Have we really reached full employment in Northern Ireland?

Ulster Bank economist Richard Ramsey has suggested that Northern Ireland is now “effectively at full employment” as the latest official figures showed the unemployment rate was 3.5% in the three months between December and February 2018. This is quite a drop from the over 20% we had in the 1980s.

Northern Ireland has traditionally been associated with high unemployment so this is quite a turnaround. Now as always there are some caveats, the BBC reports:

The inactivity rate in Northern Ireland stands at 27.9% compared to a UK rate of 21.2%.

Of the economically inactive, 82% did not want a job while 18% did.

Of those who did not want to work, 30% were long-term sick or disabled, 27% were students, 22% were looking after the family or home, 12% were retired and 9% cited another reason for inactivity.

But essentially the point is if you want a job you can get a job. Whether it’s the job you want and the salary you want, well that’s another matter.

There was an interesting discussion on Radio Ulster’s Inside Business show about staff shortages in the hospitality industry. You can listen to it below:

Basically, there is a massive shortage of chefs and other restaurant and hotel workers. Traditionally about a third of staff in hotels have been from overseas but Brexit is threatening this labour supply.

Bill Wosley, owner of The Merchant, Bullit, Little Wing and other fine establishments, made the point that it is getting next to impossible to attract local workers. Each week he is traipsing around schools trying to attract pupils into the industry with not much success.

Hospitality has a terrible image of long hours and low wages. On the show, they made the point that the industry has changed to be more aware of work/life balance. But my new neighbour is a chef who has 5am starts in one of our shiny new hotels. Not much you can do about this if people want their breakfast.

But what about our unemployment blackspots?

Well, it seems even they are not as bad as they used to be.  This table below shows unemployment levels in West Belfast, (source):

Here is East Belfast:

It does question the narrative of our local politicians who bemoan the lack of employment opportunities in their area if thousands of jobs are only a stroll or a bus away. The trickier issue is one of people being unemployable. The reason many companies prefer foreign workers is they are better workers. You hear many a tale of woe from employers about the quality of some local workers. They don’t come in on time (or at all), they are forever on their phones, they are barely literate, etc etc. Given the number of kids leaving school without basic skills you get the impression that our fabled education system is not as hot as we imagine.

And what of the future?

Traditionally we have been a low wage economy but as staff shortages rise, wages will also need to rise to attract workers. Many firms will look to automation to fill the gap but for the foreseeable future robots cannot do basic tasks like pick veg, fry an egg, change a hotel bed etc. I can see many industries just becoming unviable and firms closing.

Is a universal basic income the only saviour?

The obvious thing to do is look at the 27% economically inactive figure and try to entice some of them back into work. We all hear stories of people getting caught in the benefits trap. People should not be penalised for working a few hours a week. If we had a guaranteed income for all and not this complex mess of a benefits system, then more people would enter the labour market. Northern Ireland is the perfect place for the UK government to test out Universal Basic Income. When our politicians get their act together they should be pushing for this, not nonsense like lower corporation tax.