Following the release of the States of Guernsey’s latest quarterly population, employment and earnings statistics, Richard Hemans, the IoD Guernsey’s lead on economics, commented: ‘The latest bulletin is as always full of interesting statistics from which we can draw broad conclusions about certain elements of Guernsey’s economy.’
Guernsey’s population increased by nearly 1,000 people or 1.4% during 2023 and is now nearly 65,000. The population has increased by 2,500 over the last five years, an average of 500 people per annum.
The population increase indicates that the island is an attractive place to live and reflects a robust economy where there are plenty of employment opportunities, but the scale and pace of the increase will inevitably put pressure on the island’s housing, infrastructure, and social cohesion. At 1,045 people per square kilometre, Guernsey is the fourth most densely populated place in Europe after Monaco, Malta, and the Vatican City. For comparison, Jersey’s figure is 864, whilst the UK's is 277. It was 1,008 at the end of 2018.
The population increase in 2023 was wholly attributable to net migration, with a natural decrease of 154 people and positive net migration of 1,064 people. Births continue to decline, with 451 births recorded in 2023, which compares with 636 ten years ago. Deaths exceeded 600 and have increased significantly since 2021. Further research needs to be undertaken into these trends, particularly the fertility rate, which is likely to be below 1.4 in 2023, well below the replacement rate of 2.1 and also that of the UK, which was 1.44. The island will be dependent on immigration to maintain and grow the population.
It was pleasing to note that the working age population recorded the largest increase, which suggests that the majority of net migration is falling in this category. Indeed, the dependency ratio or the ratio of working age people to the total population improved in 2023, from 65.9% to 66.2%. This is important to ensure the economy can continue to grow and to secure public finances and services.
However, the population continues to age, with the average age rising to 44 in 2023. The average age is increasing by one year every five years. This makes it even more important to keep the pension age under review and to prioritise the health of the population.
Moreover, although the working age population increased and the dependency ratio improved, the labour participation rate has decreased. People in employment as a percentage of the population declined from 49% to 48.8%. Again, further work needs to be undertaken to understand why this is happening and policies introduced to improve participation. It is noticeable that the female labour participation rate is rising, but the male participation rate is falling. The island needs people to be economically active to ensure the economy can continue to grow and to secure public finances and services.
The increase in employment of 0.7% over the last 12 months is positive, but it is slower than the increase in the population and explains why the participation rate is falling. The unemployment rate also fell to 0.8% from 1.0%, which shows how tight the labour market is and illustrates why the participation rate needs to improve.
It is concerning that the public sector is now the largest employer in the island, ahead of Finance. The public sector now accounts for 17.8% of employment, which compares with 14.9% in Jersey. However, it accounts for 8.9% of the total population, which compares with 9.1% in Jersey. The main problem is again the participation rate, with 62% of the population in employment in Jersey, compared with 49% in Guernsey, which is a staggering difference and probably one of the keys to unlocking our economy.
Finance, retail and hospitality reported the largest falls in employment over the last 12 months, whilst public administration, private health and agriculture recorded the largest gains. Over the last five years, professional services and construction have enjoyed the biggest gains, whilst finance and retail have suffered the highest falls. The key to our prosperity and living standards is our finance sector and the decline must be reversed.
‘Earnings decreased by 0.7% in real terms in the quarter ending 30th June 2024. Given the 0.9% increase in employment, this suggests consumer spending, the main driver of the economy, was probably flat. High inflation continues to erode real incomes, and it seems that the balance of power is swinging back in favour of employers, with employees preferring employment over pay increases.
‘There is some interesting analysis of earnings by socioeconomic group and industry in the bulletin. It shows that the upper quartile is experiencing a slightly higher squeeze on earnings than the lower quartile, and also indicates that pressure on income is also being felt by middle earners. Women are experiencing flat real earnings growth, whilst men are seeing a decline of about 1.2%. Furthermore, employees in 15 out of 19 sectors are experiencing negative real earnings, with only hospitality, administration and support, the public sector and private sector health and benefiting from real earnings increases in the year ending 30th June 2024.’