Economic and well-being gaps between Ireland and Northern Ireland ‘widening’

The gap in economic performance and well-being indicators between Ireland and Northern Ireland is widening, a report has found.

The research found that Ireland is outperforming Northern Ireland in most areas, including labour market trends, living standards, economic structures, education, health and overall well-being.

New research, published by the Economic and Social Research Institute (ESRI) and commissioned as part of the Institute’s research programme with the Shared Island Unit, Department of the Taoiseach, provides a high-level comparison of the economies of Ireland and Northern Ireland in recent years.

The research recognises that the economies north and south on the island are distinct in important structural respects.

Northern Ireland is part of the wider UK economy, with significant implications for trade and public policy.

Ireland, on the other hand, is a national-level economy and an EU member state, so direct comparisons between the two will not always be on a like-for-like basis.

Insights

Nevertheless, the research provides a range of insights on the relative performance of both economies over recent years.

The report found that Ireland’s population is growing faster than Northern Ireland’s, largely due to strong net migration in recent years.

This has resulted in Ireland having a younger population, with a lower old-age dependency rate.

There have also been shifts in the labour market over time.

Labour market participation in Ireland has increased significantly since 2010, widening the gap with Northern Ireland.

In 2022, the participation rate of those aged 16 to 64 was 76.8% in Ireland compared with 72.4% north of the border.

Employment rates in Ireland overtook Northern Ireland in the period after the financial crisis, reflecting Ireland’s strong recovery.

But due to the Irish economy’s highly open nature, the country’s labour market is more volatile than Northern Ireland’s, and experiences larger swings in unemployment, migration, and NEET (not in employment, education, or training) rates.

Living standards

Turning to living standards and income, the report found widening gaps in all commonly used measures of living standards and these gaps favour Ireland.

It focuses on reliable measures of living standards that are not distorted by globalisation effects, which is important for Ireland.

Household disposable income in Ireland is 18.3% higher than in Northern Ireland and the gap has widened over time.

Ireland’s Gross National Income (GNI) per capita in 2022 was 57% higher than Northern Ireland’s Gross Domestic Product (GDP) per capita, reflecting stronger economic growth.

In terms of wages, the data show a positive gap favouring Ireland, with hourly earnings 36% higher than in Northern Ireland in 2022.

While Great Britain remains Northern Ireland’s largest trading partner, the north’s trade with Great Britain has declined since 2015, while trade with Ireland has increased.

Tax

On a per capita basis, Northern Ireland residents pay significantly lower personal income tax than those in Ireland, which is 2,980 euro in Northern Ireland compared with 6,725 euro per capita in Ireland.

Corporate tax receipts per capita in Ireland, which is sitting at 5,760 euro, are more than five times those in Northern Ireland, reflecting the dominance of multinationals.

Ireland allocates a higher share of government expenditure to health, with 26.3% in Ireland compared with 17.3% in Northern Ireland in 2022/23, and education, with 10.7% in Ireland compared with 9.5% in Northern Ireland in the same period.

Northern Ireland has a higher share of pubic sector employment, while employment in Ireland is more heavily concentrated in high-value-added sectors such as ICT and financial services.

Manufacturing in Ireland accounts for 44% of gross value added, more than 2.5 times Northern Ireland’s share.

Labour productivity in Northern Ireland lags behind that of Ireland in most sectors.

The report found that Northern Ireland is more productive in construction, and agriculture, and forestry and fishing.

Labour productivity in Ireland is more than 2.5 times compared with north of the border, with the gap particularly influenced by the role of foreign-owned firms in Ireland.

Education

Across all age-groups in 2022, education enrolment rates are higher in Ireland than in Northern Ireland.

The report shows that some 71% of 15 to 19-year-olds in Northern Ireland are in education compared with 94% in Ireland, a gap of more than 20 percentage points.

Early-school-leaving rates have dropped in Ireland, from 5% to 2.7% between 2018 and 2022, but increased in Northern Ireland, from 9.4% to 10% between 2018 and 2022.

Overall, early-school-leaving rates are three times higher in Northern Ireland than in Ireland.

Inpatient and outpatient waiting lists were similar for those waiting between zero and six months for treatment in 2024, but the rates for longer durations are much higher in Northern Ireland.

Some 86 per 1,000 people in Northern Ireland are on waiting lists for 18-plus months, compared with 12 per 1,000 in Ireland.

Life expectancy is an important indicator that tends to encapsulate the impacts of multiple well-being determinants across a range of areas including income levels, educational attainment and access to health services.

In 2021, life expectancy for children aged below one in Ireland was 82.4 years compared with 80.4 years in Northern Ireland, a gap of two years.

As was the case with many other key metrics, the gap between Ireland and Northern Ireland in life expectancy has also been widening over recent years.

Adele Bergin, an author of the report and an associate research professor at the ESRI, said: “Ireland has experienced stronger economic growth, higher wages, and higher living standards in recent years.

“The gap in economic performance and well-being indicators between Ireland and Northern Ireland is widening.”

Seamus McGuinness, an author of the report and a research professor at the ESRI, said: “The report provides a contemporary analysis of relative economic performance of both economies and allows for differences, in both the levels and evolution of key performance metrics, between Ireland and Northern Ireland to be better understood.”

‘Absorb’

Taoiseach Micheal Martin said the Irish government will “assess and absorb” the report.

Asked for his reaction to the report, Mr Martin said: “It illustrates similarities, complementarities, difference, and we just should take the material as it is.

“I think the Northern Ireland Executive will take the material in terms of its plans for economic development in the north and so forth.

“We, likewise, will assess it and absorb it.

“But I think it’s good work by the ESRI and there’s pluses and minuses within the report, some of it is not a surprise, but I think some of it, insofar as it applies to the post-Brexit era, is interesting in terms of the exports and imports both ways.

“But suffice to say, the British market is still extremely important, and I think the relationship between Ireland and Great Britain is very important, north-south is very important.

“That tripartite relationship is key, and research of this kind shines a light, and also indicates where we can co-operate and work together to deal with the challenges facing citizens.”