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Allison Catalano

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Ciara Crummey

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James Black

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Mairi Spowage

Research Theme Lead for Data Management

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International trade is vitally important for regional growth and understanding how trade interacts with local supply chains, which is necessary for developing business and trade policy. The Northern Ireland Department for the Economy has a “10x Economic Strategy” which seeks to, as one of its goals, increase and diversify the exporting business base in Northern Ireland.

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 Fraser of Allander Institute at the University of Strathclyde a chance to dig into some characteristics of businesses at a detailed sectoral level.

In particular, we sought to answer two questions:

1. What is the scale of employment supported by exporting in Northern Ireland, and what is the nature of this employment, particularly with regard to gender?
2. What is the nature of exporting versus 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 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 allows us to improve upon that previous modelling and examine the differences between exporting and non-exporting firms in Northern Ireland.1

What is the scale of employment supported by exporting in Northern Ireland, and what is the nature of this employment, particularly with regard 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 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 the indirect effects of exporting in input-output modelling are overestimated, as are the direct effects of employment and GVA, which we explain in more detail below. We have used microdata to explore these differences, leading to the second part of our study. As we explain, the approach we have taken helps demonstrate the importance of using Northern Ireland specific data when attempting to understand the impact of trade on Northern Ireland.

What is the nature of exporting versus 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 are nearly double for all exporters compared to non-exporters, indicating significantly higher wages. 78% of all imports to firms 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 based on averages are likely to be higher than is the reality.

Links to wider CITP research

This project also supports our CITP research theme on trade and employment. In this, the teams at Strathclyde and Sussex aim to define the estimated number of jobs supported by exports to different destinations and with different characteristics of employees. Using linked microdata, we are looking to decompose the Input-output table for the UK, and in time for smaller geographies as part of the UK, into exporters and non-exporters, which will allow us better to understand the different supply chains and employment that exporters support in the economy.

This work can help support trade policy and the negotiation of Free Trade Agreements with a significantly more detailed understanding of how changes to trade policy could positively or negatively impact people with different characteristics in the labour market, different types of firms, and different parts of the UK.

Footnotes

1. This study was funded through a grant from the ESRC and NISRA and made possible thanks to data provided by ADR UK. Read the full report