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Productivity is 2022’s biggest challenge

Prof John Turner and Dr David Jordan


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NI needs a more highly-skilled workforce

NI needs a more highly-skilled workforce

NI needs a more highly-skilled workforce

Last year was a roller coaster for the local economy as the coronavirus pandemic dominated the immediate economic outlook.

Brexit, and the Northern Ireland Protocol, continued to create uncertainty for local businesses. And by the end of the year, global disruption to supply chains, alongside increasing energy prices, saw inflation rise dramatically.

Yet none of these is Northern Ireland’s biggest economic challenge in 2022. Instead it is poor productivity.

Productivity measures the value of output produced in the economy for a given amount of work.

Northern Ireland has the worst productivity performance of any region in the UK, and is almost 20% below the UK average. A worker here would need to work a six-day week to match what the average UK worker produces by the end of business on Friday.

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John Turner

John Turner

John Turner

When we talk about increasing productivity, it can seem like we just need to work harder. Yet in NI, we already work the longest hours of any UK region outside London. Raising productivity is therefore about how we work smarter, rather than harder.

Increasing productivity is crucial for the local economy. Improvements in living standards are closely linked to improvements in productivity, and higher productivity can mean not only higher wages, but also more money available to invest in public services.

Our poor productivity performance is nothing new. For the past 100 years, levels of productivity in NI have lagged behind the rest of the UK.

This productivity gap can even be traced back to before partition of the island. The structure of the local economy was once primarily to blame, with an over-reliance on the old staple and declining industries of shipbuilding and textiles.

But failings within sectors are equally as important, with service sectors contributing the most to the gap.

As a recent Green Paper produced by the NI Productivity Forum highlights, there are several causes of this poor productivity performance.

Firstly, lower levels of human capital in NI continue to hold back productivity. This is driven by both a brain drain, where a large proportion of our young people leave for university and do not return, and by an attainment gap, where too many of those entering the workforce have no or low levels of skills and qualifications.

With a low-skilled workforce, it is not only harder to attract new investment, but it is more difficult for existing firms to grow and compete against their national and international competitors.

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David Jordan

David Jordan

David Jordan

Secondly, there is a managerial skills gap within local businesses. When measured against best practice, NI firms score more poorly than their counterparts in the rest of the UK.

While there are star performers in the local economy which have adopted best practice, there are too many firms which lag behind, dragging down productivity.

Thirdly, low levels of investment create barriers to productivity growth. Expenditure on research and development in NI is below the UK average.

As there is no single cause of Northern Ireland’s poor productivity performance, long-term and coordinated policies are needed.

The pandemic response and current global economic uncertainty will continue to hold policymakers’ immediate attention in 2022. Yet our economy’s future health will be determined by policies which promote productivity growth. None of the problems are insurmountable. What they require is a concerted effort and long-term vision from our politicians to meet Northern Ireland’s productivity challenge.


Dr David Jordan is a research fellow at Queen’s Management School. John Turner is a professor of finance and financial history at Queen’s University



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