A jobless recovery is no recovery

19 Nov 2012 Seamus McAleavey    Last updated: 8 Aug 2014

Recessions may be measured by a fall in GDP but it is the loss of jobs that matters most.

Since the “Great Recession” began in 2007 the unemployment rate in Northern Ireland has increased from 3% to 8%. Youth unemployment is a staggering 19%. According to the Labour Force Survey, some 67,000 individuals are unemployed, over half of whom have been out of a job for over a year.

Another 52,000 people want work but do not satisfy the official definition of unemployment. In addition, many part-time workers would prefer a full-time job. It is claimed that planned reforms to welfare will encourage people into employment. However, unless jobs are available, reducing the social safety net will only add to the hardship of these individuals and their families.

It cannot be assumed that these figures will simply melt away with a revival of economic growth. Indeed PwC economist Esmond Birnie expects the unemployment total to continue to rise in 2013 despite growth in the Northern Ireland economy of 1.2%. Rather than being an afterthought, job creation must be placed at the centre of the Executive’s economic strategy.

In this context it is welcome that the Executive’s £200m initiative, announced earlier this week, included specific measures to give a “short term boost to employment”. But a more ambitious and sustained effort is required.

It is important to acknowledge that the Executive faces considerable challenges. Just as many of our local economic problems stem from difficulties in the global economy, so recovery here will be largely determined by conditions elsewhere.

The Executive’s own scope for manoeuvre is limited by its dependence on the block grant. For example an increase in investment would help to create employment, particularly in construction, but the Executive’s capital budget has been decimated by the UK government.

The Executive also lacks control over key economic levers. It has called for the devolution of Corporation Tax, arguing that a reduction in it would help stimulate jobs – albeit with a loss to the block grant. Whatever the merits of that particular policy, it is commendable that local politicians are prepared to assume greater economic responsibility. Perhaps though, it is time to widen the debate to the devolution of other economic powers. Commissions have examined the merits of greater fiscal autonomy in Scotland and Wales. To date, no such review has taken place in Northern Ireland.

For its part, NICVA has established the Centre for Economic Empowerment to help stimulate and inform discussion on these important issues. Last year we organised a conference on the meaning of a ‘good’ economy and how to go about creating it.

This year’s conference is focused on job creation. It will provide a space for civil servants, business and civil society to discuss some ‘big ideas’ as well as specific policies for boosting employment. The speakers include Stewart Lansley, author of The Cost of Inequality, who will talk about the role that a more even distribution of wealth might play. Matthew Taylor, Tony Blair’s former Chief Advisor on Political Strategy will discuss the need for political reform if we are to tackle the economic problems of our time.

NICVA recognises that there are no easy answers, but we hope that this event will contribute to a much needed debate. The economic crisis has underlined the need for fresh thinking. We failed to ensure that everyone benefitted during the boom. Let us ensure that no one is left behind by the recovery.

A version of this article appeared in the Belfast Telegraph on Monday 19 November.

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