Belfast Telegraph

Dole queue rise signals weaker labour market in Northern Ireland, says economist

By Amanda Ferguson

The first rise in the number of people joining dole queues here in more than two years points to a weakening in Northern Ireland's labour market, a senior economist has said.

According to the latest Labour Market Report the number of people claiming unemployment-related benefits rose by 200 to 44,000 in June, the first increase in 28 months.

But there has been a fall of 10,400 in the unemployment claimant figures over the last 12 months.

The overall UK claimant count levels also increased over the month to June 2015, the first increase following 31 consecutive months of decline. The Labour Force Survey showed that the unemployment rate in Northern Ireland increased by 0.2% over the second quarter to the end of May.

But it fell over the year by 0.4% to 6.2%, lower than the 5.6% UK average.

Ulster Bank chief economist Richard Ramsey said that in general terms we were witnessing a "weakening in the labour market". He also highlighted the growing number of economically inactive people.

"What is interesting is this comes just a week after George Osborne's Budget where he announced a range of welfare reforms, many of which are designed to encourage people into employment," he said.

"The labour market figures show both in Northern Ireland and the UK as a whole that getting into work may not necessarily be that easy going forward, particularly when you compare it to what's happened in the last couple of years.

"It is not just in terms of unemployment; the employment figures were showing a fall of 18,000 over the last quarter and 4,000 over the last year. The latest figures show an increase in the number of economically inactive people of 19,000 over the last quarter.

"Welfare reforms announced last week are still yet to kick in. Many of them are designed to encourage more people into work, however, the availability of jobs may make this a challenge.

"I expect to see Northern Ireland's unemployment rate edge higher in the month ahead."

Danske Bank chief economist Angela McGowan said the Government's new restrictions around tax credits could raise unemployment levels further.

"For part-time workers and in particular for working mothers, the cost of working part time will rise significantly," she said.

She added: "Incentives for entering into the world of work will decline as tax credits are adjusted and this will have a disproportionate impact on the local economy, where wages are lower than the rest of the UK."

Enterprise Minister Jonathan Bell said: "The latest figures highlight the continued challenges faced by the Northern Ireland labour market and the impact of continued uncertainty in global markets."

He said a rate of 6.2% compares favourably to April 2015 rates of 9.7% in the Republic.

Belfast Telegraph