Productivity in NI is 40% lower than the Republic

The Irish Economic and Social Research Institute (ESRI) was commissioned by the Shared Ireland Initiative in the Department of the Taoiseach, to report on relative productivity between the North and the South. Previous ESRI reports have looked at comparisons on health and education delivery and cross-border trade. Historically, most reports circulating in NI tend to compare NI with GB for obvious reasons and this report on productivity is thought to be the first to attempt an island-wide analysis.

The results are startling:

In summary, NI and RoI were comparable in productivity rates in the year 2000 but have diverged since to the extent that in 2022, output per worker is 40% lower in the North. In 17 sectors of economic activity, the North’s output per worker exceeded the South in only two – electricity & gas supply and construction. In some such as financial services, insurance and legal, the gaps were huge. The report attempts a number of explanations as does the response of Dr David Jordan, Research fellow at Queens University which is included in the report. They include Troubles legacy, peripherality to the UK economy, over-reliance on public sector, lack of foreign direct investment and crucially lack of graduates. It’s estimated that a 1% increase in graduate employment results in a 1% increase in productivity. NI has lower levels of graduate employment and improving post-secondary educational attainment in the North is a key requisite to improving productivity levels.

However as the causes of the productivity gap are disparate, there are no quick or single-track answers and sadly the report in my view is inconclusive – unhelpfully in my view, summarizing that the normal drivers of productivity levels such as exports and investment can help explain the productivity drivers in the South but not the gap in this instance.

Productivity is important. In a global marketplace it demonstrates a nation’s standing viz a vis competitor nations (which is all of them!). Long-term employment security depends on being competitive and in a changing marketplace it helps to determine those industrial sectors in which to achieve a comparative advantage against other nations. Investment should then be directed into those areas of activity and away from those where you cannot produce competitively.

This report will inform the Irish government’s understanding of the relative performance on the island but what will be the response in the North? Unionists will doubtless ignore or decry it as unwanted Southern interference in Northern affairs.

My fear is that any hard copies will just gather dust on the shelves of Queens University, but that would be a shame. Why not instead get Stormont (when it’s back) to produce an action plan to increase educational attainment post 16, attract foreign direct investment, foster engagement with NI Chamber of Commerce and other business representatives and yes sort out the Troubles legacy? 20 years ago there was worker output balance as between the 6 and the 26. Surely we owe it to the next generation to plan on achieving that again in the next 20 years?

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