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 broadly positive in terms of economic data, suggesting that the local economy and the consumer is in good shape. There are some pockets of concern, but on balance the picture is relatively bright.
‘The population continues to increase, growing by 0.6% during the year to 31 December 2022 and the number of people living here now exceeds 64,000. Population growth was broadly in line with the last four years and continues the positive trend seen since the end of 2017. Quarter 4 2022 delivered the third highest quarter of annual net migration in the last sixteen quarters – people want to live here given the quality of life and employment opportunities that the island offers.
‘However, the island is dependent on net immigration to grow the population because the natural decrease in the population during 2022 was the highest in the last four years. Births remainvery low (third lowest in the last sixteen quarters) and deaths are very high (the highest in the last sixteen quarters). This socioeconomic trend deserves further investigation because we need to be able to grow the population naturally as well as through migration.
‘The percentage of the population in education or employment is back to pre-pandemic levels. There was a 1.3% increase in the working age population and the dependency ratio (working age population as a percentage of the total population) improved from 63.9% to 64.3%. Migration is helping the dependency ratio and therefore the ability of the island to be productive, support those not working and to pay the taxes necessary to fund public services. However, the dependency ratio is expected to deteriorate over time, and the continuing decline in births and the population under 15 needs addressing.
‘The data on employment and earnings was also good. The number of people in employment increased by 1.7% over the twelve months to 30th June 2023and is now above pre-pandemic levels. Unemployment remains low and the decline in the number of vacancies indicates the labour market may be loosening. The economy continues to create employment, which is positive for businesses, consumers and public finances.
‘The number of employers is also growing, which suggests that people are still confident to set up their own businesses, although the decline in the number of retail employers and small employers underlines how difficult it is for some sectors of the economy. This is reinforced by the sectoral breakdown of the number of people in employment, where hospitality, finance and business services are expanding, whilst manufacturing and retail are contracting.
‘Earnings increased in real terms for the first time since first quarter of 2022, which should support consumer spending, the main driver of the economy. With pay increases exceeding inflation, the strength of employees in the labour market is clear. This may aggravate inflationary pressures and put company profits under pressure, however.
‘Growth in earnings is not being shared by everyone, however, with the lowest quartile continuing to experience a fall in real earnings. This needs to be monitored from both a social and economic perspective, when the cost of living crisis is putting so much pressure on all households, particularly the less affluent.’