‘Have it all’– or having a laugh?

THREE solid hours of reading and I’m puzzled. Perplexed, even. You see, I go through stuff, like presidential statements to the Assembly and that ripping piece Guernsey Economic and Financial Stability Overview, so you don’t have to.

(Picture by Adrian Miller, 26475665)
(Picture by Adrian Miller, 26475665)

And I’m damned if I can see anything in the official publications that backs up Gavin St Pier’s view that the island really ‘can have it all’.

At first, I wondered whether the quote was an optimistic headline. But no, the president of Policy & Resources really did say: ‘I am actually confident that we can have it all – we can meet the needs of our community whilst ensuring we remain a competitive, low-tax economy with a fair distribution of the tax burden.’

And this, I’m afraid, is where it gets a bit complicated. Le Prumier de Giernesi is a relentlessly glass-half-full chap. A Catholic upbringing and bitter experience tend me to the opposite view. As you may, at times, have noticed.

So while the economic overview does have some very positive news about gross domestic product growth – which P&R not unnaturally bigged up – some of the underlying detail is disturbing.

I’ll try to avoid too many stats and figures but while GDP growth – the rising value of goods and services produced in Guernsey’s economy – has been strong, it’s now slowing. And that’s before Brexit happens.

Worse, while ‘the economy’ is apparently doing well, you and I aren’t feeling the benefit. Yes, median earnings rose in real terms (after inflation) but by less than GDP growth. Mr and Mrs Guernsey are not seeing much trickledown from what P&R called ‘stellar’ growth.

Pick away a bit further and you’ll see that median earnings in finance – equal to 40% of the island’s output and 19% of all jobs – have steadily declined. It’s a similar picture in the professional and business services sector, which have traditionally supported finance.

It’s the same with information and communication services and construction, wholesale and retail. Actually, the picture in the last category is more bleak since this declining sector employs a significant proportion of island youngsters who leave school before age 18.

Where there is strong growth in median earnings is in admin and support, which includes HR and cleaning and security services. These last two aren’t generally highly skilled or paid, so this more reflects the shortage of labour in the island.

While there has been a welcome population increase of just under one per cent, we still have around 240 people fewer than at the peak in 2011. Net migration also increased, which balanced the impact of Guernsey’s ageing population and thus the number left working and paying tax.

Yes, that’s also good news and reflects that there are jobs here to attract and retain folk. But – and it’s a big one – that’s generally down to fewer people leaving the island, at the same time as the island birth rate is in free-fall. Fertility rates have dropped to ‘an unusually low level’.

‘If this were to persist it could present long-term challenges for the economy and a greater dependence on migration to maintain an adequate workforce,’ we’re told.

So basically, the island’s ticking along with full employment, no spare labour, no capacity for job growth other than by attracting folk here and out of the 19 economic categories measured in the report, 12 pay less than the economy median.

Unless you’re white-collar finance, professional, public sector or an estate agent, your pay is sub-par. Construction is the earnings cut-off point in the data sets and that too has been squeezed.

As an aside, here’s a little teaser for you. How much has Guernsey given to overseas aid over the last 20 years? Go on, £5m.? £10m.? Nope, it’s £43m. – more than £1,000 per taxpayer.

Ballpark, it’s the amount you’ll also have to find after the States completes a job evaluation scheme and levels up – never down, eh? – pay rates. Excellent news for those benefiting but hopeless, dead money on a bang-for-your-buck basis.

Another little example for you. Deputies Peter Roffey and the usually more prudent Chris Green have persuaded the States to set a 2% of GDP target on infrastructure spending.

This matters as the previous 3% target hasn’t been hit, basically because Guernsey lacks the management and resource capacity to sustain the projects implied by that level of investment.

So to do what the States now asks means we will have to take on more civil servants – and pay them anywhere between £2,600-£15,900 more than the median earnings most Guernsey people are expected to live on – to get this extra work done.

That’s significant. While finance employs 19% of islanders, the number working for the States has now grown to 17% – without all the new initiatives currently planned. Retail, previously the second-biggest employer, is down to just 12%.

Which brings us back to the start: why did our top politician channel former UK PM Harold ‘Super Mac’ Macmillan’s ‘you’ve never had it so good’ comment from 1957 with his own 2020, ‘yes, you really can have it all’?

On one level, I suppose he’s technically right. The economy has been remarkably resilient and well-handled by a few stalwarts. Look after it, exercise a bit of prudence and there are still a few tunes to be coaxed out of the old girl.

Let rip this Assembly’s current wish list and we transition from small government to middling government and a fresh tax-and-charging regime visited on the same squeezed middle and millennials.

So to have it all, we’re reliant on the good sense and restraint of States members. Either Deputy St Pier knows something we don’t about his colleagues or…

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