Although David Cameron’s comments about Northern Ireland’s over-dependence on the public sector have done nothing to help the ill-fated UCUNF project, they are entirely appropriate comments and needed to be made. Northern Ireland is grossly over-dependent on the public sector.
Some of this over-dependence is understandable. Spending, per capita, on policing and security, for example, is still higher than in the rest of the UK despite the so-called “peace process”. But spending on healthcare, per capita, is lower than Scotland.
However, the main reason we eat up so much public money is not just because of public sector employment – it’s also because of massive social security payments – largely because a big chunk of our work-force is economically inactive.
Moreover a disproportionate percentage of our “economically active” are in fact not active at all – they are public sector workers. Public sector workers do not produce anything – they merely consume. The extent to which they contribute to the economy is purely through spending their wages: consuming retail goods and services.
NIPSA general secretary Brian Campsfield seems to think otherwise - implying there is some type of merit in having a large percentage of the work-force employed by the public sector – and that the private sector has in some way failed in the competition for employment.
Over on the BBC web site he’s quoted as saying: “[David Cameron's] faith in the ability of the private sector to provide sufficient jobs to replace thousands of jobs that would be lost to the public sector is sadly misplaced…the private sector in Northern Ireland relies heavily on public subsidy and yet its “entrepreneurs” have failed to create sufficient high value employment.”
These comments must surely rank up there as among the silliest assessments of Northern Ireland’s economic woes. Mr Campsfield seems to believe that entrepreneurs are overtly focused on creating employment – and that they somehow fail if they don’t. Entrepreneurs, in fact, avoid employment as much as possible because it is expensive. Moreover, entrepreneurs may not have the ability to employ the local workforce if that workforce simply doesn’t have the necessary skills to sustain revenue. In an economy where a huge percentage of the workforce is inactive or employed by the public sector, the private sector hasn’t much in the way of rich pickings. Moreover, given the nature of the workforce itself it yields very few entrepreneurs. Northern Ireland has an enterprise averse workforce – and a workforce unable to sustain high growth, high employment businesses – unless some drastic action is taken.
As for subsidy, the fact is that private businesses benefit little from state subsidy – indeed such subsidies are outlawed under European law. Businesses that thrive here do so despite government rather than because of it. Business taxation is substantially higher than in the Republic of Ireland and costs of doing business are higher here than in other parts of the UK. Despite this, Northern Ireland has produced some highly viable export focused businesses. However, not enough.
The public sector in Northern Ireland is like pond-weed – it creates the impression of healthy vegetation but, ultimately, it has the effect of crowding-out everything else. It starves the pond of nutrition. In many respects this is the effect that over-dependence on the public sector has had on Northern Ireland’s economy.
That’s not to say that public sector workers aren’t essential. Of course they are. But without the private sector there is no GDP to be divided. The private sector creates ALL of our wealth – but very little of the UK’s private sector wealth is created here in Northern Ireland. Something must be done to change that. Perhaps a reduction in the block grant will focus minds on the basic law that without real employment there can be no public sector employment. Very few of our politicians are prepared to admit that. More worrying, many don’t even know it.