Brexit: On our terms · Brexit – on our terms The Republic of Ireland will not be immune from the effects of Brexit: already, it is clear that the fall in sterling is making exports

Brexit: On our termsUnite Strategy to Defend Jobs, Investment

& Employment Rights

Unite the Union, Ireland RegionFebruary 2017

www.unitetheunionireland.orgwww.unitetheunionireland.org

(JN7741) HB030117

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Brexit: On Our Terms

Unite Strategy to Defend Jobs, Investment & Employment Rights

CONT EN T S

Foreword by Len McCluskey Page 5

Brexit – A historic challenge Page 6

Unite’s approach to Brexit negotiations Page 7

Moving Article 50: The Legal Position Page 9

Brexit does not simply mean Brexit Page 11

Economic Impact: Opportunities and Threats Page 13

Impact on Northern Ireland Page 15

Impact on the Republic of Ireland Page 20

Case Study 1: Industrial Manufacturing, Northern Ireland Page 23

Case Study 2: Agri-Food, Northern Ireland Page 25

Case Study 3: Agri-Food, Republic of Ireland Page 27

Case Study 4: Financial Services, North Page 31

Unite Proposals – Northern Ireland Page 32

Unite Proposals – Republic of Ireland Page 34

www.unitetheunionireland.org

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your union campaigned tirelessly against Brexit because we knew the threat it posed to our members, not onlyin Great Britain and Northern Ireland, but also in the Republic.

In the few short months since the United Kingdom voted to leave the EU, many of our warnings have already beenproven correct. Not only has there been an economic impact, with sterling losing twenty per cent of its value –there has also been a frightening increase in the level of hate crimes and xenophobia, typified by some of themore outrageous proposals made at the Tory party conference.

While we campaigned for a Remain vote, Unite accepts the result and has not argued for a second referendum.Rather, our focus is and will continue to be on making Brexit work for you, our members; defending jobs,ensuring continued investment and employment rights plus a seat at the table – a voice for workers.

Unite recognises that many working people don’t feel that Freedom of Movement has benefited them butthat’s no reason to sling single market access at the risk of workers’ livelihoods. There are better alternativeswhich address legitimate concerns and protect our economy. We are seeking the restoration of collectivebargaining and for unions to be given a role in safeguarding terms and conditions so we can ensure a ‘ratefor the job, not a race to the bottom’.

What does that mean in practice? It means that Great Britain and Northern Ireland will be lobbyingWestminster and Stormont to ensure that we retain tariff free access to the single market, free movement oflabour and – crucially – all the EU labour market protections and workers’ rights we now enjoy.

Brexit – on our terms

The Republic of Ireland will not be immune from the effects of Brexit: already, it is clear that the fall in sterlingis making exports to Britain and Northern Ireland more expensive, putting pressure on the local economy inborder areas as custom is lost to Northern Ireland. at the same time, depressed demand in Britain andNorthern Ireland resulting from Brexit will have a negative impact on the economy and, therefore, on ourmembers in the Republic.

There is a very real danger that the uncertainty caused by Brexit will depress both investment and consumerspending – resulting in a substantial setback in the Republic's economy, putting our members’ jobs and livingstandards in jeopardy. That is why Unite will continue arguing for the state to fill the investment gap, and formeasures to redistribute resources to low-income groups who spend their income in the local economy –securing all our livelihoods.

Unite will argue for state assistance to enterprises on both sides of the border to help respond to the Brexitshocks. However, workers must be actively involved in this process. There must be a democratic partnershipbetween employees, employers and the state. Workers are not by-standers in all this. Decisions made abouttheir jobs, working conditions and their workplace cannot be made without them.

We did not want Brexit. We campaigned against it because we feared the impact on our members North andSouth. But now that we have Brexit, we will be doing what Unite and the trade union movement does best –working to ensure our members’ livelihoods are protected and promoted. Whether organising in the workplace,standing shoulder-to-shoulder with migrant communities or lobbying Governments for investment – Unite willensure that Brexit is made to work for working people.

Making Brexit work for workers:North and South

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Unite Strategy to Defend Jobs,Investment & Employment Rights

Len McCluskey and Jimmy Kelly

Jimmy Kelly,Regional Secretary, Unite the Union, Ireland

Len McCluskey,General Secretary, Unite the Union

Unite’s approach to Brexit NegotiationsDespite the closeness of the referendum result, Unite recognises the validity of the democratic mandate forthe UK to leave the European Union. The people have spoken but we oppose any attempts to portray thisvote as something it is not.

We recognise that very many working-class people in the UK voted for Brexit and they did so for a variety ofreasons. In many cases the vote reflected a rejection of the government’s austerity policies and the failureof successive governments to address the chronic effects of de-industrialisation which have left all too manyparts of the country falling ever further behind.

We also recognise that there are genuine fears about inward migration and the pressures it places on publicservices in disadvantaged areas at a time of severe cuts to funding.

Many working-class communities feel abandoned by the political elite.

Unite is seeking Brexit: On Our Terms both in the UK and Ireland; that is the safeguarding of jobs andprotections and the retaining freedom to movement and trade across borders.

Our voice must be central to any Brexit negotiations.

Nowhere is that more appropriate than in Northern Ireland, the only part of the UK with a land-border with theEU; where the economy and workers are more exposed to the adverse impacts of Brexit than any other part ofthe UK. Northern Ireland voted with a 56% majority to ‘remain’ – a democratic decision which must berespected by all parties.

The decision taken by the UK electorate in the referendum on EU membership to leave (Brexit) is arguably themost significant decision for Northern Ireland since the 1997 Good Friday agreement.

It is vital that the voice of Northern Ireland’s workers is reflected inthe positions adopted by the Northern Ireland Executive as well asby the UK Government.

In the Republic of Ireland, Unite will participate fully in structuresestablished to deal with the impact of Brexit. We will stand againstthose who seek to exploit the threat of Brexit to argue for lowerwages and further attacks on public services. We argue governmentmust be proactive in defending the economy and workers.

While overall Brexit will have negative consequences for theeconomy, both in Northern Ireland and the Republic of Ireland, werecognise that there will be some positive opportunities presentingthemselves. Indeed in order to offset the negative consequences,we need to fully explore new market openings and take advantageof increased powers for governmental intervention to securegrowth in the economy.

Leaving the EU has the potential to transform society and the economy for years to come and will undoubtedlychange relations between Northern Ireland, the Republic and Great Britain. It is vital we get it right.

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Brexit – a historic challengeUnite is the collective voice of over 1.3 million working people, including seventy thousand members inIreland, north and south. We represent a million manufacturing workers in the UK and Ireland.

While cognisant of the many short-comings of the European Union, Unite Executive Council voted tocampaign to Remain as we were fearful Brexit would have serious long-term consequences.

Unfortunately since the vote, nothing has suggested reviewing that opinion:

• Threat of years of uncertainty as new treaties covering trade and migration are negotiated during whichperiod investment would causing a decline in demand and employment in key sectors e.g. construction;

• Potential loss of EU funds which have underpinned the peace and social/economic development ofNorthern Ireland;

• Potential threat of a return to a ‘hard-border’ on the island which may have a destabilising political effectand result in severe economic dislocation (the Republic of Ireland constitutes 16% of NI external sales or37% of its exports, worth £3.6 billion in 2014);

• Limits to freedom of movement of labour throughout the EU including those of UK workers and citizensto pursue opportunities in other EU countries;

• Fear that the Tories would seek to take advantage of leaving the EU to roll-back workers’ rights, humanrights and environmental protections.

In addition to its adverse impact on the UK/Northern Ireland economy and workforce, our union recognisedthat Brexit would represent a particular challenge to the Republic of Ireland. The UK remains the largestdestination for ROI services exports constituting 20% of the total (€20.1 billion in 2014) and is the thirdlargest destination for ROI goods exports (€15.0 billion in 2015).

Given such interdependence any barriers to trade and certainly any tariffs would seriously impact trade andjobs; in particular those in more exposed economic sectors.


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Moving Article 50: The Legal Positionarticle 50 is the formal mechanism that the UK has to trigger to leave the European Union. Contained withinthe Treaty on European Union (TEU), article 50 provides that:

‘Any Member State may decide to withdraw from the Union in accordance with its own constitutional arrangements;A member state wishing to withdraw notifies the European Council and the European Council provides guidelinesfor negotiations which are then used as the basis for the negotiation of a withdrawal agreement.

The withdrawal agreement shall be concluded between the European Council and the State; and TEU and theTreaty on the Functioning of the European Union cease to apply from the date of entry into force of the withdrawalagreement, or, failing that, two years after the notification (unless the European Council unanimously decides toextend this period).’

It is crucial to recognise that there is no going back from article 50; it is a one way street to exit from theEuropean Union. article 50 also means that, without unanimous approval from every other Member Stateof the EU, there are just two years from its triggering to negotiate all aspects of the UK’s future relationshipwith the EU.

If no agreement is reached, the UK simply stops being a member state and would be treated no differentlythan any other country around the world in terms of having no privileged relationship or access to theSingle Market. This would mean falling back to WTO rules and tariffs to access the EU market.

This could be disastrous for both economies in Ireland. Notwithstanding the commitment to issue article 50by the end of March 2017, it is imperative that the UK government avoid triggering the mechanism until it canprovide a clear understanding of what replacement trade arrangements would like look like.

Without knowing what single market access will be, how European Employment law protections will besustained to the benefit of workers, how European regulation will affect the UK economy and the thousandsof other issues that must be determined, article 50 must not be triggered.

The Supreme Court has found that the UK Government requires the assent of parliament to trigger article 50.This is a decision that upholds democracy and offers a mechanism to subject government priorities to account.

Unfortunately the same court did not confirm any role for the Northern Ireland Executive in the Brexit process.

Given the need for the negotiated withdrawal from the EU to protectthe interests of workers and all UK regions, Unite’s policy is that theGovernment should not trigger article 50 without a meaningfulconsultation with the Northern Ireland Executive and those in otherdevolved regions/nations.

The ‘once and for all’ nature of article 50 means that triggering itshould be delayed for as long as necessary if there is to be anyprospect of prolonging departure to achieve the best terms of exit.

The European Commission takes the view that exit negotiationscannot begin until after article 50 has been triggered. That isbecause the original treaty envisaged the European Council issuingguidelines for exit negotiation only after article 50 notification hasbeen given; however that is not a position that is so defined as tobe impossible to change.

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Against inward-looking nationalismUnite is an international union. Through Workers Uniting we represent workers in the United States and Canadaas well as in Britain and Ireland.

We are implacably opposed to those who seek to turn back the clock on multi-culturalism and pervasive labourmobility which underpins so much of today’s globalised economy.

In the aftermath of Brexit, there has been an upsurge in racially-motivated attacks on ethnic minorities in theUK. Hate crimes have increased by 57% in the aftermath of the Brexit vote. The responsibility for this liesfirmly with those who argued for Brexit through a subtext of fear, heightening tensions and providing succourto those who offer nothing but hate.

Unite will stand full square beside those communities who have borne the brunt of these attacks; we willchallenge head-on all those who espouse hate or intolerance of diversity in all its forms.

Defending Worker Solidarity acrossEuropeUnite’s elected workplace representatives sit in more than 150European Works Councils, a level of interaction and collaborationwhich is without parallel in the trade union movement.

This experience, along with our links to trade unions acrossEurope and the world gives our union a unique insight andprovides a platform to promote workers’ employment rightsand to defend decent pay across the continent.

as evidenced only recently through the organisation of the firstpan-European worker demonstration at the regional corporateheadquarters of Caterpillar over job-losses, international worker olidarity is vital in battling global corporations who prioritiseprofits over workers’ rights or jobs.

Such engagements have been fostered by the European Union.Unite will not allow the moves to Brexit to stand in the way ofthis engagement into the future.

Unite will continue to participate on the all-island Civic Dialogue and in other civic platforms which allow us togive voice to workers’ interests on a cross-border basis.

These institutions will be increasingly important in minimising the dislocation and impact arising from Brexiton both sides of the border.


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Brexit does not simply mean BrexitPrime Minister Theresa May has adopted the mantra ‘Brexit means Brexit’ but no-one is able to explain whatBrexit means.

The specific form Brexit takes will mean very different levels of access to the free trade area, ability to controlinward migration and contribution to the EU’s budget. The negotiation appears to pivot on the extent to whichmigration controls have to be balanced off against access to the free market.

On this basis and taken against existing models, there are at least five broad categories of Brexit – each oneof which would have a differential impact on our economy in the longer-term.

1.Brexit – membership of the European Economic Area (EEA) – e.g. Norway• full access to the common market;• full freedom of movement within the EU;• enforce all EU directives/regulations/ECJ judgements without input;• impose EU tariffs on non-EU imports without input;• pay 83% of the UK subvention;• EEa agreements are automatically updated.

2.Brexit – membership of the European Free Trade Area (EFTA) – e.g. Switzerland• Partial access to the common market (not including services) including through 120 bilateral trade agreements;• Full freedom of movement within the EU;• Enforce all EU directives/regulations/ECJ judgements without input;• Impose EU tariffs on non-EU imports without input;• Pay 40% of the UK subvention;• Bilateral trade agreements not automatically updated – become constrained and unfit-for-purpose.

3.Brexit – customs union with EU – e.g. Turkey• Free trade access to the common market (manufacturing and industry only);• Enforce all EU directives/regulations/ECJ judgements without input;• Impose EU tariffs on non-EU imports without input;

4.Brexit – membership of World Trade Organisation with wider trade agreements - e.g. Canada• Extensive trade deal with the EU (CETa) affording mutual market access;• Enforce agreed standards on trade items;• Limited labour mobility up to three years.

5.Brexit – membership of World Trade Organisation without wider trade agreements - e.g. USa or New Zealand• Reliant on WTO trade access only which imposes severe tariffs and restrictions on imports.

There is a vast difference to the potential impact and challenges/opportunities arising from each of thedifferent forms Brexit may take.

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The UK must avoid the seemingly impossible position of not knowing the terms of the withdrawal agreementuntil after it has committed to them by triggering the article. This would seriously undermine the UK’snegotiation position.

Triggering article 50 without knowing any potential outcome the UK would mean negotiating from a positionof huge weakness. Our European partners know that the pressure will be on the UK to agree to terms withintwo years or face the worst possible scenario. Unite’s bread and butter is negotiating and we would neverallow ourselves to negotiate on behalf of our members from a position of such weakness.

Unite will campaign to ensure that article 50 is not triggered until it is clear what is on offer in terms of thewithdrawal agreement with the EU.

Unite will also campaign to ensure that any potential agreement contains the key issues necessary to protectNorthern Ireland’s economy and workers. The government must prepare a negotiating position in consultationwith industry and trade unions, which must seek to defend the interests of all sectors of our economy. Thismust include continuing unrestricted access to the Single Market and commitments to retaining and extendingemployment rights.

It is crucial that ‘Hard Brexit’, motivated by Tory right wing ideology – advocated by those who want to‘leave at any price’ rather than the interests of the people and the economy, is avoided.

Our exporters must not be subject to trading barriers, such as costly tariffs, which threaten jobs and themanufacturing sector in particular.

Unite will not support any withdrawal agreement that does not meet these standards.

Unite proposals:

a) Triggering article 50 should require a meaningful consultation with the Northern Ireland Executive;b) The unknown nature of the Post-Brexit package means the deal sought should be known before

article 50 is issued;c) any exercise of article 50 without knowing the Government’s preferred Brexit terms should be

opposed for fear those terms could harm workers;d) There is nothing in the European Treaty to prevent b) and c) above


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Economic Impact – Opportunities and ThreatsBrexit has the potential to disrupt trade on an East-West and North-South basis. although no governmentor regional authority wants the return of customs posts, such controls could be enforced by the EUCommission in the case where the UK leaves the Customs Union.

If the UK government invokes ‘article 50’ but does not succeed in negotiating a new trading relationshipwith the EU in the next two-years, the rules of the World Trade Organisation (WTO) will come into effect1.This is known as ‘Hard Brexit’.

Under WTO rules trading tariffs could be imposed on trade between the EU (ROI) and UK. For example,for cars this could mean a 10% charge on exports to the Republic and a 4% charge on imports toNorthern Ireland and Great Britain.2

Tariffs would make trading between the Republic of Ireland and the UK far more expensive, causing aninstant downturn for exporters in both jurisdictions on the island. The long-term impact would becrippling, leading to declining sales, less foreign investment and potential offshoring.

There’s mounting concern among many employers for the adverse potential of Brexit. This is particularlythe case for businesses based in both Northern Ireland and the Republic of Ireland.

Adverse impact even without tariffs

If the UK leaves EFTa then we will see some imposition of additional trade controls/bureaucracy. Evenwithout the imposition of tariffs – this will result in an immediate cost to businesses trading or shippingacross the border.

There appears to be some agreement that movement of trade across the border could be controlled andmonitored through technological means although the viability of such a technological solution remainsunclear given the porous nature of the border and the pre-existence of a pervasive, cross-border blackeconomy. Indeed, it is likely that customs controls will only provide additional stimulus to such activities.

The imposition of trade controls will have a serious adverse impact on some agri-food sectors along theborder, notably those involved in milk-processing which draw supplies on a cross-jurisdictional basis.

Long-term Impact on Border economies

Brexit threatens to exacerbate economic dislocation in the border region. The initial depreciation ofsterling has had an impact on trade and consumption patterns. While this is to the benefit of NorthernIreland retailers at present, the uncertainties arising from currency upswings and downturns result inborder areas of both jurisdictions suffering relative disinvestment in the long-term.

Even where the economy responds positively to opportunities for import-substitution within the UKor orients toward new export openings, and if that of the Republic of Lreland succeeds in diversifyingaway from the UK, this will result in further dislocation in cross-border trade - a perhaps unavoidableconsequence of Brexit under all models.

Short-term impacts

Brexit is already having an impact, primarily as a result of the almost 10% devaluation of sterling thatfollowed the referendum vote:

• Retail and Tourism consumption shift from south to north – reducing demand in ROI, increasingdemand in NI;

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1 Swati Dhingra and Thomas Sampson, Life after Brexit: What are the UK’s options outside the European Union? London School of Economics, February2016, URL

2 Gavin Thompson, Daniel Harari, The economic impact of EU membership on the UK, House of Commons Library, 17 September 2013, URL

Associate EU status for NorthernIreland?One alternative to enforcing customs controls across the NI/ROIborder would be to secure some form of ‘associate’ EU statusfor Northern Ireland. This would certainly mitigate many of thepotential adverse impacts (in terms of restricting cross-bordertrade), and potentially allow the region to secure investmentfrom the UK as a ‘bridgehead’ to the EU.

This ‘solution’ would however pose new problems, e.g. difficultiesfor NI production sites working within predominantlyGB-based companies, and threatens the possible imposition ofrestrictions on trade from Northern Ireland to the rest of the UK.Furthermore, such an approach would not address any impactson ROI-GB trade. It appears unlikely that such a proposal wouldbe politically acceptable to both parties in an incoming Executive.

Defending the Common Travel AreaSimilarly there is no clarity on the form migration controls will take under Brexit. although the common travelarea long preceded entry of both states into the EU, as yet, there is no obvious solution to re-imposing somedegree of controls in a context where the Republic of Ireland remains within the EU.

There are three basic approaches – each has its own challenges.


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This would be highly contentious and result in considerable social and economicdislocation. It has the risk of aggravating the political agreement reached on theisland but appears most likely to occur.

1. Impose migrationcontrols on theborder

2. Impose migrationcontrols at theIrish sea

3. Extend UK bordercontrols (partially)to the entireisland

This would involve placing additional restrictions on travel between Northern Irelandand the UK. again, this would be very politically contentious result in significantsocial and economic dislocation – the DUP have indicated that this is a ‘red line’issue for them.

In this approach the UK and ROI would jointly control inward migration to theseislands, with the UK increasing their involvement in controls at Irish airports/ports.Under the model which has been recently discussed, EU nationals would continueto have the right to travel and work in the Republic but would not enjoy those rightswhen they enter Northern Ireland.

Those promoting this approach believe that making EU migrants ‘illegal’ would besufficient to prevent large-scale migration to the UK.

any approach involving the imposition of additional controls on EU visitors is unlikelyto be acceptable to the Dublin government. There is also a potential that NorthernIreland would become a back-door for EU migration to the UK.

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Impact on Northern IrelandNorthern Ireland is a society which continues to deal with the legacy ofconflict. The peace process itself is grounded on the Belfast agreement of1997 which was negotiated in a context where both the United Kingdomand the Republic of Ireland were EU member states.

Brexit therefore poses immediate questions for parties to that agreement,including the Irish government which is a co-signatory and guarantor.Opinion in Northern Ireland is divided on Brexit with both leadingExecutive parties split on the issue. This situation is leading to aconcerning lack of clarity and direction on this vital issue. The currentinstability in the institutions only adds to the vacuum in defending theinterests of Northern Ireland workers and the economy.

The process of Brexit could further destabilise for Northern Ireland particularly in the context whereScotland runs a second independence referendum. What’s more the likelihood of some form of bordercontrols north and south, or east and west, are inherently divisive. Unite seeks to defend freedom oftrade and movement between all parts of these islands – a goal in the interests of everyone living onthe island.

Risk of Economic Dislocation

Northern Ireland’s ability to capitalise from any long-term opportunities may be impaired by structuraldamage resulting from short-term transitional shocks: losing access to EU markets may damage the economyso much that we would be unable to fully grasp opportunities from future non-EU market openings.

The UK government may seek an extension agreement beyond april 2019 to avoid any gap period wheretariffs would be imposed on EU trade but their ability to do so would be contingent on the agreement ofall 27 member states. What’s more the Conservative’s apparent preference for an exit from the CustomsUnion makes even this potentially a moot concern.

In any case uncertainty over the UK government’s negotiating preferences ahead of invoking article 50only adds to the negative economic consequences facing Northern Ireland in the intervening period.

Government intervention to protect the economy

It is vital that the Northern Ireland Executive intervene to support those sectors facing particularchallenges as a result of Brexit. action is needed today.

Such intervention must target those sectors identified in the appendices to this document but shouldalso include a wider demand-stimulus package. The Northern Ireland Executive has some ability toborrow to sustain such a stimulus and there is a strong argument for additional ‘impact’ funding fromHM Treasury above and beyond that administered under the Barnett formula.

Given the disproportionate impact on Northern Ireland, a region suffering from stagnating growth andlying at the bottom of the regional performance leagues under virtually every indicator, there is a strongcase for such additional funding.

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• a drop-off in investment/demand in construction sector in NI as a result of uncertainties;• Demand in some export-oriented NI manufacturers has increased, sustaining jobs and in some cases

resulted in limited additional employment;• Uncertainties and concern among the NI agri-food sector resulting in a threat to immediate investment

decisions – primarily over reduced access to overseas labour;• Difficulties for ROI agri-food as a result of the weaker value of sterling leading to a decline in ROI

exports to NI and GB markets.

There is a need for both governments to do more to support the economy at this time and offset demandcontractions through a stimulus package.

Impact of UncertaintyThere is already mounting evidence that investment decisions are being held-back and delayed due touncertainty over the form and nature of Brexit. This is particularly concerning for Northern Ireland’sconstruction sector which is strongly tied to the British market and threatens a significant downturn innew construction starts. While there may be some opportunity for NI contractors to diversify into newnon-sterling markets on the basis of operating costs, due to sterling depreciation, there are unlikely tosubstitute in the short-term.

It is vital that the Northern Ireland Executive must fully utilise its borrowing powers to bring forwardan expansive programme of public works to cushion the NI construction sector. The impact of suchdiversification will increase competition within the construction sector in the Republic of Ireland. Irishcontractors already face additional domestic competition from Northern Ireland competitors andincreased difficulty winning UK contracts due to the sterling devaluation.

The impact on the Irish Construction industry and its workers is likely to be pronounced and there is a needfor an offsetting programme of public works in the Republic of Ireland to generate demand for this sector.

Opportunities

While we believe that the overall impact of Brexit will be overwhelmingly negative to both economies onthe island, we do recognise the existence of some opportunities:

• Increased ability to provide some form of Selective-Financial assistance to NI Manufacturers;• Scope to orient domestic NI procurement to local companies;• Scope for expanded state intervention in NI economy and stimulus;• Growth of UK agri-food market openings for NI producers;• New trade agreements and growth between the UK and non-EU countries;• Opportunities for ROI to attract investment away from UK/NI;• Opportunities for NI to attract investment/jobs from GB (in context where NI retains preferential

EU market access/status).

Comments by President Trump would suggest a strong likelihood that the UK will be able to accelerate atrade deal with the USa lending impetus to moves to leave the Customs Union (enabling such a deal toprogress). Significant concerns must present over the terms of a trade deal negotiated by a ConservativeParty led by Theresa May and a US administration led by Donald Trump. The experience of the failednegotiations in relation to the EU-US Trans-atlantic Trade and Investment Partnership (TTIP) deal show thethreat posed by such ‘business charters’ to the NHS, public services, workers’ rights and the environment.

Trading with nations that will not uphold our labour standards is not an acceptable solution – that tradewill come with a heavy price tag, certain to be paid in the jobs, rights and wages of working people.


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Unfortunately, simply guaranteeing freedom of movement for students and academics will be insufficientto deal with the adverse impacts associated with the rise in xenophobia following the Brexit vote – asituation which is likely to deter potential applicants or visiting academics from coming. It is vital thatgovernment act decisively to stamp out intolerance and all forms of hate crime.

Community Development Activity and Peace-building

It is also unclear whether the UK government will have a similar focus on community-led regeneration asthe EU has had in the past. as a result the impact on community structures in NI is likely to be profound.Funding under the current Peace programme for Northern Ireland reconciliation projects amounted to£424 million to the end of 2020 with the EU having provided £1.3 billion in Peace & Reconciliation andINTERREG programmes since 1995.

Northern Ireland’s community sector needs continued access to community and regional funds given theneed to mitigate the social and economic dislocation along the border area and the necessary for peaceand reconciliation activities in a society which continues to emerge from prolonged conflict.

Infrastructural Funding

Northern Ireland currently benefits from a number of regional structural funds. Most prominent beingthe Interreg Va programme (2014-2020) which provides €283 million towards economic, social andterritorial cohesion across a trans-national areas including Northern Ireland, the border region of theRepublic and Western Scotland. Other structural funds include the European Regional Development Fund(ERDF); the European Social Fund (ESF); The European agricultural Guidance and Guarantee Fund (EaGGF)and the Financial Instrument for Fisheries Guidance (FIFG).

a number of critical infrastructural investment projects have been taken forward with funding underthese programmes, the loss of access funding poses very serious concerns for capital investment plans inthe future.

Decisions on capital expenditure have already been subject to delay or uncertainty (e.g. york streetexchange, Belfast/Derry Translink Hub facilities) as a result of Brexit.

Protections for Northern Ireland workers

Notwithstanding commitments to transfer in their entirety existing legal provisions and protections,there are well-grounded concerns that workers’ rights could be downgraded once we leave the EU.Should the UK leave the Customs Union, workers would be unlikely to benefit from future right improvementsand ECJ rulings and even if it was to remain in the single-market as it cannot be guaranteed that theiradoption would be a condition for continued market access.

Restrictions on EU labour mobility

The government has threatened registers of EU workers in certain sectors and across-the-board restrictionson their coming to work in the UK. This seeks to play on prejudice against migrant communities and seeksto scapegoat foreign workers for the exploitative actions of employers and the social costs of austeritypolicies.

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EU Structural & Social Funds, Agriculture Programme

For decades, Northern Ireland and the border region of the Republic of Ireland have been net beneficiariesfrom EU membership.

This situation reflects their relative disadvantage, the significance of the agricultural sector, the place ofEU cross-border and regional integration funding and the role the EU has played in underpinning thepeace. The sudden loss of these funds would constitute a serious threat to agriculture, Business, Furtherand Higher Education Providers, Local authorities and the Community Sector.

The EU has played a vital role supporting initiatives through its Peace & Reconciliation programmesand facilitated and underpinned cross-border collaboration and harmonisation through theINTERREG programmes.

The UK government has guaranteed existing funding to 2020 but there are no provisions after this dateand it is unlikely that funding would be replaced by additional spending under the Barnett formula (e.g.Northern Ireland draws down 12% of UK-wide agricultural subsidies compared to a likely 3% allocationunder the Barnett formula).

agricultural producers also face grave uncertainty as a result of Brexit. In addition to the potential threatof tariffs which would make farming inviable for a large proportion of existing farmers, there are concernsover the future provision of direct-transfer payments (necessary to sustain entire sectors of production).Under the current Rural Development Programme, £623 million is allocated for Northern Ireland,£186.5 of which is provided by the EU. Of this total, approximately £70 million is earmarked for the widecommunity through village renewal schemes, rural broadband, rural services and rural business supports.

Impact on Research and Higher Education

Similarly Universities and local authorities may only have partial access to similar funds in the futuree.g. Horizon 2020 or future Interreg funding programmes and will have little input into their formulationand design.

Horizon 2020 provides €80 billion in funding across the EU for the period 2014-2020 for research andinnovation activities, primarily targeted at supporting research institutions but also businesses involvedin innovative activities. In the first eighteen months of its operation, €15.5 million of funding wasallocated to Northern Ireland-based projects. The Innovative Medicines Initiative (IMI) is another areawhere there may be an impact. IMI is a partnership between the EU Commission and the Europeanpharmaceutical industry; the IMI 2 programme provides €3.3 billion for the period 2014-2024, withhalf coming from Horizon 2020.

In many cases, research funding is complemented by structural funding with resources allocated to newfacilities linked to successful research activities. Exiting the EU clearly threatens to impact such synergies tothe detriment of Northeen Ireland’s Higher Education sector.

Probably the most significant threat facing Universities is potential difficulties in accessing global talent.The proportion of non-resident students at Queen’s has risen dramatically over the past few yearsproviding a significant boost to that institution’s revenues.

Moves to apply migration controls on academics or students coming to the UK would have a verydetrimental impact, not only on the funding of higher education institutions but on the academic culture(in which inter-cultural and global exchange are routine).


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services. This will result in a further deterioration in workers’ pay in Northern Ireland.

Northern Ireland doesn’t need a growth strategy predicated on lowering pay to attract investment orstimulate growth. The problem facing the economy is not so much high unemployment as low incomesand low productivity. Improving competitiveness through lowering wages won’t help grow the economy.

Short-term Impact

The drop in the value of sterling means that UK exports are more competitive. This tends to grow marketshare and revenues but will also increase input costs, e.g. rising energy and raw materials costs, wherethese are sourced from outside the UK.

as net input costs are usually a fraction of output sales, the net impact on manufacturing will be largelypositive. However, for those businesses that import substantially from abroad and sell predominantlyin the UK – the impact will be negative. any currency-based benefit accruing to those manufacturersoperating with high input-output ratios will also be unlikely to be sufficient to offset uncertainties.

There looks to be a substantial short-term benefit to the Northern Ireland service sector, specificallyretailers in border hubs such as Newry or Derry/L’Derry. This is likely to lead to substantial growth inturnover and employment in these more labour intensive sectors, as well as secondary demand growth.

The impact on Northern Ireland farmers is likely to be predominantly negative. Sales are normallysterling denominated, inputs are usually imported and constitute a high proportion of sales, meaningfarmers already operating under tight or non-existent margins will be forced to close. Exacerbated byuncertainties over the future replacement for CaP funding from EU, Brexit is likely to result in significant,structural change in NI farming with large numbers of smaller farmers leaving the industry.

a fuller consideration of long-term impacts on agri-Foods, Industrial Manufacturing and the Financesector are provided as case-studies below.

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Restrictions on EU labour mobility

Such policies and the divisive discourse promoted by the official ‘Leave’ campaign have given rise toa surge in xenophobia and hate-crime. Unite stands full-square against such attacks. Instead of suchmeasures, proper safeguards must be introduced for those communities and industries affected by EUmigration by demanding proper trade union recognition and collective bargaining agreements for anyemployer seeking to recruit outside the UK.

We must turn the race-to-the-bottom economy into a rate-for-the-job culture. Together with othermeasures, such as the restoration of the Migrant Impact Fund, this can start to address the concerns onthis issue in communities and in those economic sectors facing deteriorating wage rates and employmentconditions. Restricting labour market mobility threatens to have a very destabilising impact on thosesectors with a business-model dependent on such labour – in particular the agri-Food sector.

Given the proximity of the Republic of Ireland, there are real concerns labour market restrictions willresult in large-scale disinvestment and the loss of employment in Northern Ireland. This is particularlythe case in the agri-food sector where access to labour is a bigger concern than access to the EU market.

Rethinking Corporation Tax and the Race-to-the-Bottom Approach

The keystone of the current economic policy of the Northern Ireland Executive is to lower corporatetaxes in a vain attempt to replicate the ‘successes’ of the Republic of Ireland in the 1990s in securingforeign-direct investment.

Unite has repeatedly argued that this is predicated on a false understanding of the Irish economy andwill not be successful in a period of reducing global investment and trade.

as has been recognised by the Minister of Finance, the Brexit vote and the likely potential that the UK asa whole may adopt a similar approach to lowering taxes on corporations has run a ‘coach and horses’through the Executive’s plans.

Reliance on reducing corporate taxes can only work for peripheral economies where there is a sufficienttax differential to attract investment away from core economies. The UK government’s apparentpreference for a Hard Brexit only increases the likelihood of substantial cuts to corporate taxes as theyadopt mercantilism to leverage advantage over the EU in FDI markets.

Now is the time for the NI Executive to reconsider an alternative course. Instead of cutting taxes and pub-lic expenditure, government must adopt a proactive role, investing in critical infrastructure, skills provi-sion and directly into the economy to promote growth based on expanding demand.

Impact on Workers’ Pay

Northern Ireland already is characterised as one of the lowest paid regions in the UK with median wageshere (£20,247 in 2015) significantly lower than the UK median (£27,703) and a Republic of Irelandmedian (€36,519). It is likely that a downturn in demand will result in a further diminution of pay levels.

The immediate depreciation of sterling in the aftermath of the Brexit vote is likely to be a structural(long-term) feature and it is unlikely that wage inflation will rise to offset the inflation in goods and


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While the DoF has revised downwards growth projections, they are still basing future projections on aSterling exchange rate of 85 pence for 2017 out to 2021 in each year. Given that Sterling is alreadyabove this with a trajectory heading towards parity, more realistic projections are needed.

There were further measures in Budget 2017 that actually undermine a future government’s ability todeal with a Brexit impact; notably, the erosion of the tax base through cuts to USC and inheritance tax.We could see a repeat of the crash when the economy struggled because of a narrow tax base after adecade of tax cutting.

Potential impact on the economy

The DoF has prepared a sectoral impact study which suggests that a number of sectors could be impactednegatively, depending on the eventual terms of the UK’s withdrawal. In addition to the agri-Food sector,which is dealt with in the case study below, particular concern has been raised for the impact on indigenousmanufacturing, retail and hospitality sectors; other sectors that could be impacted are finance,pharmaceuticals, and computer services.

Indigenous Manufacturing

Indigenous manufacturing – in particular, food manufacturing – face potential negative impacts on anumber of fronts: a structural change in sterling, thus increasing the price of ROI goods; any deflatingimpact on the UK economy; and, in the case of the UK losing access to the single market, the impositionof tariffs.

In the food sector, nearly 30 percent of all exports go to the UK market. This is Ireland’s largest indigenousmanufacturing sector and has high multipliers (domestic sourcing). Further, 80 percent of employmentin this sector is outside Dublin and, therefore, plays a large role in this area.

There are other sectors of indigenous manufacturing that will also be impacted: general traditionalmanufacturing (excluding key high-tech, multi-national dominated sectors; the traditional sector canalso include multi-nationals in mid-tech sectors); electrical and materials manufacturingand machinery & vehicles.

Retail

The impact on this sector will be mostly felt in the bordercounties, though it could stretch beyond this. This impactwill be mostly felt through a structural change in thesterling/euro relationship.

In the two years prior to the referendum sterling rangedbetween 0.70 and 0.75. However, since Brexit sterlingplunged to 0.90 (approaching parity). Though it has recentlystrengthened, if it returns to 0.90 and lower it will amountto a structural change.

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Impact on the Republic of IrelandThere is little question that the UK’s decision to exit the European Union will have a substantial impacton the Republic’s economy. This may occur through a number of channels:

• Potential structural change in Sterling, making exports to the Britain/NI more expensive and puttingpressure on retail and hospitality sector in border areas as custom is lost to Northern Ireland;

• additional costs arising from tariffs and administration in the event of losing single market status; • Depressed demand in the Britain/NI which may put further pressure on export sales; • Depressed demand in the EU as a result of Brexit; again, impacting on the export sector.

a wide range of studies have been produced attempting to estimate likely impact on the Irish economyin the absence of ‘off-setting’ actions by government. The most recent (ESRI) forecast3, even on the mostbenign case where the UK remains a member of the European Economic area (EEa), a 2.3% reduction inGDP, a 2.2% reduction in pay and a 0.6% reduction in government balance (as a proportion of total GDP)by the end of the ten year period following conclusion of the article 50 negotiations.

These assessments are based on econometric models which assume static quantitative relations betweeninputs and outputs and estimate a response to changing demand and public sector consumption. as such,these models are inadequate to capture fully the qualitative changes likely to arise from structural andabrupt changes to the economic substructure. There is a risk that these models may under-estimateimpact or neglect factors which may result in short-term but significant changes.

Risks from a Hard Border

The even more difficult question of a ‘hard border’ looms over policy-makers. While a number ofproposals of suggestions have been put forward which, in effect, would provide either the Republic andBritain/NI special status or providing Northern Ireland special status (whether formalised in relation tothe EU or provision of special border and immigration protocols), there is nothing concrete emerging,never mind a consensus.

The risk of continued inaction

While the Government cannot be blamed for the external impact of Brexit, it can be faulted for having,so far, a limited and, in some cases, a non-response. For instance, in a Budget 2017 paper released bythe Department of Finance (DoF), a number of measures were listed as being introduced to limit theimpact of Brexit.

However, many of these measures – such as reducing Capital Gains Tax for small disposals, extension oftax relief for the self-employed and a ‘rainy day fund’ - were announced prior to the referendum resultand, in any event, are unlikely to have any impact on Brexit issues. The ‘rainy day fund’ will only start in2019; by then, the impact of Brexit may have penetrated deep into the Republic’s economy.

a further worrying sign is the Government’s failure to base future projections of economic growth andfiscal measurements (tax revenue, deficit, etc.) on realistic benchmarks.

3 http://www.esri.ie/pubs/WP548.pdf The research considers three cases where the UK trades with the single-market under the EEA, EFTA and WTOarrangements. These result in reductions in UK-EU trade of 23%, 31% and 50% and that FDI-inflows to the UK are reduced by 9.7%, 17.1% and23.7% respectively. The impact of reduced economic growth and trade results in reductions of 2.3% (EEA), 2.7% (EFTA) and 3.8% (WTO) in IrishGDP after ten years – which compares to long-term forecasts of between 1.8% and 3.2% reduction in UK GDP and between 2.7% and 5.5% inUK wages.





Case Study 1: Industrial Manufacturing, Northern IrelandManufacturing in Northern Ireland is a major contributor to the local economy employing more (10.1%) of thetotal workforce than in the UK (7.7%) – although based on the same contribution to national output (9.8%).The sector employs 85,000 workers and, excluding the Food, Beverages and Tobacco sector, generates turnoverexceeding £16.3 billion annually (£12.6 billion outside Northern Ireland).

Total manufacturing sales to the Republic of Ireland amounted to £1.4 billion in 2014 with £1.5 billion to therest of the EU which taken together are only just lower than total exports to the rest of the world (£3.1 billion).any uncertainty over cross-border trade and trade to the EU is likely to pose a very significant challenge tothe sector.

as Professor David Bailey, Professor of Industry at aston University stated, “The least costly option is the closestdeal we can get to the current arrangement, which means retaining access to the Single Market.” 4

Similarly given the scale of trade to the rest of the United Kingdom any proposals which would threaten theability to trade freely across the Irish sea would potentially result in even greater economic dislocation andstructural damage.

The dangers of Hard Brexit for Manufacturing

alternative options being proposed in some quarters including so-called ‘Hard Brexit’ would prove devastatingfor manufacturing workers. One of the most prominent ‘Economists for Brexit’ is Professor Patrick Minford, whoas an economic adviser to Margaret Thatcher is responsible for thirty years of de-industrialisation. It is clearthat Minford sees Brexit as a chance to finish the job.

Minford told a parliamentary committee: “It is perfectly true that if you remove protection of the sort that hasbeen given particularly to the car industry and other manufacturing industries … you are going to have to run itdown. It will be in your interests to do it, just as in the same way we ran down the coal and steel industries.” 5

Writing in The Sun Minford went even further. “Over time, if we left the EU, it seems likely that we would mostlyeliminate manufacturing.” This even prompted Former Prime Minister David Cameron to call Minford’s advice‘disastrous.’ 6

Purchasing Managers Index

Given the lag in economic statistics and the short period sinceBrexit, there are few hard statistics upon which to assess itsimmediate consequences on the Industrial sector; however, thePurchasing Managers Index does provide something of an ndicator.

The latest statistics for November indicate that the short-termboost to Manufacturing resulting from the depreciation ofsterling has not resulted in a huge increase in sales (the indexwas 53.0 in November but only 50.7 in September whichindicated only marginally higher volumes – 50.0 is a staticresult). However, they do confirm that input prices have surged(78.2 in Manufacturing). It is noticeable that both these figureswere higher than the UK equivalents indicating the highlyexposed nature of the NI Industrial sector.

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4 Professor David Bailey, Addressing Unite Manufacturing Combine, July 20165 Patrick Minford, The Future of the European Union: UK Government Policy, Foreign Affairs Select Committee, 2012, URL6 David Cameron, House of Commons, Hansard, 11 May 2016, URL

This would put considerable pressure on ROI retailers as consumers head to Northern Ireland. This will impact on employment, wages and working conditions.

already, the retail sector has come under pressure from on-line shopping. a further potential developmentwould be if consumer spending in the ROI becomes depressed due to concerns over Brexit and/or theimpact on employment in affected sectors.

Hospitality

The hospitality sector could be negatively impact by a potential structural change in sterling. Fortypercent of tourist visits come from the UK and this sector is sensitive to exchange rate changes.

a weak sterling would increase costs for UK visitors. In addition, any reduction in consumer spendingdue to the general impact of Brexit will also affect this sector as restaurant spending is highlydiscretionary.


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Case Study 2: Agri-Food, Northern IrelandMore than 23,500 are employed, directly and through agencies, in food and drink processing industries inNorthern Ireland. The sector accounts for more than 3% of the region’s Gross-value added – or more than£1.1 billion in output.

The Northern Ireland executive has identified the sector as being of vital strategic importance for the futuredevelopment of our economy. The Going for growth strategy for the sector identifies the following fourobjectives for growth by 2020:

• Increase sales by 60% to £7 billion;• Increase employment by 15% to 115,000;• Increase external sales by 75% to £4.5 billion; and• Increase total added-value of products and services from local companies by 60% to £1 billion.

Brexit Impact

as has been discussed previously, Brexit threatens to impinge access to EU markets, in particular that of theRepublic of Ireland to Northern Ireland-based companies. This is not simply due to the threat of imposedtariffs but increased bureaucracy involved in complying with trade activities.

The table below provides a breakdown of external sales by sub-sector within the food and drink processingindustries:

Wages and Productivity

Productivity in Northern Ireland has suffered continued decline while that in the UK has largely stagnated.Overall productivity (output per job) in the NI economy is estimated at £40.4k, with that for Manufacturing38% higher, averaging £55.7k in 2015. Separating productivity in advanced and Traditional Manufacturingprovides figures of £49.6k and £63k which are both still higher than the Northern Ireland average.

Pay in the sector remains marginally lower than the Northern Ireland average - £25k against £25.8k –although that figure is reduced by Food production which has an average pay rate of only £17.9k.

The disparities between these rates illustrate the reality that Northern Ireland workers’ pay cannot besacrificed to offset the costs of Brexit. Instead we need action to secure tariff-free market access and todefend these sectors from adverse impacts.

All-Island Energy Market

Gas and electricity prices for Northern Ireland’s large consumers, principally industrial manufacturers, areamong the highest anywhere in the EU. One mechanism to lower these into the future is the establishment ofthe all-island, Single Energy Market (SEM), jointly regulated by the Commission for Energy Regulation (CER) inDublin and the Utility Regulator (UReg) in Belfast.

although commitments have been made that this will be unaffected by Brexit, it remains to be seen whethertrade restrictions will curtail or constrain the ability to buy and sell energy in an integrated energy marketon the island. It is also unclear how Brexit might impact plans to establish a wider regional energy marketintegrating the UK, Irish and French electricity markets which was initially planned for completion by theend of 2017.

Northern Ireland remains heavily dependent on both coal (19%) and gas (72%) for its electricity generation(2014) and any disruption to supply of gas resulting from Brexit would be seriously detrimental to the UK-wideeconomy but particularly that of Northern Ireland.

Challenges to successfully attracting FDI

Unite has repeatedly challenged Invest NI on their failure to secure foreign-direct investment in themanufacturing/industrial sector; indeed, the dominant trend is for indigenous producers to be acquired byMNCs only to have activities and employment stripped away over time through continued restructuring.

With no assurances over the form of Brexit for at least two years, Northern Ireland’s ability to attract FDI willbe threatened as this is based on tariff-free access to the EU market, investors are likely to situate investments90 miles south of the border to avoid risks.

Northern Ireland’s economy and our manufacturing sector, in particular, is sharply exposed to this threat. Itis imperative that the same securities be offered to potential manufacturing investors in Northern Ireland aswere offered to Nissan by the UK government in October 2016.





While widespread use of external labour undoubtedly has the impact of reducing wages in the local economy,in the absence of higher pay, the inability to freely access such labour in the future would result in disinvestmentand significant job-losses with the closure of Northern Ireland production sites.

agri-food processors constitute 24% of total manufacturing sector employment in Northern Ireland, the loss oreven a significant reduction in employment in one or two of the largest employers in this sector would resultin very serious economic challenges and dislocation. It is vital that we secure continued access to the EU labourmarket although Unite is already aware of a reduction in the numbers of workers coming from the EU giventhe depreciation of sterling and heightened fears over Brexit-inspired xenophobia.

Case Study 3: Agri-Food, Republic of IrelandThe UK is highly reliant on food imports. There are estimates that over 40 percent or more of their food needsare imported9. This is an important point that doesn’t feature in the debate. While the data referenced doesnot breakdown the EU between Eurozone and non-Eurozone countries, we can assume that of the 27 percent offood that is imported from the EU, most of that is Eurozone countries (not much would come from Sweden andDenmark, though there would be imports from Poland and other non-Eurozone countries).

Therefore, the ROI is not put at a competitive disadvantage vis-a-vis other Eurozone countries exporting intothe UK as they all face the same Sterling issue. However, even in non-Eurozone countries, a depreciatingSterling is not an issue. 10

Sterling has depreciated at the same rate against other currencies (save Sweden) as against the Euro. This isnot to under-estimate the negative impact on Irish exporters and more work would need to be done to see inwhat markets we are competing with other exporting nations (meat, dairy products, etc.).

Further, UK exporters may be able to penetrate Irish (and other countries’) markets given the currencyadvantage while UK producers may become more competitive in their own domestic market. as well, allcountries exporting into the UK will suffer due to the economic slowdown predicted in the UK; given ourreliance on UK markets, this will impact the ROI greater.

However, we should place this beside the fact that the ROI will be competing with other countries exportinginto the UK market; in which case currency is not an issue. Further, the UK will still be a heavy food-importingcountry.

Policy should focus on two things (among many): to exploit our proximity to the UK market. Investment intransport links and seaports could help develop our competitive advantage. Second, while Irish exportersshould start to move away from its reliance on the UK market, this is a long-term process. In the short-term,Irish exporters should exploit the similarities in national cuisine and taste which is important in foodmarketing exporting.

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9 http://qz.com/716156/the-british-import-a-quarter-of-their-food-from-the-eu-and-thats-a-problem/10 http://www.xe.com/currencytables/?from=GBP&date=2016-10-28

These statistics suggest that particular agri-food processing sectors are much more exposed to adverseimpacts from Brexit than others – as a result of higher sales volumes to EU member states. The sectors most‘at risk’ as a result of any diminution in trade access are Milk and Milk Products (39% of sales); Drinks (38%),Fish (36%) and Bakeries (25%). In Beef, Sheepmeat and Pigmeat approximately 20% of total sales areexposed, with the risk to Fruit and Vegetables marginally lower. The poultrymeat sector is overwhelminglyoriented to the UK home market with only 13% of all sales going to EU states – and virtually none outside that.

If Brexit results in any significant reduction in trade volumes to the EU, these figures would suggest a seriouspotential threat to Northern Ireland’s agri-food producers. In every sub-sector where figures were disclosedenabling analysis, the size of the exports to the EU relative to total sales was many multiples of the averagenet profit.

This would suggest that any significant reduction in market access would amount to very severe challenge tothe sector. For example, average net profits in the milk and milk products processing sector is only 0.5% buttotal EU exports constitute 39% of that sub-sector’s sales.

Even within these sectors there is significant variation of profitability, with only animal by-products (6%)and Eggs (2%) sub-sectors having a lower profitability range of more than one percent. In five sub-sectors,companies were operating on a break-even basis or were loss-making – Beef & Sheepmeat, Drinks, Fish, Milk& Milk Products, Poultry. This would suggest that there is significant risk of structural damage to the sector inthe context of any serious ‘shock’.

The risks facing the Northern Ireland agri-food processing sector are not simply confined to difficultiespresenting for continued export volumes to the EU but also include potential adverse impacts on localagricultural suppliers and for local employers accessing EU labour.

Impact on local agricultural producers

Northern Ireland’s agri-Food processing sector is highly dependent on supplies from local NI-based suppliers.The likelihood is that Brexit may result in severe pressures on local farms but will also potentially make it moredifficult to access inputs from the Republic of Ireland.

If the UK fails to achieve agreement allowing access to the EU market for agricultural products, punitiveimport-export tariffs would be encountered7. These are very likely to result in widespread difficulties in theNorthern Ireland agricultural sector, in particular for the Cereals and Cattle & Sheep sector (both LFa andlowland which currently operate on a deficit basis, when transfer payments are excluded).

While guarantees have been provided for substitute funding for agricultural producers until 2020 in thecontext of loss of EU Common agricultural Policy funds, there is no clarity over this continuing at currentlevels into the future. Under the current arrangements, and due to the weight of agriculture in the NI economyrelative to that of the UK, and the predominance of Less-Favoured area status in the region, Northern Irelandreceives 12% of all CaP payments to the UK. Under the Barnett formula (which would determine distributionof additional Westminster resources for the sector), Northern Ireland might expect about 3% of all UK funds.

Lack of Access to EU labour

Many local producers have a business model which is highly dependent on securing foreign labour. Dunbiaindicates that it sources up to 60% of their 1,240 workforce in Northern Ireland from the EU, the averageacross the sector in the UK was recently estimated8 at 26.9%.

7 All exports from Northern Ireland to the EU would face the following average tariffs based on 2015 WTO data (assuming the UK qualifies forWTO’s Most Favoured Nation status): Dairy 42.1%; Fruit, vegetables, plants 10.9%; Live animals 1.2%; and Meat & edible meat offal 5.2%. Withinthese broad categories there is considerable variation, e.g. Milk and cream between €17.9 per 100/kg and €22.70 per 100/kg; Fresh or chilled pota-toes 6.7%; Live sheep €80.50 per 100/kg; and Fresh or chilled bovine meat, boneless 12.8% + €303.40 per 100 kg. Similar rates would be levied onUK imports from the EU – resulting in both input price inflation and wider inflationary pressures.

8 http://foodresearch.org.uk/wp-content/uploads/2016/03/Food-and-Brexit-briefing-paper-2.pdf





Irish wages are below that of other large European exporters such as Denmark, Netherlands, France and even Italy.

On any level we little relationship between wages and exports. This is not to say it doesn’t exist – it justdoesn’t exist to the mechanistic extent that IBEC believes.

NOTE: all these figures are in Euros since that would be the main currency of exporters into the UK. PPPscould be used but they tell us more about the quality of the wages within a country and comparative livingstandards, not goods and services traveling across borders.

3. Productivity and Profits

Productivity data in the food sector suffers from the same problem to that other sectors in which multi-nationalcompanies operate: the tax-avoiding accounting exercises make productivity figures useless.12 The followingis a sample:

as seen, in the multi-national sector Irish productivity and profit figures are way off the chart and cannot be used –except to show the extent of multi-national tax avoidance activities.

Therefore, the following is for the indigenous sector. This comes from the mapping exercise on the Foodmanufacturing sector.

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12 Eurostat Foreign Control of Enterprises: http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=fats_g1a_08&lang=en

Employee Compensation

Irish wages are higher than UK wages in most sectors due to the UK’s low wage, low productivity economy.We cannot compete on that scale. However, IBEC reports that food exports to the UK rose by 29 percentbetween 2010 and 2015, from €3.4 billion to €4.4 billion. yet, during this period, Irish employeecompensation (or labour costs) was much higher than UK levels in the food sector. 11

If there was a relationship between wages and exports, then we could rightfully ask how exports couldincrease given the wage differential. One answer lies in the quality of the product, the marketing, etc. – thereal basis of competitiveness. another answer – if one believes there is a deterministic relationship betweenwages and exports - lies in the fact that Irish wages are lower than other countries that are exporting intothe UK market.

11 Eurostat Labour Cost, Wages & Salaries: http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=lc_ncost_r2&lang=en The 2015 is calculated onthe basis of the Labour Cost Index using overall manufacturing as a proxy for the food sector: Eurostat Labour Cost Index - http://appsso.euro-stat.ec.europa.eu/nui/show.do?dataset=lc_lci_r2_a&lang=en





Case Study 4: Financial Services, Northern IrelandFinancial Services is a growth potential sector for the Northern Ireland economy. Businesses in the sector areattracted to Northern Ireland by the numbers of graduates it produces each year.

The sector employs 33,000 across Northern Ireland, primarily in Belfast which is the number one destinationfor financial technology R&D investments globally.

One third of total employment in the sector is by major international financial services companies with centresin the region. The sector’s significance extends beyond direct employment as it provides significant demand toIT and legal services.

Given the low average labour costs and low cost of living, the operating costs of locating in Northern Irelandare significantly below competitors half those in London and 30% lower than Dublin.

any assessment of the threat posed by Brexit is restricted by the absence of detailed statistics for the sector.The situation is likely to reflect that applying to the UK economy where an estimated 1.1 million work infinancial services with a million more in related professional services such as IT and law. 40% of the£22.8 billion external sales surplus in the sector comes from the EU.

The UK’s financial sector would be disproportionately impacted by changes to UK-EU trade relationships,owing to the central position in services such as trade clearing and capital markets.

Estimates of possible job-losses arising from a ‘Hard Brexit’ scenario where UK Financial Services providerswould be denied “passport” access to the regulated financial markets and refused more piecemeal“equivalent” admission, meaning companies that could still trade would be subject to WTO tariffs.

This scenario could result in the likely loss through offshoring of tens of thousands of jobs – PWC have quoteda figure of 100,000.

In more benign scenarios, where an ‘Equivalency’ deal is negotiated for access to Europe’s financial markets onbroadly unchanged terms, an estimated 7,000 positions would be threatened as a result of off-shoring moresenior positions.

Likely Impact on Northern Ireland

The Financial Services sector is growing rapidly and is already making a substantial contribution to oureconomy; however, by UK standards and taken alongside London, Belfast is a very minor player. The likelihoodis that Brexit negotiations will place very little consideration to workers in this sector in Northern Ireland.

The risks to the sector from loss of passporting and the failure to secure ‘equivalency’ status are potentiallyvery substantial.

Many companies are likely to transfer investments elsewhere, especially on the island, to retain EU passportingstatus. In the situation where ‘equivalency’ is secured these risks would fall substantially – this is particularlythe case given the nature of the employment provided by the sector (which is more analytical).

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This shows that the Irish indigenous sector – whether measured as GVa per employee or per hour – is highlyproductive.

The following shows the level of indigenous profits (gross operating surplus) per employee. More work wouldneed to be done to break this down into hours.

The Irish indigenous sector has the second highest levels of profits per employee. This suggests that there isscope for employers to absorb some of the losses due to Brexit.


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(a) Investment: a. Increased state investment budgets focussed on export companies: energy and transport infrastructure,

telecommunications, etc. b. Commitment to maintain the single-energy market and advance wider energy market expansion as

previously planned.

(b) Raised Incomes: a. a social compact to ensure that pay deals rise to compensate workers for the inflationary spike likely

to arise in 2016-2017 from the devaluation of sterling; workers should not have to pay the price forBrexit.

(c) Support for Agri-food, agriculture and rural communities a. Specific actions should be provided to agri-Food processors including access to low-interest loans and

support for export diversification and import-substitution activities. b. Continued access for agri-food sector in Northern Ireland to EU workers and to the legal status of all

EU migrant workers. c. Transitional support for agricultural producers and a commitment to future transfer payment schemes

to compensate for loss of CaP; d. Funding for NI-based and cross-border research and disease elimination activities; e. Continued funding for Rural Development programmes (RDP) within Northern Ireland and on a

cross-border basis.

(d) A step-change in Enterprise Strategies a. Unite has made a number of recommendations in this regard in our November 2015 policy document

‘Growing the Economy and Living Standards’. In particular given the structural significance posed byBrexit for the economy, we need to move beyond short-term measures aimed to compensate lossand initiate new democratic institutions and practices in building and expanding Northern Irelandenterprise to secure market investment.

(e) Access to EU Funding Programmes a. Continued and equal access to follow-on EU Research and Innovation programmes, after Horizon 2020,

with full integration with other EU investment/economic development programmes; b. Commitment that Further and Higher Education

providers will be able to access research talent andrecruit students without being subject omigration restrictions;

c. Funding for future Peace & Reconciliation activitiesand NI-wide access to wider EU Structural Funds;

d. Continued access for the Northern Ireland Executiveto EU structural funds, or equivalent substitutefunding for infrastructural and cross-borderinvestment programmes.

(f) Peace Dividend: a. The original peace dividend for Northern

Ireland was slashed by 60% from that initiallypromised. Given the exceptional circumstancesaround Brexit, there is a strong case for this to berevisited.

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Unite Proposals: Northern IrelandUnite demands ‘Brexit on our terms’ – that is no diminution of existing labour or human rights, guarantees asto tariff and restriction-free market access, free movement of labour. as well as moves to mitigate the threatsposed by leaving the EU, our government must seize all the opportunities offered.

There needs to be much greater clarity ahead of the Brexit negotiations. The Northern Ireland Executive mustbe provided a direct input on the negotiating stance taken by the UK government. There must be a direct rolefor trade unions in that process.

Government in Belfast and London must adopt a proactive approach to intervening to protect our economyand our community from the threats posed by Brexit and to exploit fully the opportunities arising.

Workers and Human Rights Protections

European Union directives and judgements of the European Court of Justice have underwritten many of therights won by workers over the past four decades: the working time directive, equal pay, etc. These are real riskas a result of Brexit. It is vital that these protections are wholly transferred to domestic law with the additionalsafeguard that they cannot be rescinded by a simply parliamentary majority.

In the case of Northern Ireland, the European Convention on Human Rights incorporated into UK law as agreedin the Good Friday agreement (1998) must be afforded similar status.

An industrial strategy

It is not enough for the Executive to defend the status quo; a vision for the future must be predicated oninvestment to grow Northern Ireland’s economy.

To achieve this, we need a long-term industrial strategy committing the Executive to deploying every tool at itsdisposal in the pursuit of challenging growth targets. These must be Specific, Measurable, achievable, Realisticand Time-bound (SMaRT), including targets for productivity improvement, manufacturing output growth(to 20% within the medium-term) and industrial FDI-investment/job creation targets.

Such a strategy must be underpinned by a programme of direct investment, including the strategic use of thepublic sector procurement budget. In particular, the Northern Ireland Executive must fully explore opportunitiesto support local industrial development outside the confines of EU state-aid directives.

The Executive must prioritise investment and incentives for the provision of skilled apprenticeships whichwould not only benefit existing manufacturers and the supply chain; it would remove a vital barrier tore-shoring and mitigate the threat of off-shoring.

actions in an industrial strategy should include: increased support for diversification of export markets, movesto ensure public procurement budgets benefit local suppliers, identification of price-insensitive niche marketsand retraining/ re-tooling of firms and a programme of equity-linked capital investment

For its part, the UK government must extend the same assurances to Northern Ireland and to other economicsectors as they have to secure investment by Nissan to the Northeast. Such assurances would suggest that theUK government appear confident of securing market access to the Customs Union at the very least.

Actions to support the wider economy

In terms of supporting the wider economy, there is a need for:


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(e) Fiscal Policy: the Government should abandon future tax cuts. The economy cannot afford the erosion ofthe tax base.

(f) The Rainy Day Fund: the Government should abandon or, at least, postpone the introduction of the RainyDay Fund. Starting in 2019 this will cost €1 billion annually. Some of this could go towards funding aBrexit response. In any event, the Government already has a rainy-day fund – Exchequer deposits(cash balances) and other liquid assets. It is estimated that this is in the region of €10 billion andpossibly higher.

(g) Robust Economic and Fiscal Projections: it is necessary to have more robust projections in order to assessthe range of damage and, therefore, the response necessary. The Government should produce a range ofprojections from best-case to worst-case scenarios.

A Democratic Framework

Having constructed its own agenda, ICTU should seek to meet with the two governments – the ROI governmentand the Northern Ireland Executive - IBEC and the CBI NI to discuss issues of joint concern, as well as interveningin cross-border bodies.

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Unite Proposals: Republic of IrelandIt is important that the trade union movement take central stage in the debate over how to respond to Brexit.Unite should take the lead in this, given that it represents workers on in NI and the Republic but it is importantthat the trade union movement throughout the island speak with one voice and with urgency. The followinglooks at some key areas and outlines potential responses for further discussion.

(a) Investment: if it is assumed that private investment will fall due to uncertainty (a good assumption) thenit is imperative that the state step in to fill the gap. In this respect, investment, to the extent that it ispossible, should focus on export companies: port and transport infrastructure, telecommunications,energy, etc. This requires a needs-based assessment and a body to examine the feasibility/priority ofindividual projects. This should be in addition to current capital spending plans. The recent relaxationof the fiscal rules announced by the EU Commission provides scope for this increased investment.

(b) Consumer Spending: again, if it is assumed that consumer spending will fall due to uncertainty, then thestate should move to redistribute resources to low-income groups as they have a high propensity tospend. Further to this, a detailed survey should be conducted to get empirical data on the extent andprofile of cross-border shopping.

(c) Enterprise Support: Enterprises in the export sector and in the border regions will need particularsupport. This requires a stake-holder approach with the full and equal participation of employer andemployee representatives along with the relevant public agencies. Support should be based on thosefirms which acknowledge this. This stakeholder approach, embodied in a fully funded ad hoc committeewith its own secretariat should carry a full audit of the sectors involved.

There are a number of steps that can be taken:

• Supports for diversification of export markets; • Identification of price-insensitive niche markets and retraining / re-tooling of firms; • Low-cost finance for enterprise investment (on the same basis as the new agriculture Fund); • Direct subsidies for employees to incentivise short-timing rather than job loss – this was what Germany

did during the initial stages of the recession and which ICTU here; • Consideration be given to a special enterprise zone for retail/ hospitality enterprises in the border areas

which may involve tax credits and other supports.

There are two important considerations: first, firms must accept the full participation of workers in theirenterprise. For instance, the Hoteliers Federation and the Restaurant association of Ireland is boycottingthe hospitality JLC. This, and similar behaviour, will not be tolerated in new supports and stake-holderinfrastructure. Second, the relevant supports should be accompanied by equity taken by the state – in orderto protect Exchequer resources.

(d) Automatic Stabilisers: the Government should move immediately to increase our automatic stabilisers.These are measures that limit the deflationary impact of job losses. The most basic stabiliser is theintroduction of pay-related unemployment benefit; this would help maintain demand in the event jobsare lost.


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Documents

Brexit: On our terms · Brexit – on our terms The Republic of Ireland will not be immune from the effects of Brexit: already, it is clear that the fall in sterling is making exports