Belfast Telegraph

Higher skills level will increase pay

By Jordan Buchanan

The economic news has been increasingly positive for almost two years now, but a common economic issue in Northern Ireland remains the wage disparity with other regions of the UK.

Average wages in Northern Ireland are consistently amongst the lowest in the UK, and similar to those in Wales and the North East of England.

Unsurprisingly, the strongest performing regions are London and the South East of England, where salaries are 74% and 24% higher respectively than here.

The main reason is the structure of our economy; Northern Ireland has a greater proportion of people working in lower paid sectors compared to the UK.

One example is agriculture, a large employer locally, but where salaries are approximately 43% lower than the average wage. However, the gap may be closing, if only very slowly.

Since 2007, average full-time wages here have risen by 12.1%, fifth highest across the 12 UK regions and above the UK average of 10.9%.

Despite this closing gap, a key issue we all face remains below-inflation salary increases.

Since 2008, 'real' wages (ie after inflation) in Northern Ireland have fallen by 6.9%, which is lower than the rest of the UK, at 7.9%. However potential good news may be on the horizon.

Nationally, we are seeing some evidence of salaries starting to increase at a rate higher than inflation and locally, there has been a consistent stream of inward investment announcements which are increasingly offering higher-skilled and higher-paid job opportunities.

Therefore the twin challenges for government is to continue to attract inward investment from blue-chip employers and at the same time, ensuring the local labour market has the appropriate skills to meet the requirements of these firms.

Similarly the challenge for wider society is to recognise the only way to raise salaries in the longer term is to raise the overall skills level of the workforce.

  • Jordan Buchanan is economist at the NI Centre for Economic Policy

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