Population - The Building Blocks of Jersey’s Economy
Why is Jersey’s population growing? Is it because Islanders are living longer, more children are being born, or is it because of the growing number of people coming to live here? If it’s the latter, what can we do to manage it, and to what degree is the finance industry involved?27 June 2017
Population, and the measures we need to take to manage it are regularly hotly debated, and I think it’s right to present the finance industry’s perspective on what is a difficult and complex issue.
As the latest figures released by the Statistics Unit reveal, our population reached 104,200 in 2016, an increase of 1,500 on the previous year. Net inward migration accounted for 1,300 and natural change (the number of births compared to deaths) accounted for 200.
The net inward migration was made up of 200 ‘licensed’ employees and their dependents and 1,100 ‘registered’ employees and their dependents. To be clear, then, the majority of population growth in 2016 was due to immigration, but the people who came here during 2016 were not taking up highly paid jobs.
These figures are important in the ongoing debate on population management. The ‘right’ figure for Jersey – and if a cap which should be put on the population – is a political discussion, and the decision on which mechanisms to use to control population is also political.
We can’t control death or birth, we appear to have limited control over the population arriving as ‘registered’ staff, so the only group whose influx can truly be controlled are the ‘licensed’ skilled staff. From these figures, however, it is not clear that stopping licences would control the population. It would, however, affect business.
But how does this translate into growth in employment in the finance industry specifically?
Financial and legal services is Jersey’s largest employer and accounts for 22% of Jersey’s total employment, or 13,080 jobs. Whilst we have seen growth in the number of jobs in the sector we are still below the level seen just before the 2008 global financial crisis, although the number of vacancies is expected to rise over the next few years. Encouragingly our employers see themselves sourcing 85% of these job requirements on Island, with a relatively modest number being imported.
Education is key
In finance, the vast majority of employees are ‘entitled’ or ‘entitled to work’ with only 11% of employees ‘registered’ or ‘licenced to work’, a figure that hasn’t changed significantly over recent years. Of the migrant workers in the financial and legal activities sector half are licensed employees, i.e. they are deemed highly skilled and essential. To echo comments made by Tony Moretta, CEO of Digital Jersey last week, if Jersey is to remain at the forefront of global finance, then we need to ensure we continue to import a certain amount of specialist skill and use that skill to continue to build our home pool of talent.
There will be a continuing demand for staff, and companies from all sectors will look to fill their vacancies. If companies are able to fill them with locally-qualified people who, knowing that they will have a rewarding career, commit to the finance industry, then there will be less demand for people who are not from here.
One way to reduce immigration, then, is to get local people to stay and get involved in the industry. Jersey Finance is actively encouraging member firms to help with this through our Life In Finance work experience scheme. Now in its sixth year, the scheme has successfully placed more than 250 students, many of whom are now moving into the workplace to hopefully start a long and rewarding career. The young people on the scheme are given the opportunity to experience first-hand what the finance industry in Jersey has to offer and the full and diverse career options available. In addition, we will continue to work with Careers Jersey by representing the industry at the Skills Show later on in the year.
Jersey has the building blocks of a typical economy
Perhaps inevitably, the finance industry accounts for a proportion of licences. As the largest employer, one of the recurring concerns we hear on Island is that the economy is too reliant on a small number of industries, especially finance. The myth perpetuated year after year is that finance is too dominant and that because of the scale of financial services business, Jersey is not a real economy at all.
But examine the facts, and there is no convincing argument to believe we can support more than three or four major industries.
When Capital Economics were researching the data to prepare reports on Jersey’s value to Britain and to the European Union last year, their researchers made some telling comparisons by reviewing the make-up of Jersey’s economies with other similar communities. The firm conclusion is that any place with a population of around 100,000 people generally doesn’t sustain more than a handful of industries. In fact, Jersey’s concentration on finance, tourism and agriculture isn’t unusual and a review of similar sized locations shows the same pattern. The make-up of our economy is absolutely normal.
Misleading conclusions can be drawn if you fail to compare like with like. Jersey cannot possibly deliver the diversity that a country of 60 million people such as Britain can provide and we shouldn’t waste effort trying to replicate it. It’s a natural desire to want to diversify because of the fear of having too many eggs in one basket but the reality is that such an economy is not achievable. In fact, a look back at history tells us much the same. Since Elizabethan times, there have always been one or two dominant industries in Jersey such as knitting and North Atlantic fishing through to ocean going cargo carrying and shipbuilding. It appears to be enshrined in Jersey’s economic DNA.
That’s not to say we ignore other sectors. I think it is prudent for the government to continue with its current approach, which is to support three primary industries, finance, tourism and agriculture and look to blend in a fourth, digital, which can support and diversify at the same time.
It is inevitable that the population will age, and as the number of pensioners increases – both numerically and as a proportion of the population – the burden on those of working age will increase. It therefore makes sense to make the workforce as efficient as possible in tax generation. Someone earning a higher wage will contribute more in tax, meaning that fewer workers will generate the tax needed to support Jersey’s elderly. As the industry that generates higher wages, that argument favours the finance industry.
Yes, we have to evolve our economy and modernise where we can. How we utilise human resource and manage our population is a big piece of that puzzle, but we should do so without turning our back on our traditional strengths, the current building blocks of our economy, and what makes Jersey special.