Statement from Minister Murphy - economic vision

Leas-Cheann Comhairle, in setting out my approach to the economy it is important to be honest about the challenges we face.

The problems of our low employment rate, low productivity, low wages, and severe regional imbalances have deep roots.

But they can be overcome.

Many of the key levers needed to tackle these issues, including the regulation of financial services, trade policy, monetary policy, and fiscal policy are reserved in London.

However devolution provides significant control over business support, skills, innovation policy, and employment law.

As a small region we are well placed to tailor support to local industries through partnership and co-design.

In addition, as a result of the Windsor Framework we alone can export goods to the British and EU markets, without the frictions and paperwork that others now endure.

The Windsor Framework also protects the all-Ireland economy, which has tremendous unrealised potential.

So there are opportunities for change.

Economic Mission

In order to use our limited resources and powers effectively, strategic focus is critical.

I am setting four key objectives as part of a new Economic Mission.

New Decade, New Approach recognised that “good jobs, where workers have a voice that provides a level of autonomy, a decent income, security of tenure, satisfying work in the right quantities and decent working conditions, should be integral to public policy”.

Accordingly, one objective is to increase the proportion of working-age people in Good Jobs.

It is not acceptable that being in work does not guarantee a reasonable standard of living. This is particularly the case for women and people with disabilities, who disproportionately make up the low-paid.

We can increase the number of people working in Good Jobs by:

• investing in affordable childcare and fair pay for childcare workers
• creating more and better paid apprenticeships and skills academies
• replacing zero hour contracts with contracts that provide flexibility and protect workers rights
• strengthening the role of trade unions, particularly in low-paying sectors
• altering our economic structure by supporting industries that provide Good Jobs.
• harnessing the unrealised potential of the Social Economy.
• And improving careers advice, including in schools, so that people are fully informed about the opportunities available to them.

Another objective is to promote Regional Balance.

Everyone, no matter where they live, should have the same opportunity to earn a living.

A number of areas suffer from economic disadvantage.

The North-West in particular has long had a low level of employment, despite having huge potential for growth.

We can create a more regionally balanced economy by:

• setting local economic targets and funding local economic strategies that are designed in partnership with councils and local enterprise agencies, and that are based on local strengths and potential
• offering greater financial incentives for inward investors and for indigenous companies that are expanding, to locate in areas that are underdeveloped
• developing industries with a strong sub-regional presence such as tourism, hospitality and manufacturing
• building the portfolio of land and property for business development in disadvantaged areas
• And driving forward delivery of projects that improve regional balance, such as the expansion of the Magee Campus, and City and Growth Deal projects.

A third objective is to raise Productivity.

Because productivity is a fundamental driver of overall living standards.

Output per worker here is 11% lower than in Britain and according to a recent study by the Economic and Social Research Institute, almost 40% lower than in the south of Ireland.

We must close this gap by:

• using dual market access to grow domestic exports and to attract highly productive FDI
• developing all-Ireland clusters in high-productivity sectors
• improving work-relevant skills, including through upskilling workers and increasing the number of students in further and higher education
• working with businesses to adopt productivity-improving technology such as AI and robotics.
• supporting R&D, and driving innovation through collaboration across government, academia and the private sector.
• and improving management practices.

The final, critical, objective is to reduce carbon emissions.

Colleagues are well aware of the legal and moral obligation to reach net zero by 2050 at the latest.

Done right, the transition to a greener and more sustainable economy can be a just transition that also generates prosperity for all.

We can build a green economy by:

• increasing our energy efficiency
• becoming self-sufficient in, and even an exporter of affordable renewable energy. We have the resources including wind, biomethane and geothermal to do this
• breaking the link with global commodity prices and ensuring that people and businesses pay a fair price for the energy produced locally 
• collaborating strategically on the opportunities and investments needed to realise our energy aspirations on the island of Ireland, within the Single Electricity Market.
• establishing a Net Zero Accelerator Fund to help plug the funding gap for projects that are not fully financed by private sources.
• developing the circular economy and taking advantage of the opportunities that exist to reduce waste, reduce cost and increase both collaboration and competitiveness across the island
• and using Investment Zone funding to support green technologies and the skills needed for a green economy.

Independent experts

In taking forward this important work it will be useful to have independent experts to advise on how, at a strategic level, these objectives should be pursued, and also to help monitor progress.

Four people who combine academic rigour with real-life practical application will act as Critical Friends.

On Good Jobs, Dr Lisa Wilson from the Nevin Economic Research Institute.

On Regional Balance, Dr Conor Patterson from the Newry and Mourne Co-operative and Enterprise Agency.

On productivity, Dr David Jordan from the Productivity Institute.

And on Net Zero, Professor David Rooney from the Centre for Advanced Sustainable Energy.

Invest NI

My Department’s Economic Development Agency has a key role to play in delivering this mission.

Invest NI has many highly skilled and highly committed people, but as the Independent Review confirmed the organisation must restructure and refocus its activities if it is to be effective in the time ahead.

There are three particularly important aspects of this reform.

First, attaching stronger conditions and incentives to its support for business, in line with the Mission I have set.

This may involve requiring a company to:

• recruit people who want to come back into the labour market, particularly people from underrepresented groups
• locate in a disadvantaged area
• or decarbonise its operations.

Secondly, Invest NI needs a new regional structure dedicated to home-grown SMEs and start-ups.

It should provide a similar service to that previously provided by LEDU, and that provided by Enterprise Ireland in the south.

Regional Offices must work on an inclusive basis and in partnership with Councils, the business community, trade unions, and Local Enterprise Agencies.

Thirdly, Invest NI must develop industries as well as individual firms.

Because fostering collections of interconnected companies, whether that is clusters, networks, sectors, or industries, will have a more significant impact and will help us turn the dial on key economic indicators.

Businesses operating inside clusters have higher levels of innovation, productivity, and resilience.

These benefits are particularly high for small firms.

To capitalise on these opportunities, we will work in partnership with industry and academia to develop sectors such as Advanced Manufacturing, Life and Health Sciences and Low Carbon.

Conclusion

Leas-Cheann Comhairle, this new approach to Economic Strategy involves:

• using the Windsor Framework to grow local exports and attract better quality FDI.
• taking full advantage of the all-Ireland economy
• genuine collaboration with business representatives, trade unions and academia
• and setting a clear Mission of a highly-productive, zero carbon, regionally balanced economy with Good Jobs.

In order to deliver this strategy Invest NI will:

• strategically use conditions and incentives as part of its work with businesses
• support SMEs and start-ups in collaboration with Councils and other stakeholders
• and develop clusters of businesses rather than just individual companies in isolation.

Working with our expert advisors, my Department will move at pace to put this vision into action.

Its focus will be on delivery.

We have a lot of work to do to turn this economy around.

That work starts now.

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