Interim Population Policy: 2014 – 2015 (P.10/2014) – amendment (P.10/2014 Amd.) – comments.

STATES OF JERSEY

INTERIM POPULATION POLICY: 2014 – 2015 (P.10/2014) – AMENDMENT (P.10/2014 Amd.) – COMMENTS

Presented to the States on 28th April 2014 by the Council of Ministers

STATES GREFFE

2014   Price code: A  P.10 Amd.Com.

COMMENTS

Introduction

The Council of Ministers does not support this Amendment, because it would mean a very significant, and immediate, decline in the ability of our industries to source workers at a time when our economic recovery needs to be supported.

It  also  sets  a  direction  that,  if  continued,  would  see  the  size  of  our  workforce significantly decline over many years at the same time as our society ages.

However, the Council of Ministers does welcome the sizeable level of agreement that appears to be emerging on the fundamental policy issues; that migration should be limited and focused on value, so as to protect what is unique about our Island while also providing our economy with workers to support our ageing society.

As the Amendment says –

"Once again one has to eliminate the 2 extreme options of net nil and +500, which lead to unacceptable solutions".

Noting this, the Amendment's primary difficulty appears to be that net migration of +325 is too high, but that net migration of +215 is reasonable.

Most prominently, the Amendment argues that the difference in dependency ratios between net migration of +325 and +215 is relatively small, so naturally, we should go for the lower net migration figure.

To present the information on this subject (sourced from the Statistics Unit) in the most straight forward terms –

Table 1: Analysis of recent net migration by year:

The above happened in a period of declining economic fortunes.

It  is  very  difficult  to  believe  that  a  more  significant  reduction  to  +215  will  not materially impact on the recovery of our economy, which remains at an early stage. Indeed, this has the potential to undermine confidence in our Island's future as a place to do business.

Instead, we need a balanced, stable approach to migration, and our industries need more time to increase the number of established Islanders they employ, as outlined in the Report accompanying the Interim Population Policy. This includes the energetic support of government through programmes such as the "Back to Work" initiative, and the skills strategy.

The hospitality industry alone employs 2,700 registered workers. They are investing in training, they are working with government, but it still takes time to change a culture of relying on migrant labour that has lasted many years.

The  more  challenging  the  target,  the  more  industries  like  this  will  find  trading difficult, and the more we constrain industries such as construction and finance, which are reporting increased expectations of recruitment.

Table 2: Analysis of population (and dependency ratios) if net migration averages +200 and +325 by 2035:

Note:  As  mentioned  in  the  Amendment,  the  Statistic  Unit  produce  a  +200  net migration  scenario,  which  is  not  materially  different  from  a  +215  net  migration scenario as proposed in the Amendment.

The 2% difference in the dependency ratio by 2035 between a +200 and +325 scenario is caused by a reduction in the available workforce by 2,600 workers. The average economic value of a worker in Jersey is just over £60,000, so 2,600 workers equates to over £150,000,000 of economic value. Indeed, it is likely that the situation would be worse if businesses take a view that recruiting in Jersey is difficult.

Furthermore, if we experience average net migration of +200, our available workforce would be 3,300 smaller by 2035 than it is today, being a 5% reduction.

This is at a time when our society is ageing – the number of people over 65 will double, and the numbers over 85, nearly triple, by 2035.

While the Interim Population Policy is for a short period of time, we should recognise these long-term and important issues, and not believe that significant reductions in the size of our workforce do not matter.

We have a number of long-term policies in place to support the improvements we need, and this long-term approach will be supported by the "Preparing for Our Future" exercise. For example, we need to increase our productivity.

However, what we should definitely not do at this time is to set out on a path that so significantly and so quickly reduces our workforce or levels of net migration.

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P.10/2014 Amd.Com.

The Amendment also expresses concern about the ability of the Island to support a population that grows in line with a planning assumption for net migration of +325, and reflects upon the difficulty of precisely hitting any net migration objective.

However,  Departments  are  already  planning  their  services  in  line  with  the  net migration planning assumption of +325 (or higher). Furthermore, reductions in net migration also costs the public money, for example, the Government Actuary Report on the Social Security Fund showed that we may have to increase contributions in a few years' time if we are to maintain the value of our pensions. If migration is lower, then  it  follows  that  the  situation  would  be  worse.  This  simply  illustrates  the complexity of the migration debate and the need to take great care.

As to the difficulty in hitting any specific net migration target, the Interim Population Policy accepts and recognises this, while also arguing that it remains legitimate to have a reasonable objective in mind and to apply the Law to achieve that objective, while continuing to improve the Law.

Finally, and importantly, the Amendment removes in full the Report accompanying the Proposition. The effect of this is to remove all the solutions outlined in the Report, most prominently those outlined in Finding 5, which include –

1. that migration should be focused on the highest economic and social value areas; and
2. that Businesses that have more permissions for migrant workers than an average competitor should be focused upon, supporting them to recruit more "entitled"/"entitled to work" staff;
3. that new businesses should predominantly employ "entitled"/"entitled to work" staff; and
4. that unused permissions should be removed.

As a result, accepting the Amendment would mean a reduced planning assumption for net migration with potentially serious consequences. It would also remove the clear mechanisms which will guide the decision-making within the Control of Housing and Work  (Jersey)  Law  2012,  as  outlined  in  the  Report,  and  not  replace  them  with alternatives.  Accordingly,  the  Council  of  Ministers  asks  Members  to  reject  this Amendment.