1. “Jobs, What jobs?” Plenary CESI conference 24 April 2013 Dr Esmond Birnie, chief economist www.pwc.co.uk

2. PwC Key messages Was an employment boom during early 1990s to 2008 Since 2008 40,000 jobs lost (about one-third of the gain during 1998-2008) Even more so than rest of UK, NI economic recovery slow Even when “recovery” is established the trend rate of employment growth likely to be low Unemployment likely to remain at current levels, or higher, for foreseeable future High skill/STEM demands, shrinking low skills sectors, and some cases of over supply April 2013 Slide 2 CESI Inclusion conference

3. PwC Context- global and UK economic outlook CESI Inclusion conference Slide 3 April 2013

4. PwC Global outlook for 2013+ remains mixed - stronger growth in emerging economies but Eurozone continues to struggle Source: OBR for UK, PwC for others EC for RoI Russia Germany UK US Brazil India Spain Key Canada Mexico South Africa Australia Japan Italy Greece Ireland France 1.9 2.0 3.6 3.0 -1.4 0.2 1.1 0.6 0.4 -1.2 2.9 6.0 -4.2 2.5 8.0 1.0 3.8 x.x = GDP growth in 2013 China April 2013 Slide 4 CESI Inclusion conference

5. PwC Northern Ireland labour market outlook CESI Inclusion conference Slide 5 April 2013

6. PwC What happened over the last two decades... Employee jobs June 1993June 1998June 2008Dec. 2012 Total545,730613,250733,020693,340 Public sector197,960195,120218,440212,910 Private sector347,770418,130514,580480,430 CESI Inclusion conference Slide 6 April 2013 Source: Quarterly Employment Survey Two periods- “golden age of growth” (early 1990s to 2008) - followed by slump (since 2008) Boom started before mid 1990s or 1998 Initially, the employment growth was private sector led but latterly public sector- public sector peaked in Sept. 2009 at 225,330 About one-third (40,000) of 1998-2008 growth has since been lost

7. PwC One driver- recent NI economic growth performance... Recent growth rates of NI’s GVA: 2010 0.8% 2011 0.3% Estimated/forecasted growth of NI’s GVA (Note- under historic trend): 2012 -0.3% 2013 c. 0.2% 2014 c. 1.4% 2015-20 c. 1.5/2% CESI Inclusion conference Slide 7 April 2013

8. PwC What might happen to employment growth... Early 1990s to 2008 trend growth c. 12,000 p.a. Even once “recovery” established much lower trend growth likely, 3,000 p.a. Corporation Tax (see the report to DEL 2012): -Likely net impact on employment growth (+ FDI but – public sector) probably would have been lower than sometimes claimed -In any case, now very much “postponed” Probably, no other “game changers” out there Executive needs to avoid sacrificing “productivity” for “jobs” CESI Inclusion conference Slide 8 April 2013

9. PwC Relationship between changes in employment and changes in unemployment April 2013 Source: QES/Nomis CESI inclusion conference Slide 9

10. PwC NI claimant count, what can we reasonably forecast? Currently c. 64,800 (similar to August 1980 and May 1997, compared to low of 23,500 in August 2007) Unemployment likely to increase further and then a slow decline. Why: -NI’s economic growth slower than UK average -Unemployment a lagging variable -Even in boom may need several jobs to take one person off count Out-turn subject to: -Eurozone (hence RoI) -GB recovery (hence extent of migration) -Speed and impact of welfare reform CESI Inclusion conference Slide 10 April 2013

11. PwC Re. what kind of jobs... In the “golden age” of employment growth (1990s to 2008) was some growth of low skill/low wage (e.g. in retail, business services and, latterly, construction) Many of those jobs lost since 2008 That type of growth not likely to recur though, tourism CESI Inclusion conference Slide 11 April 2013

12. PwC Some uncertainties The UK “productivity conundrum” i.e. Employment decline in the downturn and since probably less than would be expected but how far does this apply to NI as well? Impact of welfare reform on JSA? Given trend in GB- some more public sector employment reduction likely in NI Increased participation by some groups in GB, e.g. Older workers, how far does this apply in NI? CESI Inclusion conference Slide 12 April 2013

13. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2013 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Dr Esmond Birnie Chief Economist, PwC (in NI) 028- 90415808 07850-907892 esmond.birnie@uk.pwc.com