ULSTER’S ECONOMY MORE UNEMPLOYMENT LIKELY SEQUEL TO THE BARRICADES

Press, Volume CIX, Issue 32078, 28 August 1969, Page 16

ULSTER’S ECONOMY MORE UNEMPLOYMENT LIKELY SEQUEL TO THE BARRICADES

[Reprinted from the "Economist” by arrangement.}

Unemployment is the economic spectre which has stalked Northern Ireland all its days, and it is unemployment’s shadow, poverty, which magnifies and distorts Ulster’s political and religious differences. Now, more unemployment still is the inevitable consequence of the latest troubles. Just how many men and women will find that the labour exchange queue is the logical aftermath of the barricades is a question that few of those embroiled in the current crisis have yet asked, but the answer is lying in wait for them.

Up to and beyond 20 per cent unemployment in such towns as Londonderry, Newry and Enniskillen is now expected this winter, with unemployment for the six counties as a whole running at 10 per cent or thereabouts. This prophecy is based on Ulster’s own economic forecasts, and is, if anything, optimistic. Last week's unemployment returns show that Ulster has 7.3 per cent of its labour force idle (over half having been on the labour exchanges’ books for more than 13 weeks), compared with only 2.5 per cent unemployed in the rest of the United Kingdom. Although many Belfast men walked to work when the buses stopped running during the riots, and burnedout factories and shops speak for themselves statistically, many a non-Irish industrialist or investor must have been put off Northern Ireland for ever by the past month’s riots. Fall in Tourism However, because it takes, on average, two years to land a new factory or industry for Ulster (six months for negotiations and 18 months between starting construction and beginning production), it will be mid-1971 before the sharp down-drop in new work going into Ulster from more prosperous economies, which still normally means from other parts of the United Kingdom, shows up in Stormont’s figures. Already, though, it is clear that one of Ulster’s key invisible earnings, its tourism, running at a useful £28.5 million a year, has fallen catastrophically, and will take a long time to pick up, especially among better-off British families who saw the flames of burning Belfast on their colour television sets. One definite bill now being drawn up ready for Ulster’s perennial paymaster, the Imperial exchequer in Whitehall, is the cost of compensating Ulster’s citizens for the physical damage done to their houses, shops, and factories. The most likely estimate for this is £lO million, rather than the £5 million calculated after the first totting up as the fires were dying away. While it is true that the compensation claims will be rendered, officially, to the Stormont government, it is an open secret that the bill will have to be passed on to London, as any marginal financial trimming which can be done by the Ulster authorities, concerned' to keep up industrial development inducements and advance their essential social programmes, will not even look at the cost of the riots.

Subvention Payments The biggest bill of all, however, and the one that may be looked at with greater interest in future by the British taxpayer, is the subvention which goes to Northern Ireland each year to ensure that it has the same

economic framework, if not the same economic returns, as the rest of the country. First come the so-called balancing payments from London to level up the industrial and social benefits paid out by the Stormont government. National insurance payments of £l7 million are the largest of these sums, with social security payments, such as family allowances, taking £lO million—the same amount as that distributed in regional employment premiums. A further £2 million is given in remote-area grants. Ulster gets £25 million in direct agricultural subsidies. The Treasury then adds "assumed deficit” for Northern Ireland’s nominal share of external affairs and defence of £75 million. So the grand total is £139 million for a population of million. The sum would be even larger if customs and excise duty were added.

Problem For Republic However expensive Ulster may seem to the rest of Britain, the burden of keeping Ulster’s population in the style to which it has become accustomed would crush the Republic of Ireland if it ever attempted to take on the six counties. For life is harder in the south. The Republic, with just about double Ulster’s population, allowed £49 million for education in its last budget, where Stormont allocated £5l million. And the current social services aijd health expenditures are £82.5 million for the south and £126 million for the north. • While the man at work in the north is clearly better off, with average weekly earnings in manufacturing industry running at £l6 Is 2d against £l4 6s 3d in the south, for the unemployed—the important thing for so many Ulster families —the difference is even greater. The out-of-work Ulsterman with a wife and two children can get £9 4s a week from his labour exchange, not counting other redundancy benefits; the man in the south gets only £7 18s 6d. The difference in benefits for dependants is best exemplified by Ulster’s £lO a week for a widow with two children compared with the republic’s £5 6s.

Bar to Migrants It is this financial advantage which has undoubtedly stopped many of Ulster’s Catholic minority from moving south. Indeed, even after the past riots have left many of them without a home only a few hundred have crossed the border to toe Irish Army’s tented field hospitals. All this is recognised in official Dublin, even if romantics choose to ignore it The best guess is that if Ulster were to join the Republic tomorrow and its welfare system were applied throughout Ireland toe Dail would have to double its current budget. For the farmers in the south, where farming is still three times more important than it is in toe north, there are long-term and complex hopes of financial benefit if, and when, both Britain and the two Irelands enter a wider European common market If the traditional cheapfood policy of British governments had to be changed then not only would the south s farmers enjoy higher incomes than at present but toe Republic’s government would be relieved of the considerable subsidies, such as the estimated £5O million paid out last year to export foodstuffs. However much Republican extremists may dislike it, the United Kingdom still absorbs 70 per cent of toe south’s exports and provides 50 per cent of its imports. Since toe Republic has recently moved up to become Britain’s fourthbest customer it is very much in everyone’s interest not to disturb things too much. But relatively little direct trade is done between the two portions of Ireland. As Dublin is not the natural customer for many of Belfast’s more expensive products—yet toe Republic’s merchant marine has not yet got round to operating giant oil tankers — precious little trade goes from north to south. Ulster’s exports to toe Republic were worth under £2O million last year (4.1 per cent of the south’s imports), but the south managed to sell toe north £42.9 million worth (12.9 per cent of southern exports). Dublin’s Loss As it is, Dublin’s own civil disorders, although minute by Belfast’s standards, may have given an unwanted push to the post-troubles situation that toe Republic’s economy can least stand—a fall in tourist traffic. Last year the Republic contrived a satisfactory balance of payments solely because tourism contributed a record gross £93 million to invisible earnings. This year at least £lO5 million was forecast: it is not likely to be achieved. There is a growing suspicion that potential visitors are not as sound In their knowledge of history as they might be and have been confusing north with south, or actually imagining them to be the same country. This tourist downturn gives a new urgency to Dublin’s secret trade pact negotiations with Russia, Poland, Czechoslovakia and Bulgaria. Belfast has congratulated

itself in the past because It builds as many houses each year as toe south does, and because, thanks to the welfare benefits, the migration pressure is less. But now. it will have to tighten its belt somewhere to help pay for the riots. The barricades which blocked Belfast's normal access to Ulster’s first motorway may thus have been an unwitting symbol of the scrapping of pre-riot priorities. New roads, schools and houses have been the chief ways in which Ulster has lately built up its admittedly sadly depleted social capital at three times toe rate of that in the rest of the United Kingdom. New Workers

When winter slows regular employment it has been the Stormont government’s policy to initiate a series of winterwork programmes. That could suffer this time. More important, each year Ulster’s farms, shipyards and traditional engineering plants shed 5000 workers, and a further 4000 young people come on to toe labour market from school. Increases of 1000 jobs a year in construction and 3000 in service industries have left an annual balance of 5000 to he taken up by new manufacturing industries. For toe last 10 years Stormont has managed, at the expenditure of much of its and Whitehall’s resources, to create an average of 3300 new jobs each year. It is not likely to do as well now.

Migration, the traditional resort of the Irish, seems to be the only answer, although it is one which no Ulster politician has yet found the courage to advocate in public. Each year some 7000 people are guesstimated to leave Ulster for good, but in each of the last 10 years its population has increased by 10,000. And those who leave are, by the nature of all such migrations, the younger and better qualified sections of society—indeed many of them give up good jobs in Ulster to go to better ones elsewhere. The Stormont officials’ own calculation is that if toe present migration rate were doubled it would only reduce toe unemployment rate by 1 per cent Even so, a policy of increased emigration is now occupying much more attention in the planners' minds than the rioters realise.

Ulster’s normal inducements to attract industry from overseas are already in some trouble. Regional development schemes in Britain were catching up even before toe riots. There are also those in Northern Ireland who fear that within toe very seeds of success, such as the tremendous expansion in man-made fibre production, may be contained the conditions of a one-industry predominance which leaves such a small-scale economy particularly vulnerable.

As one of the men responsible for successfully shifting Ulster’s textile industry from its traditional flax and cotton to the new chemically-based fabrics said: “Things have gone well, but we could be making man-made fibres into the shipyards of the 1980 s." And in a Belfast still grimly trusting that Harland and Wolff can maintain its place among the great yards of the world that is quite a warning. Growth Figures But there is one important economic advantage which is being quietly nursed by Ulster's backroom boys. It is a simple equation, but one which shows that Ulster has stolen at least an occasional march on the rest of the United Kingdom. Industrial production has been rising at a significantly higher rate than in Britain (an average annual growth of 6.4 per cent between 1982 and 1966 compared with 3.8 per cent for the whole of (he country), mainly because of an investment boom. In 1966 —toe last year for which detailed estimates are available—it is believed that fixed investment amounted to 30.6 per cent of gross domestic product in Ulster, compared with around 21 per cent in Britain. This is the sort of investment rate which ought to bring swift economic development to a country which still has a large unemployed labour force. Unfortunately, industrial investment is the thing which the troubles are likely to hit above all.