The skills gap and Northern Ireland's economic future

Northern Ireland's economy faces a pressing skills gap, impacting productivity and growth. Collaborative efforts between business, government, and education are crucial to addressing this workforce challenge, writes Christine Patton

Despite the good news stories of a strong jobs market and low unemployment rate across the Northern Ireland economy, attention has turned to skills and the skills gap challenge faced by many sectors and employers across the region.

Skills are generally broken down into three categories:

1. Basic skills – those that everyone needs, including literacy, numeracy and basic digital skills.
2. Essential skills – those which are transferable and applicable to almost any job, such as communication and teamwork.
3. Technical skills – those which are specific to a sector or role and are not easily transferred.  

But how important are skills to Northern Ireland’s economy? Arguably, there is nothing more important for our economic success. 

For an economy to thrive, it needs a sufficiently skilled workforce across all three of the above categories. It also needs a high level of productivity – something Northern Ireland has struggled with, consistently falling behind that of its UK counterparts. Education and skills development are key drivers of productivity.

Increased well-being also contributes to local economic development, with skills significantly correlated with life outcomes.  

However, there are challenges to achieving a sufficiently skilled workforce. Given the rate of acceleration of new technologies, sustainability targets, an ageing population, and the growing emphasis on placemaking, developing the skills pipeline and closing the skills gap will not be an easy task.

For employers specifically, it can be a struggle to attract the right people with the skill sets required.

The 2024 Business Barometer report published by Open University in partnership with the British Chambers of Commerce, has found that nearly half (44%) of organisations in Northern Ireland are still reporting worrying skills shortages.

In recognition of the skills imbalance and the challenges employers face, the Institute of Directors, in partnership with Grant Thornton, MCS Group and SONI, established a Skills and Workplace Forum to identify key skills issues.

To promote prosperity and flexibility to respond to future opportunities, the report made five recommendations:

1. Reduce economic inactivity – Northern Ireland must widen our labour market, increasing our talent pool to better support employers to build diverse, more successful teams.
2. Greater engagement with schools – Northern Ireland needs to improve the targeting, timeliness, effectiveness and efficiency of all age career guidance. We need new ways of informing and motivating young people and adults about careers and skills for a lifetime of work.
3. Improve access and widen participation – We need to change how we think about learning and skills and be responsive to all young people’s circumstances as well as new and emerging technologies and trends.
4. Make childcare work for everyone – The Northern Ireland Executive needs to provide specific support to community-based social enterprises (such as women’s centres) to scale up sustainably, enabling them to provide affordable childcare solutions to parents in Northern Ireland.
5. Change access to the apprenticeship levy – We need to change how the apprenticeship levy operates locally so it’s ringfenced for labour market partnerships, skills and lifelong learning (similar to Skillnet).

As we look towards the future of the Northern Ireland economy, skills shortages must remain to the fore.

To make progress in closing the skills gap, there must be a genuine partnership between business, government, education, and training providers.

All parties must play a key role in stimulating the local skills system through strong collaboration and engagement to work towards a better future and, as the Skills Workforce Forum report put it, ‘realise the full potential of our workforce, which is our greatest asset’.

Christine Patton is Manager of Economic Advisory at Grant Thornton NI