NI Economy: A Neo-Liberal Failure

untitledBy Donal O’Cofaigh

Recently published statistics expose the nature of the much touted ‘recovery’ in Northern Ireland. While it is true the employment rate is now higher than it was at the 2008 peak, the reality is that employment growth has predominantly been in the lower-paid services sector with the proportion of workers on part-time or zero-hours contracts rising.

Gross disposable household incomes per head here are 18% lower than the UK average, with the sharpest falls being experienced in the south and west of Northern Ireland, where the differential is now 26%. The difference is getting wider: real wages here remain 7% lower than they were in 2007 and have flatlined in the last year while those in the Britain have continued to rise.

Northern Ireland’s economy has suffered the closure of higher value-added companies such as Michelin and Howden’s and loss thousands of jobs in the likes of Caterpillar and Bombardier. The manufacturing jobs created have been of a lower economic value.

Productivity across the Northern Ireland economy continues to fall. Gross value-added per job filled is 21% lower than the UK average. For a Stormont Executive which places economic growth at the centre of its programme for government, these are damning statistics.

The neo-liberal consensus on economic policy in Stormont is to impose even deeper austerity cuts in order to slash corporation tax and secure foreign-direct investment. The folly of this strategy is exposed by the high dependency of the economy on public sector consumption – responsible for 28% of total final demand, compared to just 20% in the UK. Cutting public expenditure and investment will therefore shrink the economy here further.

The announcement by Tory Chancellor George Osborne in the immediate aftermath of the EU referendum that he proposed lowering UK corporation taxes to below 15% left Stormont Ministers shell-shocked. Where did that leave their ‘one trick pony’ for delivering economic growth? Sinn Féin’s Finance Minister Mairtín Ó Muilleoir was not for moving. Instead of harmonising corporation tax rates across the island to 12.5%, he was considering undercutting the Republic going lower still – 10%? 6.25%? This is the logic of a race to the bottom which would be a disaster for working class people.

Stormont’s strategy seeks to win low-paid jobs on the basis of beggar-thy-neighbour economics at the price of cutting public investment in roads, rail, skills and vital infrastructure. It’s a dead-duck strategy but they won’t admit it. Never before has the need been clearer for a planned approach to growing the economy rooted in public ownership and enterprise. The alternative is continued disinvestment and market failure leading to a low-wage, post-industrial Northern Ireland with ever dwindling funding for public services.

Previous Article

Apple tax scandal – a system rotten to its core

Next Article

Jobs & Benefits Offices Under Threat

Related Posts
Read More

Royal Mail workers fighting back

Royal Mail was privatised in 2013. The initial public offering went for a paltry £1.98 billion for the country’s postal services. This was a bung to the financial speculators by Vince Cable, the then Business Secretary in the Tory-Lib Dem government. On the first day of trading, share prices jumped 38%, making a tidy sum for the financial speculators.
Read More

Refugee crisis exposes brutality of capitalism

The left-wing Labour MP Tony Benn once said, “The way a government treats refugees is very instructive because it shows you how they would treat the rest of us if they thought they could get away with it.” The breaking up of the ‘Jungle’ refugee camp in Calais has again highlighted how ruthlessly right-wing governments across Europe are treating those most desperately in need of help.