left behind. Not just any part, but the north’s second city. A place which is supposed to function as the economic hub of an entire region of this island. And a city in which deprivation and inequality in previous decades lit the fuse that started Northern Ireland’s thirty year Troubles. Whether you call it Derry, Londonderry or some humorous/hyphenated variant of the two, we need to talk about how Northern Ireland’s second city finds itself permanently at the bottom of the prosperity pile – not just in NI but across the UK as a whole. And why – whilst Northern Ireland’s post-Troubles economy continues to converge with the rest of the UK – our second city is being left further and further behind.

This article (Part I) begins by summarising the evidence that substantiates the claim that Derry is an economic outlier – suffering from a level of financial and social deprivation that is quite unique within Northern Ireland (and even the UK). The second article (Part II) will consider the range of reasons why the city finds itself in such a perilous state today. And the third and final article (Part III) will conclude with an analysis of what can be done to enable Derry to genuinely fulfil its potential and role as NI’s second city and as an important cross-border regional capital – particularly in light of Brexit.

Derry’s predicament has long been ignored, but must finally be acknowledged and addressed. Because Northern Ireland can neither function nor prosper fully if a part of its territory is increasingly being left behind. And history has shown us that unexpected problems can arise when a population here feels it has been largely abandoned by those in power.


It is not just a matter of opinion to state that Derry suffers from unique levels of deprivation within NI and the UK. As a wide range of key indicators show, it is also a demonstrable fact :

When it comes to jobs, Derry is a statistical outlier – having suffered from the highest unemployment of any city in the UK for years. The latest Labour Force Report (Feb 2018, covering the period Oct-Dec 2017) shows that the Foyle constituency has an unemployment rate that is more than twice that of the Northern Irish average (7.9% vs 3.8%). Foyle is the only NI constituency to feature in the UK’s Top 10 not just for its percentage of unemployed, but also for youth claimants and the total number of people on the dole. The city also has the highest rates of both male and female unemployment – with barely over half of its adult population in employment, and a staggering two-thirds of the city’s jobless accounted for by men. Derry clearly has an unemployment problem.

The latest Labour Force figures do contain some good news for the city, with a 9% year-on-year decrease in the joblessness figure in Foyle. However – that improvement is occurring at a significantly slower rate than in the other parts of NI which have also suffered from traditionally high unemployment. Northern Ireland as a whole is currently enjoying its lowest jobless rate for over a decade, and is now ranked fourth bottom of the UK’s 12 ‘regions’ on this metric. Two other Northern Irish constituencies – Belfast West and Belfast North – used to regularly accompany Foyle in the UK’s Top 10 unemployment blackspots. But not any more. West Belfast still suffers from NI’s second highest unemployment rate – but at 6.3%, it is almost a quarter lower than in Foyle. Belfast West has also registered a 15% year-on-year drop in its headline unemployment rate, making it one of the UK’s Top 10 improvers. And it has also benefited from a 25% drop in youth unemployment (18-24yr olds) in particular. Meanwhile Belfast North, traditionally in third place for unemployment here, now has a rate of 5.8% – a 14% year-on-year improvement. So whilst unemployment across NI is reducing, Derry is starting from a higher level and improving at a slower rate – exacerbating the gap between it and the rest of the province.

Other key employment statistics also paint a concerning picture for the city. Almost half of Derry’s claimants (49%) are classed as long-term unemployed, which is significantly higher than the average for Northern Ireland (33%) and the UK (31%). The city also has the highest proportion of people of working age who are employment deprived (19%), and the highest percentage who are classed as income deprived (38%). For those who are in work in the Derry-Stabane area, their Gross Weekly median wage is only £324 per month, in comparison with a Northern Ireland average of £393 (NISRA Annual Survey of Hours and Wages 2017). The city also has a level of reliance on public sector employment which is extreme even by Northern Ireland standards – with 1 in every 3 jobs in the city being public sector roles, compared to just over 1 in every 4 across NI as a whole. And 43% of the entire population of the Derry-Strabane council district live in Northern Ireland’s most deprived SOAs (Super Output Areas – a sub-section of electoral wards used for statistical analysis). So on wages, jobs and unemployment the evidence is clear – Derry is not only at the bottom of the pile, but it is increasingly being left further behind.

Broader economic measures also point to Derry being an anomaly within the UK. The consultancy firm PWC publishes an annual ‘Good Growth for Cities’ report to rank the UK’s cities according to various factors that constitute their economic well-being. PWC’s 2017 report (covering the period 2014-16) placed Belfast mid-table in the UK in terms of economic health – with above-average performances in jobs, transport, home ownership and income distribution, but an overall score that was just below the UK average. The same report also ranked Derry bottom of the UK’s 57 cities, and identified it as one of only two cities (along with Swansea) not to see any improvement in performance since the 2011-2013 study.  Referring to both Swansea and Derry, PWC concluded that “These cities have not seen reductions in unemployment on the same scale as their peers, and have seen worsening scores in areas such as health, work-life balance and income equality”.

Levels of entrepreneurial activity also offer an important insight into the health of any economy, as the creation of new start-ups is directly related to growth, productivity and employment. A ‘Global Entrepreneurship Monitor’ has been organised worldwide since 1998, and it measures the likelihood of nations and regions to be entrepreneurial. The UK has seen record levels of new business start ups in recent years –  although it is a dynamic that hasn’t been echoed in Northern Ireland, which has the UK’s lowest level of early stage entrepreneurship. Only 6.3% of NI’s working age population is engaged in early stage entrepreneurial activity, vs a UK average of 8.8%. The comparative figures for elsewhere are 9.2% in England and the Republic of Ireland, 7.6% in Wales and 7.3% in Scotland.

The headline entrepreneurship score for NI masks significant differences within the province, however – ranging from Mid-Ulster with the highest at 6.6% and the Derry and Strabane District with the lowest at only 4.2%. Drilling further into these figures, the male rate of entrepreneurial activity in Mid-Ulster was more than twice that of Derry and Strabane. And only 2% of Derry and Strabane’s 18-29yr old age bracket are engaged in entrepreneurship – which is not only by-far the lowest in NI, but is more than three times below the average (6.5% across NI).

This entrepreneurship data reflects three key issues. The first is the well documented over-reliance of Northern Ireland’s economy on the public sector, and the accentuation of that particular problem in the north-west. The second is the lack of a dynamic entrepreneurial sector within the Derry area. And thirdly – with graduates twice as likely as non-graduates to start their own business, these figures also reflect the entrepreneurial deficit caused in part by Derry’s lack of skills and qualifications.

Of the 15 towns and cities on the island of Ireland which offer Higher Education provision, Derry has by-far the lowest*. The city’s 4,000 H.E. places amount to less than 4% of Derry’s population. For perspective, the figure for Galway is 34% (26,000 places), 30% in Limerick (27,000), 21% in Coleraine (5,500) and 14% in Belfast city. Whilst more than 80% of all Higher Education places provided in NI are located in Belfast, the comparative figure for Dublin;s share within the Republic is only 43%. Derry was famously overlooked as the location for NI’s second university in 1966, in a decision that even the city’s unionist MP at the time condemned as sectarian. For half a century since, Derry has campaigned in vain to secure a university that is appropriate for the fourth biggest city on the island.  Assurances are received regularly from Ulster University that they intend to bring significant expansion to their pitifully small Magee campus – but their actions suggest otherwise. When Ulster revealed in 2009 that they intended to re-locate almost 16,000 students and staff away from Jordanstown, that offered the perfect opportunity to finally give Derry the size of HE institution it deserves. But they chose to relocate that campus into central Belfast instead, at significantly higher cost to themselves. They then added insult to injury by transferring over 100 staff and a number of courses out of Magee over the last five years as well.

Meanwhile over 1 in every 3 of Derry’s population have no qualifications at all, whilst the figure for neighbouring Strabane is 40% – both of which are significantly higher than the NI average (24%).

*For further information on Derry’s low H.E. provision – please see my previous article : https://sluggerotoole.com/2016/10/13/educating-ulster-northern-ireland-has-a-chronic-shortage-of-students-whilst-belfast-has-too-many-and-the-west-of-the-province-has-too-few-the-solution-is-obvious/)
Derry is a youthful city, with one of the highest proportions of people under the age of 16 anywhere in Europe. It also has some of the best schools in Northern Ireland, including some ranked amongst the best non-fee paying schools in the UK. Large numbers of the city’s brightest school leavers depart every year to study elsewhere, however, and the limited number of HE spaces available locally does little to redress this brain drain with an influx of students from elsewhere. Given the city’s status as a relatively high unemployment and low wage economy, it perhaps comes as no surprise to hear that in a survey last year 95% of Derry’s young people said that they saw no future for themselves in the city, and couldn’t envisage remaining there long term. 40% said their main reason for leaving would be the city’s lack of employment opportunities, whilst 21% planned to depart for University.

The city also has the highest percentage of schoolchildren entitled to free school meals in Northern Ireland at 43.3% (vs a NI average of 30.7%). And a 2017 report from the Western Health Trust showed that one in three of Derry’s children are being raised in poverty (the highest anywhere in NI).

Housing provides a reliable indicator of the state of any economy, and whilst recent years have seen Northern Ireland climb from the bottom of the UK’s house price index to now be above both Scotland and the North East of England, Derry is again being left behind. It has the second cheapest housing of any city in the UK (after Sterling in Scotland), with an average house price of £117,989 – 25% lower than the NI average (£158,285), and £10,000 below even NI’s second cheapest area (Craigavon/Armagh). Despite property being so cheap in Derry, the city has the lowest home ownership in the UK (46%, versus an NI average of 62%), and above average levels of social housing (19% vs 16.5% across NI). Derry’s housing market is merely a symptom and a reflection of the economic difficulties that the city faces overall, but provides a helpful bell-weather of its relative standing.

Whilst further evidence abounds to prove that Derry is the UK and Northern Ireland’s economic problem child, the above should provide sufficient proof that the city does indeed suffer from a cocktail of high unemployment, high deprivation, low qualifications, low wages, low home ownership, low entrepreneurship and a high dependency upon public sector employment – all of which anchors it at the bottom of the pile in Northern Ireland. And while post-Troubles NI as a whole continues to converge with the rest of the UK on many key economic indicators, it is leaving it’s own second city firmly behind as it does so. Stormont – we have a problem.

Part II of this article will go on to consider how Derry has ended up in this economic position, and what has made Derry so poor.

P.S. I appreciate that the above statistics paint a gloomy picture of Derry. My intent here is to highlight the state of the challenges facing the city, before looking at the causes behind them and the possible solutions moving forwards. I believe that Derry has a bright future, but there should be no sugar coating of the circumstances in which it has been left. Indeed – part of why it finds itself in such circumstances is precisely because of a lack of official acknowledgement within Northern Ireland of the scale of its predicament.

Read part 2 of this series.

Read part 3 of this series.

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