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Quarterly Economic Observer - Spring 2014

Quarterly Economic Observer - Spring 2014

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Summary

This edition of the NERI’s Quarterly Economic Observer (QEO) outlines our latest expectations for the economic outlook in the Republic of Ireland and Northern Ireland (Section 3). It also presents an analysis of earnings in Northern Ireland and in particular how low pay affects people by their gender, age, geography or the sector in which they work (Section 4).

Economic Outlook

Our economic outlook for both parts of the island of Ireland is broadly positive but uncertain.

In the Republic we still anticipate small positive growth in 2014, and slightly more robust growth in 2015. However concerns remain over the impact of the contraction in the pharmaceutical industry which along with reduced personal consumption contributed to negative economic growth in the final quarter of 2013. Low wage growth and persistently high long-term unemployment and youth unemployment also remain among key domestic concerns. Internationally the political tensions relating to the Ukraine and the threat of deflation in the Eurozone also weigh on the analysis.

 

In Northern Ireland, there are some positive economic signals, reflecting recent developments in the UK economy as a whole. Although these trends only amount to two consecutive quarters of growth in 2013 while the Northern Ireland economy remains over 9% below its pre-crisis peak.

Based on the assumptions and expectations outlined Section 3, our current projections for the Northern Ireland are:

-        A modest increase in overall employment, albeit a slower pace than the UK as a whole. Key growth sectors for Northern Ireland employment include Agriculture, Hospitality and Transport.

 

For Republic of Ireland:

-        Modest growth in 2014 and 2015, at 1.6% and 2.1% respectively; growth rates which are dragged down by approximately 0.5% of GDP in each year given the contraction of the pharmaceutical sector.

-        A return to growth in personal consumption, the first such increase in this component of domestic demand since 2010.

-        A decrease in exports owing to the aforementioned contraction on the pharmaceutical sector.

-        A decrease in government debt both nominally and as a % of GDP in 2014. Government debt will decrease even with the inclusion of the deficit for 2014.

 

Earnings and Low Pay in Northern Ireland

In section 4 of this QEO we look at earnings and the extent of low pay in Northern Ireland and find that:

-        Overall, more than a quarter of workers - or just under 169,000, earn below the Living Wage

-        17% or nearly 115,000 of workers are defined as low paid because they earn two thirds of the median hourly wage or less.

-        9% or just over 61,000 earn at or below the minimum wage

Looking at how these statistics are spread across the labour market we find that:

-        8% of male workers earn the Minimum Wage or below compared with 9% of female workers. However only 22% of male workers earn below the Living Wage compared with 29% of females.

-        Several constituencies have 10% of workers earning the Minimum Wage or less while, North Antrim has both the highest proportion of workers below two thirds of the Median Wage (25%) and the highest proportion (35%) below the Living Wage.

-        The Accommodation & Food Sector has the largest proportion of low paid workers, with 40% earning the minimum wage or less and 76% of workers earning below the Living Wage. Within this sector Food services has the largest proportion of workers, 66% earning the minimum wage or less.

-        Other sectors with large numbers of low paid workers include Wholesale & Retail, Administration and Agriculture. Within Wholesale and Retail nearly a quarter (24%) of retail workers earn the minimum wage or less while 59% earn below the Living Wage

-        While average figures indicate that overall the Health Sector appears well paid, in fact 44% of Social Services workers and 51% of Residential Care workers earn below the Living Wage

-        These statistics pose significant policy challenges for all levels of government in Northern Ireland. Chief among these is to :

  • enforce the Minimum Wage effectively and provide above inflation increases that would make up ground lost since 2007;
  • promote the Living Wage across the economy and implement it at all levels of government, including local government, public procurement and all contracted services
  • examine the case for sectoral wage agreements that would allow upward pressure on wages without damaging competitiveness either domestically or internationally

 

Erratum

The edition above includes minor corrections to data initially published in the March 2014 edition. This affects tables 4.4,4.6 & 4.12 and related text.

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