The Ulster University Economic Policy Centre (UUEPC) has published a new report Job creation in Northern Irish firms. The report takes into account recent debates and movement in policy around scaling, to assess how firms grow rather than why, analysing firms’ growth path, to better understand the growth process.

Focusing on employer firm births, the report uses individual firm-level records to track job creation, job retention and job loss over time. The report identifies how prevalent job creation is amongst new firms; the extent to which job creation is concentrated within a small group of firms; and how the pattern of job creation compares for firms of differing survival lengths.

Between 2007 and 2021, a total of 67,628 employer firms were established in Northern Ireland, with the majority (64%) operating in the service sector. These firms typically started small, with a median size of 1 employee and a mean of 4.5 employees at birth.

Analysing the gross components of job creation and loss over this period revealed that employer births created a total of 301,000 jobs in their birth year. Those that survived generated an additional 192,000 jobs, while those that closed removed 114,000 jobs. Those that survived but contracted resulted in a further loss of 125,000 jobs.

Overall, employer births created nearly half a million gross jobs between 2007 & 2021, resulting in net job creation of 253,000 jobs after accounting for job losses.

The report also shows that between 2007 & 2021, there were around 11,000 employer firm births in the 10X priority sectors, with approximately 5,300, surviving to 2021. The survival rate of firms in these sectors combined was higher than the service sector in general and than those in the wider economy.

Combined a total of 52,000 gross jobs were created in the 10x sectors between 2007 & 2021, 60% of which were created by firm births. The Digital, ICT and Creative sector accounted for most employer births and jobs created. With 7,500 employer firm births in total, the sector was responsible for almost 3,000 gross jobs and15,000 net jobs, 59% of the 10X total.

Previous research by UU economists suggests that firm births in the ICT sector have higher productivity than the NI average while the sector has a higher-than-average birth rate suggesting it will play a pivotal role in helping to deliver the 10X strategy.

UU Economists reported that the timings and consistency of job growth among employer firms, showed some stable patterns. Typically, those firms that survived up to 10 years, job creation was a rare, one-off event and usually occurred early in the firm’s lifecycle.

The report shows that firms that neither created nor lost jobs represented a relatively large, although diminishing share, from 52% of firms with 3-year survival to 16% of those with 10-year survival.

Longer survival correlated with more growth episodes, but growth trajectories were diverse, and linear consistent growth was a rare occurrence with the report finding that even those that survived 14 years, the highest number of job creation episodes per firm was six.

Multiple job creation episodes were linked to larger firms at birth, while smaller firms generally had no job creation episodes during their lifetime.

Speaking on the report, Dr Karen Bonner(pictured above), Principal Economist, EPC said: “In Northern Ireland job creation has been a policy lever to help grow the economy but to date we know little about the ‘how’ of firm job creation in terms of when and how often firms generate employment over their lifetime.

To this end, this project seeks to understand both the extent of job creation in Northern Ireland since 2007 and the job creation history of businesses.”

Consistent with previous research, the overall results point to growth occurring in younger firms, with the majority of jobs created in their birth year, and that subsequent growth episodes were more prevalent in the firms’ infancy. UU Economists suggest that potential policy interventions should consider both the age and size of firms rather than solely focusing on small firms.

Dr Bonner added: “Effective interventions could focus on firms with static job patterns over their lifetime, as they represent the most commonly observed pattern. Whether firms survived for 3 years or 10 years, a significant proportion of them exhibited static job patterns, indicating a lack of significant job creation or loss.

Programs supporting job growth could establish entry criteria based on various factors, including business characteristics, employment history, and the growth mindset of the owner.”