Dr. Stephen Farry:

I thank our guests. I will make a few observations and invite the witnesses to respond to them. It was interesting to hear the comments about there being some parallel with Germany. Obviously, the island of Ireland has seen major economic change over the century where historically Northern Ireland or what was previously the north of the island was the economic and industrial powerhouse; it has gone through very significant industrial decline alongside many other economies. To what extent has Northern Ireland perhaps not had the same opportunity to transform in the way some of the other modern economies in Europe have due to the legacy of violence and division? To what extent has this been a drain on our situation?

Another aspect that might be worth commenting on is the different approach to inward investment in the two parts of the island. In a very crude sense, it could be differentiated in the sense that the south of the island benefits from what one would call the attraction of profit centres due to the lower level of corporation tax. That tends to bring in the more productive economic activities whereas due to the more limited fiscal levers, Northern Ireland is more dependent on bringing in what are effectively cost centres. The model in Northern Ireland is based upon providing skilled labour at a low cost and a more competitive rate than would be the situation in other places. It is a combination of quality and comparatively lower costs than one would find in places like the US.

Regarding some of the other structural aspects of the Northern Ireland economy in addition to the points around division in terms of education and the lack of higher education graduates, difficulties also lie in terms of lower levels of exports and a much higher level of economic inactivity. Between that and unemployment, we have a relatively low percentage of labour force participation. The real pressure point in terms of skills is not necessarily at the graduate level but just below graduate level in terms of levels four and five involving the higher-level technical skills. We have a good further education offering but that is where the real pressure lies in terms of investment in skills.