International trade is vitally important for regional growth and understanding how trade interacts with local supply chains is necessary for developing business and trade policy. Northern Ireland represents an interesting case in examining UK trade policy, given the recent changes to its trade arrangements. Northern Ireland recently released some novel datasets to researchers for the first time, allowing us at the FAI a chance to dig into some characteristics of businesses at a detailed sectoral level.
In particular, we sought to answer two questions:
- What is the scale of employment supported by exporting in Northern Ireland, and what is the nature of this employment, particularly with regards to gender?
- What is the nature of exporting vs non-exporting firms in Northern Ireland, at a detailed sectoral level?
In the past, we looked at the relationship between exports and the labour market in the UK, examining how many jobs across each region of the UK were supported by international trade, using input-output (IO) modelling. Understanding how employment differs between exporting and non-exporting firms is especially valuable, but past research into exporting and the labour market in the UK is sparse. Gaining insight into this interaction allows researchers, businesses, and policymakers to identify which groups in society are potentially benefitting the most from trade and which groups may be getting “left behind.” This new research, available here allows us to improve upon that previous modelling and examine the differences between exporting and non-exporting firms in Northern Ireland.
What is the scale of employment supported by exporting in Northern Ireland, and what is the nature of this employment, particularly with regards to gender?
To understand the scale of employment supported by exporting, we used Northern Ireland’s 2018 input-output tables, which show purchasing and sales volume between industries, households, and abroad, and data on employment by gender and sector.
In 2018, Northern Ireland sold £17.7 billion in goods and services to Great Britain and internationally. Producing these exports requires the use of products from supply chains across Northern Ireland. Including these supply chain impacts, we estimate that Northern Ireland’s exports supported £27.5 billion in output, £11.8 billion in Gross Value Added (GVA), and nearly 170,000 full-time equivalent (FTE) jobs. This means that 1 out of every 4 jobs in Northern Ireland is either directly related to or supported by exporting.
However, we found that only 29% of the jobs that are either directly or indirectly supported by exports are held by women. By comparison, 47% of jobs are held by women across Northern Ireland’s economy. This is significant, as it means that expanding exports may disproportionally benefit men.
That said, there are some limitations with this methodology. These estimates rely on industry averages and do not explore the impact of differences in the characteristics of exporting and non-exporting firms. We find that it is likely that indirect effects of exporting in IO modelling is overestimated, as are the direct effects of employment and GVA. This demonstrates the importance of using Northern Ireland specific data when attempting to understand the impact of trade on Northern Ireland. We have used microdata to explore these differences, leading us to the second part of our study.
What is the nature of exporting vs non-exporting firms in Northern Ireland, at a detailed sectoral level?
Examining the nature of exporting and non-exporting firms in Northern Ireland, we found that exporting firms, as a whole, account for 54% of all business turnover in Northern Ireland while employing only 35% of workers. Exporting firms furthermore account for 55% of all purchases and 50% of GVA. Employee costs per employee is nearly double for all exporters compared to non-exporters, indicating significantly higher wages. 78% of all imports go to exporting firms. In total, productivity – here measured by GVA per employee – is around £58,000 in exporting firms, compared to £32,000 in non-exporting firms. Higher labour productivity means our estimates of the jobs supported by exports are likely biased upwards.
This study was funded through a grant from ESRC and NISRA and made possible thanks to data provided by ADR UK. The report can be viewed here.
James is a Fellow at the Fraser of Allander Institute. He specialises in economic policy, modelling, trade and climate change. His work includes the production of economic statistics to improve our understanding of the economy, economic modelling and analysis to enhance the use of these statistics for policymaking, data visualisation to communicate results impactfully, and economic policy to understand how data can be used to drive decisions in Government.
Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.