'A corporation tax cut may not work without investment in skills'
A lowering in Northern Ireland's corporation tax may not, on its own, be enough to reduce the high level of unemployment here, according to Davy Ireland.
The stockbroker's chief economist said a huge level of investment needs to be put toward lifting the skill levels of the labour force here to meet the demands of potential foreign direct investors.
Conall Mac Coille pointed out that 21.7% of the population here have no recognised qualifications at GCSE or above, a figure which compares with 11% across the UK as a whole and suggests a potential skills shortage.
"Significant investment in training and education will be required to equip the labour force with the skills required to meet the demands of employers," he said.
"In the meantime, a lack of private sector investment and employment means the brain drain from Northern Ireland will continue."
Latest migration figures show 3,109 18-30-year-olds migrated from Northern Ireland in the 2010-11 year while 845 31-45-year-olds migrated during the same period.
Meanwhile, Mr Mac Coille said the impact of a cut in Northern Ireland's corporation tax, currently at 23%, to 12.5%, is highly uncertain but evidence across the border bodes well if tax-setting powers are ever devolved.
"Given the strength of foreign direct investment flows to Ireland in recent years, similar levels of investment in Northern Ireland could be envisioned," he said.
"While the corporation tax rate remains the key deciding factor for many multinationals in choosing Ireland as a hub for operations, the access to European markets, a skilled, English-speaking workforce and a business-friendly regulatory environment are also factors.
"Northern Ireland can also possess many of these comparative advantages."
The economist also said that while the manufacturing sector here was badly hit by the downturn, better times may be ahead.
"Northern Ireland has a small exposure to defensive sectors such as food and beverages and pharmaceuticals.
"So Northern Ireland's manufacturing sector was hit especially hard by the global downturn," he stated.
"That said, the flipside is that Northern Ireland's manufacturing sector is probably well placed to benefit from any improvement in global demand."
And the services sector is beginning to stablise.
"The year 2012 was the first year to register positive growth in the services sector since 2007. Services output expanded by 1.3% in 2012. This is an encouraging sign that the domestic economy is finally beginning to stabilise."
And he said the economy as a whole is set for steadier times.
"Short-term indicators point to a stabilisation in activity in recent quarters."