In this blog, NERI Co-director, Paul Mac Flynn discusses jobs in Northern Ireland.
In a column at the end of last year I wrote about the fact that recent revisions to the Northern Ireland labour market data show that our employment situation was actually a good bit better than we first thought. Specifically, there were more people in our labour market, and more of those people had employment. This is good news for NI because labour force participation is one of the biggest weaknesses in our economy.
There are many reasons people choose to remain outside of the labour market and many of them are perfectly normal and are not problems that need to be fixed. Students and people who are caring for family are outside the labour market and there is no obvious reason to want to have fewer people in either of those categories. At present, the main reason for people being outside the labour force, or economically inactive, is due to long term illness. While the overall numbers of economically inactive may have declined recently, the proportion of people outside of the labour market due to ill health has steadily increased in recent years. But it may just be possible that the remedy for this situation may be right in front of us.
Often when we look at the problem of economic inactivity, we in NI focus on the specific reasons why the rate is so much higher here. Many aspects of a post-conflict society can contribute to higher levels of economic inactivity and recent survey data released by the NI Executive on childhood traumas and mental health shows this. Tackling this requires a proper public health approach to mental illness and it is one of the most important economic policies NI could enact.
However, beyond the factors that are unique to NI, we need to look at why our base level of economic inactivity is also so high here. Even if NI were to close the gap in inactivity with the rest of the UK, we would still have among the highest rates in Europe among developed economies. This is because the UK rate has increased significantly over the years since the pandemic. This stands in stark contrast with the experience in the Republic of Ireland where rates of inactivity are now lower than they were before the pandemic.
More positively, the fact that the UK rate of inactivity has risen so much in recent years has prompted much more interest in the reasons why people remain outside the labour market. In addition to tackling the issues that are individual to NI, we should also focus on the more commonplace barriers to people rejoining the labour market.
Policies to remove barriers can range from providing affordable childcare to making sure that the benefits system doesn’t penalise those wishing to return to work. The benefits system is something that is more likely to be effective at national level and there is limited scope for the Executive here to make real change. Childcare subsidies in the Republic have been credited with much of the improvement in activity rates there and this should lend even greater impetus to the Executive in developing its childcare strategy, but it will ultimately cost money.
Another factor that has come to the fore in the debate at UK level is the link between higher rates of inactivity and the quality of jobs that are available. Simply put, many people who have left the labour force did so because of work which is of such poor quality that it affected their health and well being.
Poor quality work is not just about pay, it covers many other aspects and specifically the nature of the work itself. Poor quality jobs can be those which are insecure or where the hours can be uncertain and even excessive. They can be jobs where the pace of work is highly intense and controlled and where people feel they have almost no control over their working lives. Add to that poor management, lack of support and no chance of recognition or progression.
A recent report by the OECD on the UK’s labour market made a direct connection between the issue of economic inactivity and job quality. The report said that “by improving job quality for all ages, a more dynamic and inclusive labour market can be created, maximising workforce potential and promoting economic growth.” A study from Leeds University went further stating that “bad work – work that does not pay enough and is unrewarding in other ways – can lead to economic inactivity” . A report from the Work Foundation laments the failure of government policy to tackle the root causes of economic inactivity which it lists as “the underlying quality, security and flexibility of work, or the provision of health-related support on offer”.
It is clear that improving job quality is key to tackling one of NI’s greatest economic weaknesses and unlocking our potential. This is also an area where we do have the power to effect change and where there is no need for additional funding. To this end, the NI Executive has now brought forward the Good Jobs and Employment bill which seeks to mark a step change in the quality of employment that is available in Northern Ireland.
Economic inactivity is, and has been, one of the most persistent and enduring of NI’s economic problems and it will not be solved through half measures or wishful thinking. It requires a game change.
This blog appeared as an article in the Belfast Telegraph on the 11th February 2025.