Island’s income inequality is among highest in world

INCOME inequality in Guernsey is among the highest in the world, a new quality of life report has highlighted.

Household income comparison with OECD member countries. These figures are converted to Purchasing Power Parity, which adjusts for differences in currency exchange rates and differences in the cost of non-housing goods and services in different jurisdictions, using a UK
conversion factor to allow comparison with other jurisdictions.
Household income comparison with OECD member countries. These figures are converted to Purchasing Power Parity, which adjusts for differences in currency exchange rates and differences in the cost of non-housing goods and services in different jurisdictions, using a UK conversion factor to allow comparison with other jurisdictions.

Figures show that the island has the highest average level of household disposable income in the OECD, ahead of the likes of the United States, Switzerland and the UK when adjusted for things such as exchange rates to be comparable, while percentage of income spent on housing, despite high house prices, is the second lowest.

But that appears to mask the experience of different parts of society.

A measure of income inequality, known as the Gini co-efficient, is well above the OECD average.

The report, called Better Life Indicators, for the first time gives an overall impression of quality of life in Guernsey compared to 36 other OECD member countries where possible.

It uses three broad measures – our economy, our quality of life and our place in the world.

Guernsey scores 9.4 out of 10 (with 10 being the highest scoring country) in the economy measure, 7 in quality of life and 7.4 in place in the world.

‘Generally speaking, our relative performance on these indicators is ‘‘good’’ or ‘‘very good’’,’ said Policy & Resources president Gavin St Pier.

‘However, even where our performance is exemplary, these indicators suggest areas where we might need to look closer at what is going on in Guernsey.

‘For example, despite the widespread experience that housing in Guernsey is expensive, the average percentage of a household’s income spent on housing is actually quite low compared to other jurisdictions.

‘We need to understand this better. This is thought to be because of the high proportion of people who own their own homes, particularly among older households where they are likely to do so without a mortgage. It is likely that different sections of our community will have very different experiences of housing costs and is something we may now need to investigate further.’

In total, 44% of households own their own home outright.

A Gini coefficient of zero expresses perfect equality, for example where everyone has the same income, while a score of one represents maximum inequality, for example where one household has all the income within a population.

In Guernsey, the Gini coefficient for gross equivalised income in 2016 was 0.40.

The OECD average was 0.316, while only Mexico and Chile now have higher numbers than the island.

Those two countries rank in the bottom three for median disposable household income.

The Our Economy measure is based on employment, where Guernsey ranks seventh in the OECD, unemployment rates, where it has the lowest percentage by some way, and household income.

Quality of life indicators uses income spent on housing, age-adjusted mortality rate and life expectancy. With a life expectancy at birth of 82.3 years, Guernsey is ranked ninth in the OECD.

Guernsey’s age adjusted mortality rate (the number of deaths as a percentage of the population, adjusted for the different age profiles of the jurisdiction) was 8.1% in 2017, broadly comparable with countries such as Germany, Belgium, Ireland and the UK.

Our ‘place in the world’ uses voter turnout, which was 73% in 2016, and access to broadband, which stands at 95% of households – only Korea, Netherlands and Luxembourg have better broadband figures.

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