Posted on Thursday 19 May 2016 by Ulster Business
More people are in work in Northern Ireland but wages are well below 2005 levels, new research from PwC has revealed.
It said average wages here in real terms – when inflation is taken into consideration - are 7% below pre-recessionary levels in 2005.
As well as a wages, the productivity of workers remains stubbornly low despite unemployment levels falling steadily.
The business advisory firm said that’s good reason to encourage the new Executive to focus on a range of economic indicators when it’s taking the temperature of the economy as unemployment levels – one of Stormont’s chosen yardsticks – doesn’t paint a full picture.
PwC chief economist Esmond Birney said that’s because not all those people in work are putting in full time employment.
“As “full-time” employment is defined as more than 16 hours a week, the number of “full-time” workers may have increased, but the total number of hours worked per person across the economy has actually fallen below the pre-recession total and that has been reflected in low productivity, currently around 8% below the pre-crisis level,” he said. “Low productivity translates into reduced business profitability, low wages, and falling household disposable incomes, which in real terms, are now around, £1,450 (11%) below the amount the average Northern Ireland family enjoyed in 2007.”
He said Northern Ireland’s economy will continue to lag behind the rest of the UK when it comes to growth, expanding at just 1.3% this year.
That compares to 3.1% in 2004 and 2.6% in 2005.
And as the new Executive gets down to business, Dr Birney said it will need to agree a longer-term public spending budget to satisfy Westminster’s condition that the Executive needs stable finances before corporation tax-setting powers are devolved.
“This “outcomes based” PfG will have a much stronger emphasis on achieving favourable economic and social outcomes for the general public- similar to the Scottish approach to policy setting and evaluation,” Dr Birney said. “Some of the high level objectives may also build into a longer-term vision for Northern Ireland’s future – perhaps up to 2030.”