Is there an economic recovery?

By Owen McCracken

economyThe mantra of economic recovery being pushed by politicians and the mass media will mean little to working class communities who witness no evidence of this in their everyday lives.

The falling unemployment rates, often cited as evidence, ignores the fact that the majority of new jobs created are poorly paid, part-time and do not in any way replace the thousands of better paid jobs in manufacturing and other sectors that have been lost in recent years. While the official unemployment rate in the North has fallen slightly to 7.3% (down 0.2% on the previous quarter), 27.4% of the working age population remain economically ‘inactive’ – the highest proportion by far across the UK. The areas of growth economists point to largely amount to clutching at straws. The manufacturing sector, which fell 2.9% in 2012, is currently up 0.2% year-on year. This can be contrasted with figures from other areas of the economy, for example the construction sector which fell sharply in early 2013 and has only recently stabilised. In retail, there is a significant proportion of empty shops in our town and city centres, on average now 19% of premises, the highest in the UK.

The fact remains our standard of living is still being hammered with workers facing a drop in the real value of their wages for the sixth year in a row. Ulster Bank economist Richard Ramsey has calculated that cumulative inflation since 2007 amounts to 21% in total, often hitting the poorest hardest with food prices up 36% and home heating oil up by a whopping 84%. A recent report by the Age Sector Platform found that 80% of pensioners in Northern Ireland worry about the price of energy, with two thirds expressing concern about the price of food.

It can be little surprise that according to the Rowntree Trust poverty in Northern Ireland is deeply entrenched and is worsening. Many households are in particular distress, the number of people being brought before the courts as they struggle to pay their mortgages has jumped by 20% in the past year. More and more people are turning to foodbanks, with Lisnaskea and Lisburn the latest places where one has been established.

With the Northern Ireland economy so heavily dependent on the spending power of public sector workers, the ongoing impact of cuts also undermines such talk of recovery. The political partyies in Stormont plan to cut more than a further 10% from government departments by the 2017/18 financial year. Their strategy of reducing the size of the public sector and promoting private sector export led growth will not work in the context of a world economy in crisis.

The weak growth seen in the North over recent months masks the fact that, as with the wider UK and Eurozone economies, the key underlying economic problems have not been resolved. Massive state debts have been accumulated and the economic stimulus injected to prop up the finance sector has had little or no meaningful impact on the lives of ordinary people.

Across Britain, the top 1% of earners have seen their share increase to 10% of total earnings, while the bottom 50% share has fallen to 18%. The failure to return to pre-crisis growth levels, deal with the existing mountain of debt and growing polarisation of wealth inequality is is sowing the seeds for further financial and economic convulsions.

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