I was invited on to BBC Nolan this week on the back of a perfectly innocent comment that the focus of the new flight from Belfast to Berlin, contrary to media reports, should not be “tourism”.
This quite obvious point, to which I added that Tourism is almost universally an industry of low value added and consequently low wages, caused some debate. That debate is important, because it is at the core of Northern Ireland’s economic failings.
Let us firstly be very clear that low wages are a problem. It is staggering that we should have to be clear about that, but it appears some people have forgotten. Low wages do not just mean that people struggle to get by, but also that they are more vulnerable to external shocks – such as the decline of Sterling putting up the cost of living or removal of tax credits. Given that their time is already taken up working, and they will generally lack transferable skills due to an educational system which does not value vocational training sufficiently, they have no flexibility to deal with such external shocks, and are thus thrust towards serious debt (and, in too many cases, real marginalisation). Northern Ireland has the lowest wages in the UK, and low wages are, in other words, the single biggest scourge in Northern Irish society.
To make an obvious point, therefore, all our economic efforts should be placed into increasing wages. However, this cannot be an artificial thing. You increase wages by increasing the value of what the economy produces. To make again what should be an obvious point, if you provide services and products of high value, people will pay you more for them, enabling you to pay higher wages. That ultimately, for example, is how a country like Denmark ends up paying its workers higher wages than even the UK as a whole (even when Sterling’s exchange rate is favourable), despite the fact they work fewer hours.
In the industrial age, Belfast was very good at the high-end stuff, of course. We know, from past generations, that high-value industries inevitably deliver higher-value output and thus the ability to pay higher wages. But that was then and this is now.
Another peculiarity to point out a week after results came out is that Northern Ireland has the best qualified school leavers in the UK (excluding Scotland, admittedly, which cannot be meaningfully compared), yet has the worst qualified workforce. Let us ask an obvious question: if Northern Ireland were a land of high-value industry paying high wages, would this be so?
So, it is established that Northern Ireland has a serious brain drain, and that it has the lowest wages in the UK. Surely no one disputes this is a problem?
Tourism is of course a useful by-product of direct links to places like Berlin. However, it is in generally a low-value-added industry (primarily because it does not require bespoke skills in the way that computing, finance or manufacturing do). Therefore, it pays low wages. This is not an “insult” and it is not specific to Northern Ireland – it is true of the tourism industry everywhere. Countries and regions which focus on tourism, such as in Southern Europe, experience their own problems with low wages and a brain drain. Countries which focus on other industries, such as Denmark above or, to use another obvious example, Germany itself, enjoy higher wages.
So, to make an obvious point again, a direct link from Belfast to Berlin should not be and is not primarily about tourism (although, to emphasise, that is a useful by-product). It is primarily about creating a direct link to a growing economy, in association with which we may be able to create considerable wealth to create high-skilled, high-wage jobs right here at home – perhaps most obviously in this case in the creative industries and all associated aspects (which potentially even include computing for animation, finance for project management, and bespoke manufacturing for things such as the tools in Game of Thrones), to use a really obvious example.
There are lots of really obvious examples and really obvious answers there! The key to creating air links to Germany, promoted countless times on this blog, is not for Northern Ireland to remain a peripheral low-wage economy. It is for Northern Ireland to become more central, more innovative, more skilled, and fundamentally wealthier. To set a really obvious objective…
A guest blog will follow explaining why much of what I have written above is nonsense…