The publishing of the States of Jersey (SoJ) statistics on population (our government statistics unit by the way really is excellent for a small jurisdiction) usually triggers off a renewed debate about how many, too many, and where from, especially if net migration has risen; cue comment this time around as the population reached 99,000.

This diagram, extracted from the States 2012 report, shows that population has been steadily rising for the last decade and is approaching the 100,000 figure, a threshold likely to spark off a renewed and vigorous debate on the subject.

From time to time some of our politicians and media have ascribed this growth to the finance industry. This usually prompts a call to action to rein back finance led growth. 

A resigned acceptance is perhaps a more typical reaction for those appreciative of the employment and career opportunities provided by the finance industry, and the significant economic contribution that helps support high quality health care, education and public services; acknowledging the substantial contribution by way of revenues generated, estimated to be half of all tax receipts. 


The following chart shows employment numbers in the finance industry:-

As can be seen the finance industry employment numbers were virtually the same in 2006 as they are today in 2013 (currently around 12,500). The reality is Finance employment numbers have operated in a range of 11,000 – 13,000 for the last couple of decades.

But what about J Cats? If finance workers are coming in with families, surely it will only need modest growth to trigger off a significant population rise?

Again, widely held presumptions are not borne out by the facts. The total J Cat population of the finance industry has been pretty much static at around 720 – 730 (about half the total for the private sector) for a number of years, and certainly isn’t a driver of population growth.

Exploding urban myth No 1. – Finance is not driving population growth

A close second to the population question is of course housing. The theory goes that if the population rises, demand increases, house prices rise, and more housing stock has to be built, gobbling up the green belt, leading to a crowded and expensive Island.

Some have been quite active in attributing the current cost of housing to the finance industry and complained to international media at any and every opportunity that this has made property expensive and unaffordable for young people. This observation is usually linked to a call to promote tourism instead, a somewhat illogical linkage, which I will demonstrate later in this article.

A response to this concern could of course be that a near full employment society or one with appreciably better rates of employment than most countries is going to benefit from higher wages and therefore will have a higher cost of living including housing. After all most right minded people would want to be in work, as opposed to being unemployed, where getting on the housing ladder is nigh on impossible.

House prices will of course react to demand influences, including a high wage economy, and or supply, where housing stock is often linked to the density of population (Jersey’s population density is quite low comparatively), and the rate of housing stock renewal and associated planning policy.


So what is the situation in Jersey?

If the finance industry population has been pretty static for the last decade, as appears to be the case, then population growth from that sector isn’t driving housing demand or prices.

But what about wages?  If finance industry workers enjoy high ‘city’ type salaries won’t this drive up prices if there is growing demand from other forms of migration or a shortage of housing stock?

Let’s look then at comparative wages by industry sector to see if we can determine a difference large enough to be a determining factor.


The SoJ statistics chart confirms that the wage differential between the finance industry and public services is in fact quite small, only around 5%, and only around15% more than for the transportation industry; too small to be a driver of above average affordability in terms of housing.

The finance industry in Jersey does not have the investment banking and trading activity prevalent in the City of London, which is where the really high earnings are generated in the finance world. On average finance as an industry has earnings per employee only marginally higher than public services in Jersey.

Exploding urban myth No 2 – Finance is not the root cause of housing market price pressures.

So what is driving house prices?

A full analysis is beyond the scope of this brief article and research sources elsewhere will hold better clues.

My own view is that the issue is tied very strongly to demographics and improvements in longevity.

The table below has been extracted from the excellent paper by Mark Boleat entitled “Jersey’s population a history” which you can find on Mark’s website. It measures in the first column, population, secondly the number of houses in the island, then the average number of occupants per house. The survey goes back centuries but I have included an extract from 1931 onwards.

The occupant number per household is revealing having almost halved since 1931. What this means is that with increasing affluence and longevity, people are living in the same house for a lot longer, with housing stock freeing up at a much slower rate.

With the demise of the extended family living together, the demand for houses has outpaced the growth in stock. Demand has outstripped supply partly due to inward migration but also because people are living a lot longer in a state of reasonable health, and therefore staying in their own homes a lot longer.

Medicine might just be one of the biggest factors in house price growth!


The Finance Industry Contribution

The finance industry in Jersey has both benefitted from and significantly contributed to Jersey since the 1960s.

The industry has provided the majority of the revenues needed to pay for excellent health, education, transport and environmental services that have combined to provide a very high standard of living and quality of life.

Contrary to popular urban myths, it has not been the driver of either, population growth, nor the acceleration in house prices, over the last decade. The causes are much more likely to be found in overall net migration to the Island ex finance, and in the improving health and longevity of Islanders.

A final thought on population, especially for those who commend that Jersey turns its back on the finance industry and invests all its efforts in tourism growth instead.

There are currently around 12,500 people employed in the finance industry generating an average economic contribution (measured as Gross Value Added, or GVA) of some£124,000 per head.  On current multiples to produce the same economic value and tax contribution from tourism the Island would need to employ another 50,000 people and boost visitor numbers to around 3.44m.

Now I think that would create a population problem!