Let’s maximise the talent we have
As well as attracting more people to the island, we need to make the most of those already here if we want to tackle Guernsey’s demographic time bomb, says Deputy Lindsay De Sausmarez
AS THE UK’s painful recent experience has illustrated, politicians should not assume that popular support for the aim of growing the economy will translate into popular support for specific measures to achieve it.
Guernsey has its own version of that quandary to navigate, and the first minefield will be the Population & Immigration Review.
The dissonance between the idea and the actual is one of the things that makes politics so difficult. Who doesn’t support the idea of more housing, for example, when the lack of it is leaving swathes of people struggling with eye-watering accommodation costs, making misery for many, blocking business and driving our young people away from the island? Yet when that idea starts to turn into something actual and plans are put forward, a glance out of the metaphorical window will tell you that the crowds that were so recently roaring for more housing are now yelling, ‘Yes – but not there!’
Actually, I don’t blame them. There tends to be two central themes of opposition to planning applications – traffic impact and the loss of green spaces – and both in my view are entirely valid and serious issues to be concerned about. We’re a small island: surface area is a valuable commodity. We need to use what little space we have wisely. I’ll expand another day on how we might do that – but for now it’s enough to note that accommodating more people in our little island has its very real challenges and impacts.
Yet that is what we are being asked to agree to do, in the Population & Immigration Review policy letter, due to be debated later this month.
As many are aware, the fundamental problem is what’s sometimes unflatteringly referred to as ‘the demographic time bomb’. Essentially, we have more people retiring from the workforce each year than joining it, so the dependency ratio of people below and above ‘working age’ (defined as 16 to the State pension age) to people of working age is growing.
This creates a double-edged sword of a problem. First of all, because more of us are living longer, public spending needs to rise to cover the cost of pensions and the health and social care that more of us will need as we get older. Secondly, because the significant majority of States revenue derives from income-based taxes, we have an ever-decreasing amount of public money with which to fund these increasing costs.
The most obvious remedy – as suggested in the Population & Immigration Review – is to grow our working-age population. The theory works on paper, but it also has some significant shortcomings. While it would keep the fiscal ship roughly on an even keel by keeping the dependency ratio in balance, it would also mean a pretty noticeable increase in the size of our population overall: aiming to attract 300 people into the island a year would lead to approximately 8% population growth between now and 2050, taking us up to 68,000.
This has some fairly punchy real-world ramifications. Thanks to a bumper run of immigration through Covid, it’s already a struggle to find somewhere to live in Guernsey. Housing availability is a key choke-hold on recruitment across many business sectors, and with demand outstripping supply, home seekers and rent payers are feeling the financial heat. No matter how much we streamline the processes, building new homes takes time – and space.
Aye, there’s the rub. To accommodate that level of inward migration, we’d need up to 114 football pitches’ worth of land, or the equivalent of 75% of L’Ancresse Common, just to build the necessary homes over the next 18 years alone. That’s a lot more land than has been allocated for housing through the Island Development Plan – and there’s no guarantee all of those sites (many of which are in private ownership) will be developed in any case. In other words, even assuming all the housing allocation sites were developed to their maximum capacity, we’d still need to find the space to build an additional 1,300 homes outside of the two main centres in less than two decades.
Let’s be honest: this is going to mean the loss of a lot of much cherished green space and the unwelcome gain of some traffic impacts from hell, unless we’re really bold about housing density and sustainable transport.
But it’s not just about housing. A bigger population needs more infrastructure across the board: as well as our land and transport network it also puts pressure on our utilities infrastructure such as energy, water and telecoms, and on our social infrastructure including healthcare, schools and recreational facilities. For all that it generates additional income, it also requires more public services, so it’s not a straightforward one-way ticket to economic stability.
However, all this is academic to a point anyway, as the policy letter (which is commendably honest) admits that it doesn’t know how we would attract all these people in any case.
Our population is ageing alongside all of our competitors’ and we are competing against much bigger jurisdictions for the same talent from the same shrinking pools. We can’t force people to relocate here, and our migration patterns have historically correlated with how well our economy is performing. In other words, it is the economy tail that wags the population dog: when there are plenty of jobs, our population increases, and when there are fewer available jobs, it falls. We can, and of course should, create the best possible conditions for a thriving economy, but beyond that it is hard to see how we could realise the level of immigration this proposed policy aspires to.
One thing that is within our gift, though, is to focus on making much better use of the people we’ve already got. The whole argument for growing the population by that degree is based on the assumption that output (which translates into revenue) per capita remains around the same. If we increase the revenue per capita – i.e. if we increase productivity in our working population – then we reduce the need to bring in as many new workers, and reduce all the associated pressures more people bring in the process.
There is certainly plenty of room for improvement in terms of our productivity. PwC’s most recent Women In Work Index for the Channel Islands, for example, shows that Guernsey has slipped further behind the UK and is now below the OECD average in terms of its gender pay gap – and that’s despite outperforming the OECD average on participation and employment rates. In other words, a high proportion of women in Guernsey are in work, but they’re earning less either because they’re not able to work as much as their male counterparts and/or because they’re paid less for the work that they do. The good news is that increasing female employment rates to match countries with the greatest pay parity would boost our GDP by £176m. a year. Exploring measures that help reduce barriers to more productive employment (like childcare and more family-friendly policies) therefore makes a lot of economic sense.
Making more of our female talent is just one way of boosting productivity: skills, knowledge, innovation and new technology are some other hugely important factors in which government clearly can play an effective role.
As ever, there’s no one simple solution to the demographic fiscal challenge looming over us.
We will need to attract more people to work here – but we will need to do so in a way that is sensitive to our community. To do that, we need to look first to make more of our most valuable resource: our people. That gives us the best chance of bringing the aim into actuality in the most productive possible way.