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Are Redundancies a Sign of Northern Ireland Job Market Downturn?

In the last month four major employers in Northern Ireland have announced redundancies.

This could see more than 1,000 jobs being lost.

Last week Ulster Bank said up to 250 jobs in Northern Ireland would go as a result of the bank winding down its operations in the Republic of Ireland.

Meanwhile, earlier this month manufacturers Seagate and Norbrook announced redundancies impacting 116 and 180 people respectively.

Call centre operator Firstsource is also planning to cut about 500 posts across homeworkers and its offices in Belfast and Londonderry after the loss of a contract.

This is the first run of large redundancies since the pandemic and inevitably raises the question of whether the labour market is entering a downturn after a significant recovery.

At the outset of the pandemic there were genuine fears of big spike in unemployment as many businesses were forced to curtail their operations.

That was largely avoided due to extraordinary government intervention such as the furlough scheme – but jobs were still lost.

The number of people on company payrolls in NI fell from 753,000 in March 2020 to 736,000 by the end of the year.

The unemployment rate jumped from a record low of 2.4% just before the pandemic to 4.3% in the summer of 2021.

But as pandemic restrictions were eased the jobs market quickly went into recovery and has not been noticeably derailed by the spike in inflation.

In April this year there were just under 786,000 people on company payrolls and the unemployment rate was down to 2.5%.

On most other measurements the jobs market has showed a near complete recovery and for many employers the biggest challenge has been finding the staff they need to grow their businesses.

But the rash of redundancies has coincided with some tentative signs of weakening in the official data.

The number of people claiming unemployment-related benefits has been ticking up since early this year.

In April 37,500 people were recorded on the NI Claimant Count, an increase of 3.8% compared to March – the largest monthly increase since the beginning of the pandemic.

And while the payroll number is far above its pre-pandemic level it actually showed a small monthly fall in April, down from 790,000 to 786,000.

The jobs market has “cooled slightly relative to 2022” said Mark Magill, labour market expert at the Ulster University Economic Policy Centre.

However, he emphasised that across the economy employers are still trying to hire.

He has looked at job vacancy numbers in Northern Ireland and said while they had fallen since 2022 they remained above pre-pandemic levels, and were “in excess of pre-pandemic levels to a greater extent than any other UK region.”

He also pointed to recent employer surveys which highlighted that a majority of Northern Ireland firms said they were still actively recruiting.

What are the prospects for those people facing redundancy in the coming months?

Mr Magill is cautiously optimistic that the jobs market will provide new opportunities.

He said redundancies were classified as “involuntary job separations” which also covered people who were sacked or did not have a contract renewed.

There are typically between 4,000-6,000 of these involuntary job separations in Northern Ireland in any given quarter but Mr Magill says “the vast majority” of people affected find alternative employment.

“In a tight labour market where three quarters of local employers are actively recruiting, the risk of long spells of unemployment and ‘scarring effects’ are reduced,” he added.

Source : BBC