Invest NI review shows high proportion of workers excluded from labour market in Derry, calls for regionally sensitivity

A newly-published report by the Independent Review of Invest NI shows Derry & Strabane had the fifth lowest number of VAT/PAYE-registered businesses in the north in 2021.

There were 5,390 such businesses in the district (7% of the total in the north).

The review recognised what it described as 'very different levels of inequality' and the high proportion of workers in Derry who are ‘involuntarily excluded from the labour market’.

"Economic inactivity (working age) varies from 19% in Lisburn City and Castlereagh to 36% in Derry City and Strabane," the report states, noting that nearly 1 in 5 (19%) of the population have no qualifications in Derry and Strabane.

It adds: "A quarter or more of the working age population in Derry City and Strabane (29.5%) and Belfast (24.9%) are employment deprived. These are people who are involuntarily excluded from the labour market."

The authors said Invest NI needed to be ‘sensitive to and understand the different needs and opportunities of the various sub regions’ in the north and that preferred Foreign Direct Investment locations can be influenced though effective engagement between open-minded firms and the agency.

"We heard a case study from a successful FinTech company whose investment in Derry demonstrated that a combination of market pressures (especially for scarce labour skills) and Invest NI cooperation with an open-minded company can influence location.

"At the very minimum this points to the need for effective engagement and cooperation, perhaps founded on a stronger acknowledgement for Invest NI to be sensitive to and understand the different needs and opportunities of the various sub regions,” the report states.

The authors acknowledged larger cities will ‘exert greater gravitational pull when attracting FDI’.

But they pointed out how Enterprise Ireland – Invest NI’s counterpart in the south – has been much more successful in ensuring a more even spread of FDI.

“Discussions with EI suggested they have had some success in encouraging a wider spread of FDI investment. It argues that this has been achieved by commitment to that outcome and measures to ensure the focus of senior management on the desired outcomes,” the report states.

Research undertaken by Technopolis, in support of the review, did find, however, that over a three-year-period there was considerable employment growth in Derry and Strabane as a result of Invest NI funding.

“Belfast, Derry City/Strabane, and Mid-East Antrim are characterised by high employment growth rate (35% on average), whereas Lisburn, Newry/Mourne and Antrim have the smallest rates (14% on average),” the report states.

The authors made a series of recommendations: NI needs an economic development agency and Invest NI is best placed to take this forward;

Profound change is needed that requires reform and repurposing;

The agency is having limited impact on productivity;

There is considerable room for improvement in leadership, structure, operation, control and public accountability;

Stronger governance and oversight is required from DfE with better strategic and policy direction;

Strengthening public understanding of Invest NI work and how it uses public monies is crucial; and

The agency needs to be a better partner, particularly in the sub-regional context.