Posted on Wednesday 17 October 2012 by Ulster Business

Job centre

Unemployment in Northern Ireland is continuing to rise despite an overall drop in the number of people out of work across the UK, according to the latest official figures.

The number of people out of work in the UK fell by 50,000 to 2.53 million in the three months to August, an unemployment rate of 7.9%.

However, the Northern Ireland labour force survey showed a seasonally adjusted unemployment rate of 8.1% for the same three months – up 1.2 percentage points from the previous quarter.

While that was still lower than the unemployment rates in the European Union (10.4%) and the Republic of Ireland (14.9%), it means that the Northern Ireland unemployment rate is now above the UK average.

And the more recent measure of people claiming unemployment related benefits showed that a further 200 people joined the dole queue here in September. The total claimant count now stands at 63,400.

The figures were clearly a disappointment to Enterprise Minister Arlene Foster, who in attempting to find positives in the worsening jobs figures over the last two years has regularly pointed to the fact that the local unemployment rate was better than the UK average.

That this is no longer the case has increased concerns over local economic prospects, with statistics this week on production, services and construction all indicating further weakness in the economy.

"The increase in the unemployment rate and the claimant count is, as always, disappointing. It continues to highlight the challenges faced by the Northern Ireland labour market," said Minister Foster.

"Northern Ireland is a small open economy and we cannot expect to remain unaffected by the continued uncertainty in markets around the world. In the face of these challenges, it is important that local businesses continue to look for export opportunities in the wider global economy."

The Minister noted that Invest NI will next month lead a trade mission to China and Hong Kong to drum up demand for local goods and services.

Northern Bank chief economist Angela McGowan suggested however, that other more innovative policies would be needed to reverse the decline in jobs.

"Only last week the International Monetary Fund chief, Christine Lagarde, warned advanced countries to end the scourge of unemployment. She warned that restoring growth was crucial for reducing unemployment and that growth should not be sacrificed for the sake of austerity. Although the local unemployment rate remains lower than many other European countries, the IMF's message is every bit as applicable to Northern Ireland. Without sustained economic growth local joblessness will continue to rise," she said.

"Low interest rates and quantitative easing alone have been unable to support strong and sustainable economic growth as the demand side of the economy is still too weak. Ed Balls and Vernon Coaker were correct this week in asserting that Northern Ireland requires strong growth initiatives now, not later. As well as government investment on infrastructure, Northern Ireland needs demand stimulating policies such a VAT reduction and tax breaks for local companies taking on more workers. These are the initiatives that are needed to create jobs but unfortunately the Northern Ireland Executive has no control over the taxation decisions."

Business organisation CBI Northern Ireland urged the Stormont Executive to do what it could to create a more business-friendly environment that would encourage firms to create jobs.

"We need to make it easier for businesses to create jobs for the unemployed," a spokesman said.

"One way of doing this is to lower Northern Ireland's corporation tax rate to a more competitive level – and we would urge the Joint Ministerial Working Group to take decisive action tomorrow.

"Furthermore, we need to tackle the burden of employment regulation – and we would encourage businesses to support the Youth Employment Scheme, which provides support for any business who hires a young person between the ages of 18-24."

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