“jobs, what jobs?” plenary cesi conference 24 april 2013 dr esmond birnie, chief economist

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“Jobs, What jobs?” Plenary CESI conference 24 April 2013 Dr Esmond Birnie, chief economist www.pwc.co.uk

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“Jobs, What jobs?” Plenary

CESI conference 24 April 2013Dr Esmond Birnie, chief economist

www.pwc.co.uk

CESI Inclusion conferencePwCPwC

Key messages

•Was an employment boom during early 1990s to 2008

•Since 2008 40,000 jobs lost (about one-third of the gain during 1998-2008)

•Even more so than rest of UK, NI economic recovery slow

•Even when “recovery” is established the trend rate of employment growth likely to be low

•Unemployment likely to remain at current levels, or higher, for foreseeable future

•High skill/STEM demands, shrinking low skills sectors, and some cases of over supply

April 2013Slide 2

CESI Inclusion conferencePwCPwC

Context- global and UK economic outlook

Slide 3April 2013

PwCPwC

Global outlook for 2013+ remains mixed - stronger growth in emerging economies but Eurozone continues to struggle

Source: OBR for UK, PwC for others

EC for RoI

Russia

Germany

UK

US

Brazil

India

Spain

Key

Canada

Mexico

South Africa

Australia

Japan

Italy

Greece

Ireland

France

1.9

2.0

3.6

3.0

-1.4

0.2

1.1

0.60.4

-1.2

2.9

6.0

-4.2

2.5

8.0

1.0

3.8

x.x = GDP growth in 2013

China

April 2013Slide 4

CESI Inclusion conference

CESI Inclusion conferencePwCPwC

Northern Ireland labour market outlook

Slide 5April 2013

CESI Inclusion conferencePwCPwC

What happened over the last two decades...

Employee jobs

June 1993 June 1998 June 2008 Dec. 2012

Total 545,730 613,250 733,020 693,340

Public sector 197,960 195,120 218,440 212,910

Private sector 347,770 418,130 514,580 480,430

Slide 6April 2013

Source: Quarterly Employment Survey

•Two periods- “golden age of growth” (early 1990s to 2008)

- followed by slump (since 2008)

•Boom started before mid 1990s or 1998

•Initially, the employment growth was private sector led but latterly

public sector- public sector peaked in Sept. 2009 at 225,330

•About one-third (40,000) of 1998-2008 growth has since been lost

CESI Inclusion conferencePwCPwC

One driver- recent NI economic growth performance...

Recent growth rates of NI’s GVA:

2010 0.8%

2011 0.3%

Estimated/forecasted growth of NI’s GVA (Note- under historic trend):

2012 -0.3%

2013 c. 0.2%

2014 c. 1.4%

2015-20 c. 1.5/2%

Slide 7April 2013

CESI Inclusion conferencePwCPwC

What might happen to employment growth...

•Early 1990s to 2008 trend growth c. 12,000 p.a.

•Even once “recovery” established much lower trend growth likely, 3,000 p.a.

•Corporation Tax (see the report to DEL 2012):

-Likely net impact on employment growth (+ FDI but – public sector) probably would have been lower than sometimes claimed

-In any case, now very much “postponed”

•Probably, no other “game changers” out there

•Executive needs to avoid sacrificing “productivity” for “jobs” Slide 8April 2013

PwCPwC

Relationship between changes in employment and changes in unemployment

April 2013Source: QES/Nomis CESI inclusion conferenceSlide 9

189,665

-35,480

-67,308

35,117

-100,000

-50,000

-

50,000

100,000

150,000

200,000

250,000

Jobs

Claimant count

Difference between 2012 and 2008

Difference between 2008 and 1990

CESI Inclusion conferencePwCPwC

NI claimant count, what can we reasonably forecast?

•Currently c. 64,800 (similar to August 1980 and May 1997, compared to low of 23,500 in August 2007)

•Unemployment likely to increase further and then a slow decline. Why:

-NI’s economic growth slower than UK average

-Unemployment a lagging variable

-Even in boom may need several jobs to take one person off count

•Out-turn subject to:

-Eurozone (hence RoI)

-GB recovery (hence extent of migration)

-Speed and impact of welfare reform Slide 10April 2013

CESI Inclusion conferencePwCPwC

Re. what kind of jobs...

•In the “golden age” of employment growth (1990s to 2008) was some growth of low skill/low wage (e.g. in retail, business services and, latterly, construction)

•Many of those jobs lost since 2008

•That type of growth not likely to recur though, tourism

Slide 11April 2013

CESI Inclusion conferencePwCPwC

Some uncertainties

•The UK “productivity conundrum” i.e. Employment decline in the downturn and since probably less than would be expected but how far does this apply to NI as well?

•Impact of welfare reform on JSA?

•Given trend in GB- some more public sector employment reduction likely in NI

•Increased participation by some groups in GB, e.g. Older workers, how far does this apply in NI?

Slide 12April 2013

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2013 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

Dr Esmond Birnie

Chief Economist, PwC (in NI)

028- 90415808

07850-907892

[email protected]