Belfast Telegraph

Record low 2.9% jobless rate not a true reflection of Northern Ireland's labour market: economist

Caution: Richard Ramsey
Caution: Richard Ramsey
Ryan McAleer

By Ryan McAleer

Northern Ireland's unemployment rate has hit a record low of 2.9%, but a leading economist has warned that it "flatters" the situation here.

The figures for the first three months of 2019 show the unemployment rate dropped by 0.9 percentage points in the last quarter, taking the rate here well below the UK average of 3.8% during February, and even further below the Republic's rate of 5.4%.

The percentage of people in work also hit an all-time high of 71.3%.

Northern Ireland's unemployment rate is now below that of the United States (3.6%) and Germany (3.2%).

But Ulster Bank chief economist Richard Ramsey said that while it's arguably one of the most important measures for an economy, the headline unemployment rate "significantly flatters" the performance of the local labour market.

He said: "An outsider looking at a headline unemployment rate of 2.9% would be forgiven for thinking that Northern Ireland was in some sort of labour market nirvana.

"Clearly, the reality is somewhat different."

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The local economic inactivity rate did fall to 26.5% between January and March, one of the lowest rates on record.

But it's still the highest among the UK regions.

"That means over one-quarter of the local working age population are neither in work or looking for work," said the economist, who added that the 71.3% employment rate was the second lowest of all UK regions.

Next month's Quarterly Employment Survey, which measures the actual number of jobs in the economy, is expected to provide a more accurate picture of the number of jobs being created in the Northern Ireland economy.

"Next month's release is expected to show a fresh record high in the number of employee jobs," said Mr Ramsey.

"However, given the economic headwinds facing the local economy, employment is expected to fall back from these record highs in the second half of 2019.

"Notwithstanding the great strides Northern Ireland's labour market has made over the last decade, particularly in relation to employment growth, significant challenges remain.

"Alongside tackling economic inactivity, productivity remains a long-standing weakness within the economy.

"In terms of the latter, Northern Ireland continues to lag well behind the UK, which in turn lags behind its key international competitors.

"If the Northern Ireland economy managed to secure superior productivity and employment rate performance that would be much more significant, economically speaking, than having a headline grabbing low unemployment rate."

Belfast Telegraph