A report released on Tuesday by the Economic and Social Research Institute (ESRI) has claimed that the prosperity gap between the Republic and Northern Ireland is widening in favour of the Republic.
The report, an Economic overview of Ireland and Northern Ireland, was commissioned as part of the Institute’s research programme with the Shared Island Unit, Department of the Taoiseach, and published by the government think tank.
It provides a high-level comparison of the economies of Ireland and Northern Ireland (NI) in recent years. The report covers a broad range of dimensions including demographics and labour market trends, living standards, economic structures, education, health, and overall well-being.
It notes that the Republic’s population is growing faster than NI’s, largely due to strong net migration in recent years. This has resulted in Ireland having a younger population, with a lower old-age dependency rate, it claims.
It also reports on shifts in the labour market over time, stating that labour market participation in Ireland has increased significantly since 2010, widening the gap with NI. In 2022, the participation rate of those aged 16-64 was 76.8% in Ireland compared to 72.4% in NI. Employment rates in Ireland overtook NI in the period after the financial crisis, reflecting Ireland’s strong recovery. However, it states that Ireland’s labour market is more volatile than the North, experiencing larger swings in unemployment, migration, and NEET (not in employment, education, or training) rates.
Using household disposable income controlled for prices, the study found that based on 2018 data, total disposable income was €5,400 higher in the Republic than in Northern Ireland, equating to an 18.3 per cent advantage after taking prices into account. The gap has widened over time, according to the report.
Ireland’s GNI* per capita in 2022 was 57% higher than NI’s GDP per capita, reflecting stronger economic growth, while in terms of wages, the data show a positive gap favouring Ireland, with hourly earnings 36 per cent higher than in NI in 2022.
While wages are higher, it is the case, according to the publication, that Northern Ireland’s residents pay significantly lower income tax than those in the Republic – more than double at €2,980 in NI vs. €6,725 per capita in Ireland.
Corporate tax receipts per capita in Ireland (€5,760) are over five times those in NI (€1,018), reflecting the dominance of multinationals.
Ireland also allocates a higher share of government expenditures to health (26.3% in Ireland vs. 17.3% in NI in 2022/23) and education (10.7% in Ireland vs. 9.5% in NI in 2022/23).
The report also gauges sectorial and productivity differences, with the North having a higher share of people in public sector employment (29.2% in NI vs. 25.3% in Ireland).
Employment in Ireland is more heavily concentrated in high-value added sectors like ICT and financial services (9.8% of jobs in Ireland vs. 5.4% in NI), whilst manufacturing in the Republic accounts for 44% of gross value added, over 2.5 times NI’s share.
Labour productivity in the North also lagged that of Ireland in most sectors. While NI is more productive in ‘construction’ and ‘agriculture and ‘forestry and fishing,’ labour productivity in Ireland is more than 2.5 times NI’s, with the gap particularly influenced by the role of foreign-owned firms in Ireland.
The study also explored education and healthcare, detailing how education enrollment rates are higher in the Republic across all age groups, citing 2022 data which showed that only 71% of 15–19 year olds in NI are in education vs. 94% in Ireland, a gap of over 20 percentage points.
Early school leaving rates have dropped in Ireland (from 5% to 2.7% between 2018 and 2022) but increased in NI (from 9.4% to 10% between 2018 and 2022). Overall, early school leaving rates are 3 times higher in NI than in Ireland.
Inpatient and outpatient waiting lists were similar for those waiting between zero and six months for treatment in 2024; however, the rates for longer durations are much higher in NI. 86 per 1,000 people in NI on waiting lists for 18+ months, compared to 12 per 1,000 in Ireland.
Life expectancy also differed. In 2021, life expectancy for children aged below one in Ireland was 82.4 years compared to 80.4 years in NI, a gap of 2 years. As was the case with many other key metrics, the gap between Ireland and NI in life expectancy has also been widening over recent years.
Adele Bergin, an author of the report and an Associate Research Professor at the ESRI, said: “Ireland has experienced stronger economic growth, higher wages, and higher living standards in recent years. The gap in economic performance and well-being indicators between Ireland and Northern Ireland is widening.”
Seamus McGuinness, an author of the report and a Research Professor at the ESRI, commented: “The report provides a contemporary analysis of relative economic performance of both economies and allows for differences, in both the levels and evolution of key performance metrics, between Ireland and Northern Ireland to be better understood.”