There are less people out of work in Northern Ireland as there has ever been, which on the one hand is excellent news, but the cost of living crisis is causing great insecurity among workers. The increasing cost of fuel bills and food bills will inevitably lead to pressure for wages to rise, which could also lead to higher inflation, so the economy is in a very delicate state at this moment in time.
Unemployment in the last quarter, January to March, fell to 2.3%, which is where it stood back in February to April 2020 just before the Covid pandemic had such an effect on the world.
Earnings Growth Is Lagging Well Behind Inflation
The problem for employees is that earnings growth is lagging well behind inflation and it is believed many thousands more people could dip below the poverty line over the next few months.
As Ulster Bank chief economist Richard Ramsey pointed out in an article in the Irish News:
“This figure (the latest monthly pay figures) is inflated, as the comparison with last year was during the furlough scheme. The latter included workers on just 80 per cent of their salaries so the strong rebound is off this low.
“Nevertheless, the earnings growth will continue to lag well behind inflation. The expectation is that inflation will exceed 10 per cent in the coming months, which will represent a 40-year high.
“The unprecedented cost-of-living squeeze, exacerbated by tax increases, will quickly take the gloss off the current state of the labour market.”
Job Security But Severe Cost Of Living Insecurity
He added: “We are living in the strange world of unprecedented job security alongside severe cost-of-living insecurity. This is a new phenomenon for the UK and Northern Ireland economies.”
He went on to say that: “Almost two-thirds of the 22,000 jobs growth over the last two years has been within public sector activities, and this source of employment growth has arguably run its course,”
But that: “A savage cost-of-living crisis will incentivise an increasing number of economically inactive who can work and need to work into employment, which should push Northern Ireland’s economic inactivity rate to a record low in the year ahead.”
It is imperative that the government do everything in their power to alleviate the strain on people`s finances that the cost of living crisis is imposing, doing nothing will only lead to great suffering and ever more pressure on wages to go higher and higher. Help now could save a lot of problems further down the line.