A report from business advisors PwC said Northern Ireland’s productivity has accelerated faster than anywhere else in the UK, with Belfast buoying up performance.
However, PwC said our overall productivity levels remained the lowest in the UK, and around 17% below average.
PwC’s Industrial Manufacturing and Services Productivity Tracker analyses productivity progress across the UK, with a focus on manufacturing, construction, and services.
Between 2011 and 2011, Northern Ireland’s output per hour accelerated by 13.5% – the steepest increase in the UK.
PwC said the progress was down at least in part to the region receiving some of the largest amounts of investment around the UK.
The firm said that if Northern Ireland continues to prioritise investment and can translate it into improved efficiency, it could boost its long-term productivity even more.
Belfast’s economic performance had also driven growth in Northern Ireland, with the Belfast Region City Deal a catalyst for further expansion.
Caitroina McCusker, PwC regional market leader in Northern Ireland, said: “Whilst any growth in productivity is to be welcomed, Northern Ireland still has the lowest productivity of any UK region, around 17% below the national average.
“This is due, in part, to Northern Ireland having fewer jobs in high-productivity sectors such as financial services.”
But she said Northern Ireland had a “significant” productivity gap in the production sector – mainly manufacturing – and in the services sector.
“It is important to recognise that the 2021 data is likely to be affected by the pandemic so it is too soon to draw clear policy conclusions.
“However, we do know that one of the most effective ways to accelerate future productivity growth is through investment in a broad range of skills, and in particular to target funding towards skills that will be of increasing importance in the years to come.
“That includes the priority clusters outlined in the ‘10x Economy’ vision.
“We continue to recommend increased investment in business-led reskilling initiatives to raise skills levels in NI, in the areas which have the greatest long term impact and contribute to productivity-led economic growth.
“Getting this right could have huge economic benefits for the region. If Northern Ireland productivity was to catch up to the UK-wide sectoral medians, it could add £7bn to the local economy here.”
Professor John Turner, economist and Northern Ireland Productivity Forum lead, said: “It is welcome news that Northern Ireland has begun to close its productivity gap to the UK.
“However, even if it maintains this performance, it will take around 15 years before it surpasses the UK average.
“We must also wait to see whether this growth can be maintained, or if it simply reflects temporary changes to working hours and output that resulted from the Covid-19 pandemic.
“This underlines the importance of addressing the underlying drivers of productivity, where Northern Ireland often lags behind its peers across the UK’s regions.”
