…but for how long?
Historically, Northern Ireland has been one of the UK’s unemployment black spots, but since the Good Friday Agreement and the end of the ‘Troubles’ all that has changed. Unemployment in Northern Ireland fell from over 12% in 1995 to under 4% in 2007 before the last recession. While it doubled again during the ensuing period leading up to 2012, it has been falling ever since. In July 2019, the unemployment rate stood at just 2.8% compared to the national UK rate of 3.8%. Employment now stands at 72%, the highest figure on record. Great news for the economy and those looking for work but with Brexit set to hit Northern Ireland harder than anywhere else, where is the unemployment rate going next?
Economic inactivity remains high
Northern Ireland’s economic inactivity rate, a measurement of those not in work and not looking for work, such as students, retirees and the disabled, is also showing improvement. But this rate has always been persistently higher than the UK rate for over 30 years. As of June 2019, over a quarter of the working age population (318,000) were included in these statistics with those aged 50 to 64 making up the highest proportion of the figure. It’s thought that this is largely a hangover from the ‘Troubles’ and a lack of investment.
Current figures place the inactivity rate at 25.8%. While still the highest in the UK, it’s one of the lowest on record for the region. Around 29,000 claim unemployment benefits and more than 56% are long term unemployed (unemployed for one year or more) compared to 26% in the UK.
Brexit could bring recession
However, all this good news is now under threat due to Brexit. Already there has been a sharp increase in business insolvencies due to the UK’s vote to leave the EU – higher than anywhere else in the UK according Creditsafe’s UK insolvency index. In Northern Ireland, insolvencies increased by 114.3% on an annual basis compared to 103% in Greater London.
Professional services company, EY, has projected that a no-deal Brexit could send the Northern Irish economy into recession with growth dipping to -0.6%. Even an orderly Brexit would see limited growth at 1.1%. The firm has also said that this is likely to lead to employment contraction during late 2019/early 2020 as job losses filter through.
After a relatively strong 2018, Northern Irish growth has already slipped behind that of the rest of the UK and is much lower than that of the Republic of Ireland which is projected to grow at 3% in 2020 before slowing to 2.8% in 2021. Of course, these figures are hugely dependent on the outcome of Brexit.
Despite the gloomy outlook, employers in the region continue to cite access to talent as the biggest priority, even above Brexit, so fewer jobs to go around may not be as damaging as it sounds. The EY report also found that in the event of a difficult Brexit, jobs lost are unlikely to be in those skill sectors most in demand.
Whatever the outcome of Brexit, job seekers in Northern Ireland, as well as elsewhere in the UK, have the peace of mind of knowing that Zoek will be there with the advice needed to tackle any downturn in the job market.
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