Investment
“Recognising the opportunity for economic growth, including in green growth technology which allows us to achieve net zero, harnessing new innovations in technology, Foreign Direct Investment growth, and supporting local businesses to scale up and improve productivity, we will realise the ambition of the proposed £150 million Investment Zone.
It will offer incentives and funding to help our industries and communities seize the many opportunities including those that arise as we transition towards net zero as part of our commitment to tackling climate change.” Programme for Government (PfG)
The PfG represents an attempt to stimulate growth through the promotion of ‘clusters’ of high value-added jobs in the high-tech, high skills sectors such as data management, pharmaceuticals, ‘green’ technologies, and the FIRE sector (Finance, Insurance, Real Estate). The unspoken aim is to follow the economic path taken by the Irish Republic, a tax haven with an economy effectively run by multinational enterprises. In 2022, foreign-owned MNEs in Ireland employed 27.2% (623,128) of all employees while the remaining 1.7 million workers working were employed in the ‘other’ sectors of the economy, which is predominately made up of the ‘domestic non-traded’ sectors. The wage gains that have accrued to the ICT sector in the Republic’s economy have been enjoyed by a small percentage of the workforce.
There is a great deal of doubt that a political project aimed at following the example set by the Republic can work. The goal of improving the performance of the NI economy by attempting to lure high-tech (mostly American) businesses to set up shop in NI, while orienting the entire economy, the media, schools, and NI’s two universities towards the development of high-tech start-ups, may not be easily met, especially in an era when regions, and even cities in the same region have been set in ruthless competition against each other in the search for FDI and ‘entrepreneurial’ edge. What will be presented as a race to ‘add value’ and bring prosperity to all might result in a race to the bottom in terms of workers’ wages and conditions.
But even if some version of the high-tech cluster economy was to emerge in NI, it would be likely that a bifurcated workforce would emerge as has happened in Dublin, with gains from high-tech and high-wage employment accruing to small segment of the population, and not to the broad-based workforce. Likewise, the clustering of high-wage workers in Belfast would put huge pressures on housing and rental prices. An increased polarisation between high-skilled and low-skilled workers in an economy owned and controlled elsewhere, would be a recipe for the kind of tensions currently being seen in the Irish Republic, or perhaps something worse.
In relation to the proposed £150 million Investment Zone, we note that this has been tried before in many guises, and due to their reliance on market mechanisms, previous attempts to bring ‘good jobs’ to NI by this method have failed. We note that Enterprise Zone in Coleraine closed shop in June 2024, having attracted one tenant since it opened for business in 2017 and costing ratepayers £3million. Enterprise Zones have not been successful, even by Thatcherite profit-driven standards. According to a Report by the thinktank, Centre for Cities, between 2012-19 Enterprise Zones in England saw creation of the 13,650 jobs, not all of which were attributable to investment as a result of EZ incentives. In addition, those jobs that were created were mostly low-skilled activities in local services such as retail, and not the high-skilled, export-oriented jobs touted by the government. Again, we ask, who benefits from this government largesse? The PfG document suggests that everyone wins when there is ‘job creation’ and profit-making. For example, Economy minister Conor Murphy has “outlined my preference that this initiative should support our green technologies and skills for a green economy. Done right, the transition to a greener and more sustainable economy can be a just transition that also generates prosperity for all."
The Workers Party believes that this money should be spent directly on job creation, rather than on efforts to woo foreign capital to Northen Ireland, which can leave any time, as may businesses have in the past. To expect the future to be different from the past because we hope that any jobs created will be ‘high-tech’ and ‘green’ is to indulge in wishful thinking, to put it mildly. The Workers Party is opposed to large sums being spent on Investment Zones because the evidence shows that they fail to create good jobs and are costly to workers and citizens but highly remunerative to large businesses. For example, the Centre for Cities (2019) reported that historically, Enterprise Zones in the UK did not create many jobs, the jobs that they did create were concentrated in urban centres, and that each private sector job cost the public purse £28,500, i.e., £1.21 billion in total (2010/11 prices), 90% of which was given over to rate relief and capital allowances for businesses.