Senior economist questions whether unemployment levels will rise in Derry as thousands come off furlough

A senior economist has told Derry councillors that the City Deal will help to combat rising unemployment levels in the city.

Dr Eoin Magennis, from Ulster University’s Economic Policy Centre, gave a presentation to Derry City & Strabane District Council.

He provided an overview of Derry’s economic performance in recent years in comparison to NI as a whole.

The meeting was told that there were historic lows in unemployment and claimant count in 2019.

But Covid-19 led to a sharp rise in claimant count rates in 2020.

As of May 2021 figures sat at 6,115 or 6.5 per cent of the labour workforce – the highest of any council area in the North.

Almost 4,000 local jobs were still furloughed at the end of May, Dr Magennis said: “The question is what happens to those over the next number of months as supports begin to be tapered.”

Economic inactivity has remained higher than the NI average for the past decade and more, he explained.

It sits five per cent above the NI average at 31 per cent.

Moreover, students who aren’t able to find employment will now fall into the inactive category.

CITY DEAL

Looking to the future, the population is expected to reach 155,000 by 2030.

With an anticipated City Deal ‘bounce’ there is the potential for an additional two per cent increase amounting to 2,800 more people by 2032.

City Deal investment is expected to attract more students, people taking up jobs and locals will be able to stay and work whereas they had to migrate for work in the past.

The City Deal is also projected to generate an additional £240m for the local economy.

In a best case scenario there could be 5,200 new jobs by 2030 and in a worst case scenario growth by just 600 jobs.

Growth will be driven by ICT and Health - contributing around 1,100 to 2,400 job - allowing for better wages and incomes by 2032.

Research centres at Ulster University’s are seen as a key part of that.

However, retail is under ‘significant pressure’ with a forecast of 900 jobs lost in a worst case scenario and 600 in a best case.

The manufacturing industry to a lesser extent which could see the loss of between 100 and 800 jobs.

Under the City Deal 7,200 jobs could be created by 2032, with residents filling 70 per cent and commuters and migrants the rest.

“Employability supports in the Inclusive Future Fund will be crucial in getting people up to Level 4 qualifications,” Dr Magennis said.

He pondered what opportunities might emerge in the wake of Covid for redevelopment of the city centre.

“Does the decline of retail offer other opportunities city-centre wise.  That is a question that I suppose the council will grapple with.

“And what opportunities might come from remote working.”

QUESTIONS

Aontú Councillor Emmet Doyle said he was surprised there was no mention of the NI Protocol and impact that might have on the local economy.

The senior economist said the protocol is being dealt with as an ‘ongoing uncertainty’ in line with Brexit.

Businesses want to see the final shape of the protocol and ‘opportunities’ will have to be examined, he added.

SDLP Councillor Sean Mooney, said retail is one of the main drivers for the region making up around 16 per cent of the workforce.

He cited the recent revelation by the Derry News that the Richmond Centre had gone into receivership and asked if anything can do be arrest the decline.

Dr Magennis said retail is a ‘very important’ sector but looking at its future is ‘tricky’.

“The point made about the Richmond Centre probably highlights that.  We go through phases with these shopping centres where they become very popular and then fall out of popularity.

“It seems to be difficult at the moment for older shopping centres to continue to renew themselves.”

The UU professor added: “Our town centres are changing with a shift to cafes operating beside retail.  Whether or not we can see ourselves reinvented as recreational centres of which retail forms one part.”

UUP Alderman Derek Hussey asked if it was fair to refer to the City Deal as an urban project because it was initially sold as being of ‘benefit to the entire council area’.

Dr Magennis said that the employability measures included in the Inclusive Future Fund will allow many jobs to be accessible across all parts of the community.

And rural areas benefit from supply chain opportunities and local enterprises.

Sinn Féin Councillor Sandra Duffy said up-skilling the workforce will be critical to get people back into employment.

She also asked what remote working will mean for Grade A office space such as the newly built blocks at Ebrington.

There will be a ‘hybrid model’, Dr Magennis suggested, with people working from home a number of days and in the office other days.

It is older office space that will suffer more, he predicted.