North and south 'must work together to prosper'

The economies of Northern Ireland and the Republic of Ireland must forge closer links if they are to prosper in an increasingly competitive world marketplace, a British Cabinet Minister claimed today.

With more manufacturing and service jobs being outsourced to countries like China and India, Peter Hain insisted the North needed to develop a high-value skills economy in conjunction with the Republic.

The Northern Ireland Secretary told the Fabian Society at Stormont that meant developing a common inward investment strategy and companies on one side of the border expanding in the other.

He argued: “The island of Ireland faces common external threats from globalisation which, by working together, we can help overcome.

“The Republic’s enormous success has led to some of its companies being prevented from expanding because of a lack of additional capacity and skill shortages. They should be encouraged to outsource in the North.

“More Northern Ireland-based businesses should follow those which have successfully expanded into the South.

“In addition, both governments should have a joined-up strategy to attract inward investment, especially maximising the South’s strong relationship with Irish American business to showcase opportunities in the North.

“We should also work on a joint audit of opportunities for further economic co-operation to mutual advantage both sides of the border, bearing in mind, for example, the Republic’s proposed €7.5m investment in the City of Derry Airport which will benefit Donegal as much as the north-west of Northern Ireland, and which is an integral element of the €100bn investment plans for the island’s infrastructure over the next 10 years.

“I believe all of this is good, common-sense co-operation on matters of mutual interest across both jurisdictions.”

While unemployment levels in the North had been halved and reached an historic low at 4%, Mr Hain said the level of economic inactivity among adults of a working age remained alarmingly high at 27.4%.

Northern Ireland, he said, had a much higher percentage of long-term unemployed than the UK – 33.8% compared with the national average of 20.7% - while 23% of the working population had no qualifications whatsoever, compared with 13% nationally.

“Only 15% of the Northern Ireland workforce has a degree or equivalent, compared to 18% in the UK,” he observed.

“Therefore, it is vital to invest in opportunities and skills, with greater access to vocational education, training and apprenticeships, to ensure no young person is left behind.

“The recently revised curriculum must ensure that children leave primary school with a strong grasp of the literacy, numeracy and ICT skills that all employers need.

“And the new post-primary arrangements must provide pupils with a minimum entitlement at Key Stage 4 and post-16 regardless of the school, and a wider choice of schools – including more emphasis on vocational courses, not least in the new specialist schools.

“Higher education, which will be benefiting greatly from the new fee income, must focus on subjects that will produce fulfilling employment and a more competitive economy.

“But university expansion must not be at the expense of the vital further education sector, where there may be an even greater need to expand to fill disturbing gaps in technical skills.”

Mr Hain said he would soon announce details of two funds which would help address those challenges.

The £61m (€89.4m) Children and Young People’s Fund would, he said, over the next two years extend the role of schools before and after the traditional school day, including additional early years provision.

The £35m (€51.3m) Skills and Science funding package would also over the next two years enhance investment in skills and training and help tackle economic inactivity.

The minister said Northern Ireland’s economy also had to wean itself off its current over-dependence on the public sector.

Public expenditure accounted for around two-thirds of the North’s GDP, he said, whereas the UK average was around 40%.

The private sector remained under-developed, with the public sector accounting for almost a third of all jobs in Northern Ireland compared with the UK average of a fifth.

Public expenditure as a percentage of GDP was significantly higher in Northern Ireland than elsewhere – accounting for some two-thirds of regional GDP, compared with the national average of around 40%.

“The currency of the future will be high productivity, high value-added activity and highly developed skills,” he declared.

“For much more must be done if Northern Ireland is to become a world leader in the fastest growing and most wealth-creating sectors – a place where people want to locate and expand their businesses, and a place with which people want to trade.

“That requires investment in research and development and the promotion of innovation and creativity, encouragement of enterprise, the right skills for future employment opportunities, and a modern infrastructure to support business and consumers.”