Interim Population Policy: 2014 – 2015

STATES OF JERSEY

INTERIM POPULATION POLICY: 2014 – 2015

Lodged au Greffe on 30th January 2014 by the Council of Ministers

STATES GREFFE

2014 Price code: D P.10

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to  request the Chief Minster to  apply the  Control  of  Housing and  Work (Jersey) Law 2012 to support a planning assumption for net migration of + 150 households per year, which equates to +325 people per year, on average for the period 2014 – 2015, as outlined in the accompanying Report of the Council of Ministers dated 30th January 2014

COUNCIL OF MINISTERS

REPORT

Contents

Introduction by the Council of Ministers

Key Statistics

Residential Statuses and what they mean

Executive Summary

Section 1: Section 2: Section 3:

Appendices: Appendix 1:

Appendix 2: Appendix 3:

Population and Migration in Context Migration Controls

Conclusions

Statistics Unit Population Model (scenarios of net migration – net nil; +325: +500)

Surveys and consultations about population and migration Population Policies immediately prior to the 2012 Strategic Plan

Sources:

• Statistical evidence produced by the Statistic Unit on employment, our economy, public opinion, population and migration
• Past consultations providing evidence of public opinion, for example, the consultations on our Strategic Plans, and the "Imagine Jersey" exercise
• The accumulated knowledge and experience of the Housing and Work Advisory Group, the Population Office, and the Council of Ministers.

Introduction by the Council of Ministers

Jersey  has  a  unique  natural  environment,  a  strong  sense  of  community, and  our economy generates jobs and significant income to fund good quality public services. We must maintain and enhance this, striving for improvements where needed and facing new challenges, such as our ageing society. Over the next 20 years:

• Jersey's over 65s population will nearly double
• Our over 85s population will nearly triple
• Our working age population will decline by 11% by 2035 if we have no net migration

We are developing and applying policies to meet these challenge, for example, to secure economic growth and diversification, to provide quality health care into the future, and to provide homes, all based on limited migration that delivers economic value, creates jobs, and serves our community.

We need a balance between economic, community and environmental goals. Earnings, productivity, health, town development, policies to protect the countryside – they all play a part in helping frame population policy.

This is why we have developed "Preparing for our Future" – providing a framework to enable our community to coherently plan for the long term, and setting the issue of population in the wider context of what type of Island we want Jersey to be.

In the meantime, we are proposing an interim population policy for 2014 and 2015.

1. Maintain  the planning  assumption  of  +325  migrants  per  year  that  has underpinned the long term policies approved by this Assembly. This is a reasonable basis foran interim population policy – limited migration that will maintain our working age population and allow our economy to grow.
2. Enable migration which adds the greatest economic and social value, and only where local talent is not available. In particular;

1. Support  the  "Back  to  Work  programme" and  other  initiatives  to encourage employment and improvements in skills for Islanders
2. Use migration controls to increase the employment of "entitled" and "entitled to work" staff, particularly in businesses that employ more migrants than their competitors.

This provides stability in line with our existing policies, while we continue to deliver our 2012 Strategic Priorities, and so we can develop our long term vision together, focusing on keeping every aspect of our island in balance – economy, community and environment.

Key Statistics

• Our population has nearly doubled in size in the past 60 years – from 55,000 in 1951 to 99,000 in 2012.
• On a scale of 0 to 10 Jersey residents rated their overall life satisfaction as 7.5 on average. Life satisfaction in Jersey is higher than in all OECD countries except Norway and Denmark.
• Net migration has reduced– from a peak of +1,200 people per year in 2006 – 2007; to +600 in 2010 – 2012.
• Jersey's over 65s population will nearly double over the next 20 years; our over 85s population will nearly triple.
• If we have no net migration, the number of people between 16 – 65 will reduce by 11% by 2035.
• Our population will be 110,700 in 2035 if we average net migration of +325 people per year.
• The total value of our economy, as measured by Gross Value Added (GVA) (Earnings + Profits) has not grown in real terms over the economic cycle, and currently stands at £3.6bn, although substantial reductions have occurred since the economic crisis of 2008.
• Between 2007 – 2012, total private sector employment grew by 1%.
• Unemployment increased from 4.7% in 2011 to 5.7% in 2013.
• The unemployment rate is highest for people born in Jersey – 6.4%.
• 82% of working age adults are economically active (working or are looking for work) – higher than most other places, for example, 77% in the United Kingdom.
• 87% of our private sector workforce is "entitled" or "entitled to work", i.e. longer established residents.
• More than 35% of employees in hotels, restaurants and bars are "registered", i.e. newer residents, rising to 40% in the summer (higher than other sectors).
• In contrast, approximately 5% of workers in finance and construction are "registered".

Residential Statuses and what they mean

Executive Summary

Finding 1:

Population growth is normal for a successful jurisdiction, and has been generally positive for Jersey, but we face serious challenges.

Our population growth has been normal. Small, wealthy Islands, in particular, tend to have higher population densities.

Our  population  growth  has  contributed significantly to our society and wealth, including the ability to fund public services, as industries such as tourism and financial services have grown over the post war period.

Islanders  report  very  high  levels  of  "life satisfaction", despite prominent concerns around migration, unemployment, and the affordability of housing.  That  said,  we  have  challenges  in  the future:

• The number of people over 65 will nearly double by 2035
• The number of people over 85 will nearly triple by 2035
• Net nil migration would mean our working age  population  will  decline  by  11%, equivalent to approximately £400m of our Island's economic output.

We should be proud of our achievements, while recognising  that  more  needs  to  be  done  to secure our future.

Finding 2:

Legitimate concerns around migration should be addressed as part of securing the overall success of our Island.

Islanders have consistently said that migration is their highest priority and most pressing concern. In  a  small  and  beautiful  Island  this  is understandable. At the same time, Islanders found migration more acceptable if it kept taxes low and the quality of services high.

Appreciating  this,  the  2012  Strategic  Plan  and Economic  Growth  and  Diversification  Strategy give a clear direction on migration:

• It should be limited
• Focused  on  higher  economic  and  social value activities,
• Support local employment
• Complemented  by  policies  around

affordable housing, long term public service provision, skills development, protection of our environment, while securing economic growth

The  Council  of  Ministers  believe  this  is  the right  course  – migration  that  is  limited  and delivers  the  greatest  gain,  pursued  alongside complementary policy measures to secure our long-term future.

Finding 3:

We should plan for the long- We would benefit from a long-term and collective term future of our Island,  vision for Jersey. We can then all work toward with population being one  that vision, and present our Island clearly to the element of a vision for the  rest of the world.

type of Island we want to be.

This  involves  alignment  around  how  different economic, environmental and social policies work together, with population being one component of that vision. It would be wrong to set our long-term population policy in advance of that vision.

The  Council  of  Ministers  is  developing  this work through the publication of "Preparing for Our Future", and will engage with the public in 2014. In the meantime, a debate on the issues we  face,  and  an  interim  population  policy providing direction and clarity for the short- term is needed.

Finding 4:

We should adopt a planning assumption for net migration of +325 people per year – giving a direction that will secure stability in the size of our workforce, and in line with existing States approved policies.

Government  cannot  control  all  migration decisions, for example, when people get married or relatives come to live with them. This is the case whatever system we have. However, we can adopt assumptions to enable us to plan services and  infrastructure,  and  we  can  direct  our  new Control of Housing and Work Law to reasonably secure those assumptions.

In  advance  of  "Preparing  for  Our  Future",  a "planning assumption" of net migration of +325 per  year (which  equates  to  150 households  per year) should be followed. This would:

• Build on the 2009 and 2012 Strategic Plans and the long-term policies already approved by the States
• Set a direction consistent with a stable working

age population in the future

• Recognise that our long reliance on migration will take time to change as we improve our skills  base  and  incentives  to  work,  and  that limited  migration  is  necessary  if  we  are  to grow and continue to create jobs
• Represent a continued and gradual reduction in net migration following recent trends

This is a policy of stability in the size of our working  age  population  supporting  existing States decisions,  for example,  around  health, housing, etc. Within this, we should improve our  economic  performance  and  develop  our long-term vision.

Finding 5:

The Control of Housing and Work (Jersey) Law 2012 should be used to support our policies and planning assumption.

We should apply this  Law  with care and offer support, recognising that businesses continue to face challenges around recruitment. For example, through  the  "Back  to  Work"  programme,  by offering temporary licences to facilitate change, by investing in skills, and promoting incentives to work, etc. However:

• 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
• New  businesses  should  predominately employ "entitled"/"entitled to work" people
• Unused permissions for migrants should be removed

In  making  these  decisions,  we  should  support migration  that  has  a  high  economic  and  social value,  and  ensure  we  do  not  undermine competitive pressures.

In  this  way,  employers  who  mainly  employ "entitled"  and  "entitled  to  work"  staff  will experience no additional burdens; we will help reduce  unemployment  and  limit  migration; and  businesses  will  compete  for  staff  on  an increasingly level playing field.

Finding 6:

Our migration controls should be continuously reviewed and improved where possible, including a focus on compliance and other measures to support our migration objectives.

We  should  undertake  a  post-implementation review  of  the  new  Law  to  secure  continuous improvements  in  its  effectiveness,  including  a review  of  qualifying  periods,  photographs  on registration cards, how we service customers, and compliance.

In addition, we should review other measures to secure migration objectives. In particular, looking at how migrants access public services and fairly managing any incentives that may exist to people migrating to Jersey.

Continuous review and improvement assists us in achieving our objectives.

Population and Migration in Context

Population and Migration Trends

Over  the  past  60  years,  Jersey's  Index: Population growth population  has  almost  doubled  from

55,000  in  1951  to  nearly  100,000  today.

While our population growth has been  higher  than  the  other  Crown  Dependencies,  all  have  experienced  significant population growth. Indeed,  the world's population is growing fast  (by 30% between 1990 and 2010).  

The  world's  most  populous  jurisdictions  are  generally  small  and  economically  successful,  and  very  often  islands.  For  example,  Jersey  (819  people  per  square  kilometer)  Guernsey  (1,000),  Bermuda  (1,225),  Malta (1,344), and other much denser  jurisdictions  such  as  Hong  Kong  (6,414),  Singapore  (7,436)  and Monaco (24,728).

It would be surprising if this were not

the case – population growth is partly  Net Migration in the last decade a consequence of success.

Over  the  last  decade,  our  net  1,600 migration has fluctuated in line with  1,400 economic  trends  – growing considerably  before  the  2008  1,200 economic  crash,  and  slowing  since.

On  average  net  migration  (to  the  1,000 nearest 100) has been:

800 600 400 200 0

• +700 per  annum  over  the  period 2002 – 2012
• +1,200 per annum over the period 2006  – 2007 as  the  economy performed well
• Slowing  considerably  between 2010 – 2012 to +600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

At the end of 2012, our population was 99,000. (The 2013 population  * The 2009 figures are provisionally scheduled for publication in June, 2014). Strategic Plan

target/consistent

with the migration Tmhige raSttiaotnisstcicesnaUrinoist, wesitlilmbaet:e  that  our  future  population,  under  different  assumptions

underlying

2035 Population existing States

policies

** The level of net migration experienced in 2012

The composition of our population is also changing as we live longer and society ages. Composition of our population under different net migration scenarios (nearest 1000):

An ageing society  is a  very considerable  economic and social challenge. However, it is a challenge that would be compounded if the number of workers were decreasing at the same time. This would present Jersey as a very different, much older society to the Island we know now. This is what happens if net migration is nil:

• Our working age population will reduce by 7,500 , or 11%, and
• Our over 65 population would still double

11% of Gross Value Added (at 2012 values) would equate to approximately £400 million. The relationship  between  workers  and  economic  value  is  not  linear  – the  actual  reduction  in economic value depends on productivity, and could be higher (for example, if businesses left or closed if they were unable to recruit); or lower (if the reduction in workers happened in lower value sectors  without other  material  effects). However, it is  likely that  a  reduction in  our workforce would lead to a very significant reduction in our economic output.

To put this into greater context, the number of people over 85 will nearly treble, whatever our migration levels – from 1,900 in 2010 to 5,100 in 2035.

This will be a significant challenge for our public services.

For example, typically an person aged 65 or over is estimated to use up to four times as much resource as an average adult.

Furthermore, these trends will continue as the over 65s population will continue to increase after 2035.

Composition of over 65s population under different net migration scenarios (nearest 100):

However, the solution to  our ageing society  is  not to import  more  workers to  maintain a consistent ratio of working age people to people over 65. If that were our objective:

• Migration would need to average 3,000 people each year
• Our population would reach 165,000 by 2035
• Our population density would increase by 67%

This is unacceptable to the Council of Ministers and most Islanders.

Other  policy  measures  are  possible  if  we  want  to  extract  a  similar  or  greater  economic contribution  from  a  shrinking  working  population,  for  example,  increase  productivity  and participation, so that we generate more economic output from our working population.

However, these measures would have to be very radical to compensate for an 11% reduction in our workforce while our over 65 population nearly doubles and our over 85 population nearly triples.

• Even if we change our expectations so that the "working age" cohort is set at 16 – 70, i.e. people retire at 70, then pensioner numbers would still increase by 43% by 2035 (noting that the current intention for increasing State pension age is that it will rise to 67 by 2031).

Furthermore, there is a sizeable risk that some of these measures would be counter-productive, for example:

• If businesses cannot recruit they may relocate or close, increasing unemployment and reducing wealth;
• Encouraging people to work longer does not mean those people will actually work

These issues will be examined in much greater depth in "Preparing for Our Future", the Long- Term Planning Framework being launched, including analysis  of different productivity and economic activity rates under different migration scenarios. This interim population policy is not designed to give all the answers to these issues – it simply seeks to highlight these issues and establish a course of action for the time being. In doing so, a natural and simple conclusion can be strongly inferred:

• Net migration cannot be the primary response to our ageing society (that level of migration would be unacceptable) but
• Without some net migration our situation will be much worse (if our working age population declines as our society ages).

Economy and Employment

The most productive sector of our economy (right) when measured by the "Gross Value Added" (GVA) per worker is the finance sector.

Agriculture, wholesale and retail, and hotels, restaurants and bars, are the least productive sectors on this measure.

Economic growth in the period up to 2000 was strong (below right) driven by the growth in high value financial services. This took place alongside growth in the population and working age population.

2012 GVA (economic activity) per full-time equivalent employee (FTE) (£000s) (dotted line = All Sectors)

Over the last decade, this economic growth has flattened. This began before the 2008 global economic crisis. This trend is further illustrated by showing trends in the Gross Value Added per full-time equivalent employee (FTE) in the largest private sectors of the economy (below right).

• The finance sector has shown a significant reduction in GVA per FTE in the last 14 years, notably in the banking sub-sector – this began before the economic crisis and has been steeper since due to low interest rates
• All other sectors have shown flat or slightly reducing productivity over the economic cycle – followed by small reductions since the economic crisis

Real GVA index (2000=100)

120.0 100.0 80.0 60.0 40.0 20.0 0.0

Pre-1998 data is indicative only

This is concerning.

If productivity is decreasing, we need more workers to generate the same level of economic output.

Index (2000=100): Gross Value Added by Full Time Equivalent employee, by Sector

However, the size of our workforce has increased moderately over the last 10 years, and is now at a record high.

This combined effect of (i) reducing productivity and (ii) more employment has meant that our overall economic output has been broadly maintained at approximately £3.3bn in real terms (comparing the peak points in the economic cycle (2000 – 2007)).

At the same time, unemployment has risen in recent years, in particular since the global financial crisis, and this has been compounded by the euro crisis and significant decline in the fulfilment industry as a result of the withdrawal of Low Value Consignment Relief.

Total Employment (headcount) 1997 – 2013

70,000

65,000

60,000

55,000

50,000

45,000

40,000

Total 35,000 Private

30,000

Under the International Labour Organization (ILO) definition of unemployment, 3,200 people were not working but looking or waiting to take a job in June 2013 (compared with 2,570 in March, 2011).

This is a considerable rise in the ILO unemployment rate from 4.7% to 5.7%.

If the unemployed are a match for vacant positions, this means that we need less migration as we have "local" workers who can fill gaps in the labour market. However, the labour market rarely operates this perfectly.

Changes in unemployment (upper panel, International Labour Organization Rate, % working age population); lower panel, number registered as unemployed and actively seeking work):

Unemployment also varies considerably depending on where a person was born – with migrants showing much lower rates of unemployment (and much higher rates of working).

Analysis of economic activity, unemployment, and proportion of population (2011 Census) (age 16 – 59/64)

It is also the case that more of Jersey's working age population actually work or want to work than in many other jurisdictions (economic activity was 82% in Jersey in the 2011 Census, compared for example to 77% in the United Kingdom in 2011).

While these numbers are important in any migration discussion, if the debate is framed around numbers of workers, it is important to understand that the much lower rates of economic activity by Jersey born people is largely due to the fact that many more Jersey born people of working age are in education, and therefore, at least in theory, enhancing their skills for the labour market.

Analysis of  economic  activity by  migrants by  length of  residence (2011 Census)  (and adding in people who are in full time education) (age 16 – 59/64)

This analysis also implies that the propensity to work (or be in education) is not effected as a person lives in the Island longer, and that the 5 year qualifying rule for Income Support benefits does not materially affect the behaviour of people when it comes to working. (Only after 10 or more years' residence does the propensity to be economically active reduce, which may be more related to family decisions, such as having children).

Analysis of migrant employment by sector and residential status (ordered by number of migrant workers employed) (as at 31st December 2012):

The above analysis is as at December to avoid seasonal distortion, but it is worth noting that in June employment rises by approximately 2,000 – 2,500, half of whom are registered workers.

It is evident that the significant majority of workers, 87% in December 2012, are "entitled" or "entitled to work". The largest employers of migrant labour are hotels, restaurants and bars; financial and legal services; and wholesale and retail. (This analysis is as at December, so does not reflect the most significant seasonable variations associated with the summer tourist season or the agricultural peaks).

If we are to manage migration, it is logical that these sectors (hotels, restaurants and bars; financial and legal services; and wholesale and retail) are our focus, while still ensuring that migration into all sectors is managed.

The graph (right) illustrates compellingly that:

• Although wholesale and retail and financial and legal activities do employ a large number of migrants in total, as a proportion, these sectors overwhelmingly employ Islanders who are Entitled/Entitled to Work.
• Furthermore, of the migrant workers in the financial and legal activities sector, half are licensed employees, i.e. they are deemed highly skilled and essential.
• However, hotels, restaurants, and bars not only employ a large number of migrants, but they comprise a very significant proportion of their workforce (more than 35%). Furthermore, most of those migrant workers have registered status, i.e. they are not essential employees.
• Miscellaneous business activities, which include for example cleaning activities, also employ a sizeable number of migrants, who also form a significant proportion of its workforce.

It is also notable that those sectors with the lowest Gross Value Added per FTE employ the largest proportions of migrants:

• This is understandable to the extent that a business will generally source labour from outside the established population where it cannot find the skills it needs at the terms and conditions it offers within the established population.
• The finance industry requires specialist skills, but levels of

Graph showing employment by residential status in sectors employing the largest numbers of migrants (December, 2012):

Graph showing employment by residential status in all sectors (December, 2012):

pay are high, attracting many

local residents, including

those leaving education or

seeking alternative careers. GVA and Migrants by Sector

• However, other industries  

with lower economic values  2011 GVA/fte £000s (left axis) Non-locals Dec 2011 (right axis) often cannot complete for  180 45 staff on pay.  160 40

• Arguably, a culture and  140 35 popular perception has grown  120 30 100 25

around this, such that some

80 20 industries are seen as "not for  60 15

local people". 40 10

This profile of migration is not  20 5 consistent with an objective of  0 0 maximizing economic value, and

is contrary to objectives around

limiting migration – which the

significant majority of the public

want to see.

However, this profile of migration

has been facilitated over many

decades through the Regulation of

Undertakings and Development

(Jersey) Law 1973, because there

has been a strong desire to  Total employment (headcount) in wholesale and retail support industries which  and hotels, restaurants and bars (Dec 2001 – 2012): contribute to our way of life, and

to not see businesses cease.

This has meant that most sectors have continued to be able to satisfy their labour needs – the graph (right) illustrates that total employment in sectors with a low economic value has increased over the last 10 years.

An estimated 900 people per year are also completing their 5 years residence and gaining their "entitled for work" status.

This estimate is based on the 2011 Census, and is slightly higher than expected. Many factors influence this preparedness to stay in Jersey, and it is not possible to provide a definitive causal link.  The  most  likely  and  prominent  causes  are  that  other  jurisdictions  have  experienced significant economic difficulties, and the changes to qualifying rules, for example, the reduction in the housing qualification period to 10 years, and ability to gain financial support with housing costs after 5 years through Income Support.

This has meant that businesses are therefore less reliant on newer migrants as the Island is retaining more of its established population.

We are also seeing a change in the type of migrant coming to Jersey, with it being increasingly high value.

Composition of the Workforce, 2003 – 2012

Profile of Migration 2010 – 2012

Migration Controls

Past Challenges

There is a credibility gap around migration policy because past targets have been exceeded, most notably in the period 2009 – 2012. There is value in understanding why this is the case:

The inadequacies of our  The new Control of Housing and Work (Jersey) Law past migration controls  2012  was  introduced  in  July  2013  to  improve  our and associated  migration controls.

information gathering

Our old laws found it difficult to regulate effectively who worked in Jersey, as they contained limited powers to vary licences and impose new conditions.

They also struggled to minimize, detect and respond to breaches in the law, for example

• Employers  were  burdened  with  proving  their employees residential status
• Returns  from  businesses  did  not  detail individual employees
• Successful  and  quick  prosecution  was problematic.

Furthermore,  it  was  difficult  to  gather  and  maintain population statistics on a frequent basis. This meant that decision makers did not have sufficient information to monitor performance against targets and respond.

These  past  deficiencies  have  been  substantially removed through the new Control of Housing and Work Law.

The introduction of registration cards for all  new workers means employers are clear about who they are hiring; improved compliance and enforcement powers have been introduced; the ability to require activities to cease has been created and licences can now  be  varied;  and  more  detailed  return mechanisms  have  been  introduced  showing individual employees and their residential status

Managing migration and  The use  of short-term targets  presents  migration and population is not an exact  population control as an exact science. However, this is science not the case.

Net migration is influenced by personal decisions, such as entitled Islanders leaving, returning, getting married, or wishing to have relatives come to Jersey to live with them. We cannot and should not control these types of

personal decisions.

In addition, a business may wish to relocate to Jersey or expand, and as part of creating jobs locally, they may also need some permission for migrant workers. Such a business may bring a range of benefits to Jersey, and it would not be sensible to refuse those permissions even if  the  target  for  a  single  year  was  to  be  exceeded, especially with high unemployment.

No system can manage these factors to a precise level, whether work permits, or even border controls. We are a  mobile  world where personal relationships  develop between  established  Islanders  and  people  from elsewhere, and where employers will always need to import skills and labour to some level or other.

This does not mean that we cannot set, work toward, and  reasonably  achieve  targets  – just  that  our expectations of any system should be set at a realistic level, especially in the short-term.

The inherent tensions  Many  Islanders want  migration  where  it  relates  to between limiting  people they want to employ, or contract to do work for migration and the needs of  them, or it may be someone they know such as a family employers and consumers  member or friend. The following are the most common should be recognised examples faced:

• An entitled person who wants to return to the Island  with  a  family  member  who  is  not entitled, usually a partner, or even a grown up child.
• A business wanting to employ someone who is not  entitled,  where  they  may  not  be  able  to continue trading without that permission.

In short, applicants usually believe they have a good case  as  to  why  permission  should  be  granted,  often when they are facing very difficult personal or business circumstances.

In  particular,  there  is  an  inherent  tension  between limiting  migration  and  the  needs  of  employers  and consumers generally.

Many businesses and industries rely on migrant labour, which is often very skilled and motivated, and often also more willing to accept low pay. Even with high unemployment, and while improving, this remains the case.

This  helps  businesses  offer  competitive  prices  to  consumers.  If we  are  to  refuse  these  permissions,  it could  have consequences for  profitability and prices, and the number of businesses operating.

This  creates  legitimate  dilemmas  for  decision- makers who have no desire to see any business fail and have sympathy for Islanders wanting to have their  loved  ones  living  in  Jersey.  It  requires, however,  a clear  framework,  an  understanding of the  potential  consequences  of  applying  that framework and a proper decision-making process.

Improved migration controls and how they could be applied

Generally, migrants would not come to Jersey, or at least could not afford to stay in Jersey,  if  they  could  not  work.  They  have  no  access  to  financial  support  from government and generally they rely on being able to support themselves.

This is borne out by the labour market participation statistics – 90% of British-born people of working age who are new to the Island work or are looking for work. This figure rises to 93% for other nationals new to the Island.

The new Control of Housing and Work (Jersey) Law recognises this, and requires a business to  have  a  licence to  trade  which  limits the  number of  migrant  workers ("registered"  and  "licensed")  they  can  employ.  A  business  does  not  need  any permission to employ "entitled" or "entitled to work" staff.

It is for the Chief Minister through the Housing and Work Advisory Group, chaired by the Assistant Chief Minister, and including the Minister for Economic Development, the Minister for Housing, and the Assistant Minister for Social Security, supported by the Population Office, to decide what licences should be granted for "registered" and "licensed" staff.

The  Housing  and  Work  Advisory  Group  are  applying  the  Law  in  line  with  the Strategic Plan direction to support activities which have a high economic and social value,  and  granting  permission  for  "licensed"  and  "registered"  staff  only  where "entitled" or "entitled to work" persons are clearly not available for these businesses.

Alongside this, and to tackle unemployment, the Back to Work programme has been supporting employers and job seekers with a wide range of initiatives. For example, a hospitality campaign, employment grants, volunteering schemes, job match events, a job club have been set up. Through these activities 1,300 job-seekers were supported into work in 2012, and 1,800 in 2013. Indeed, the Housing and Work Advisory Group includes  representatives  of  the  Social  Security  Department  to  secure  the  best outcomes. However,  employers consistently tell the  Housing and Work  Advisory Group that they have challenges around:

• Motivating local people to work at given levels of pay and conditions, and
• The lack of skills in many areas, prominently in industries which have relied historically on migrants

This includes a requirement for newer migrants for roles where skills can be taught quickly, for example, shop assistants, bar staff, cleaning staff and housekeepers. These requests are refused, but it is a continuing concern.

It is not enough for a business to show they cannot identify an "entitled" or "entitled to work"  person,  they  must  also  demonstrate  "high  value".  This  is  challenging,  as definitions of "high value", necessarily, vary.

The average value of each worker in our economy (Gross Economic Value (GVA) per full-time employee (FTE)) is £60,000. The simplest definition of high value then, is to define it as any worker who generates a value above the £60,000 average.

However,  many  enterprises create social  value, for  example, cultural,  sporting  or health benefits, or indirect value where they service customers, for example, a new restaurant  or  tourist  attraction.  The  Housing  and  Work  Advisory  Group  and Population Office seek to navigate these issues by assessing applications individually.

The table below provides a broad outline of how decisions are currently made:

"High Economic value"  Where  a  business  has  a  high  economic  value, (direct contribution)  permissions for  staff  would  usually follow  where  it

was demonstrated that  all possible  efforts  to recruit "entitled"  and  "entitled  to  work"  staff  had  been undertaken, including engagement with the "Back to Work" team.

Alongside the granting of these permissions, conditions may be applied. For example, the permission may be temporary and/or name the specific person who may be employed.  In  addition,  there  may  also  be  a requirement for "entitled" and "entitled to work" staff to be recruited for other positions and/or an assurance that proper training programmes are in place.

At present, there is not clear definition of high value – although having an economic value per worker above the average in the economy of £60,000 is the guide.

"Low Economic value"  In  the  past,  permissions  were  granted  such  that (direct contribution)  businesses  could  have  the  average  number  of

permissions for migrants in their sector, or higher, if they  demonstrably  could  not  find  local  people.  For example, if the average hotel had a licence so that 40% of its staff could be migrant workers, then a new hotel could also have that permission having demonstrated difficulties  in  recruiting  locally.  This  would  be  a starting  point,  as  each  case  would  be  considered individually.

This treatment has changed since unemployment rose dramatically.

Instead, the starting point for businesses which are not deemed  high  value  is  that  they  do  not  receive  any additional  permanent  permissions  to  employ "registered" and "licensed" staff. Again, each case is looked at individually to assess its merits.

This is the case even if the applicant demonstrates that they  have  tried  to  recruit  suitable  "entitled"  and "entitled to work" staff and cannot succeed, although a very short-term permission may be granted.

For  example,  if  a  hairdresser  cannot  source  a  local stylist, but Islanders have no difficulty getting a haircut of sufficient quality in the Island, should we permit them  to  bring  in  a  migrant?  The  answer  has  been generally  "no",  bearing  in  mind  the  desire  of  the Assembly and public to limit migration.

Other benefits  Some businesses are able to show that they are creating

something  exceptional  in  terms  of  their  offering  to customers, or wider benefits for Jersey, even though as a business they may have a below average economic value.

For example, a prestigious or niche hospitality offering where  significant  investment has  taken  place,  or  a service that was not previously being provided, where there was a demonstrable customer demand.

There is also a range of areas where social benefits are evident,  most  notably  health  care,  or  cultural  and sporting ventures.

There may also be a family connection. For example, a person may be the co-habiting partner or child  of a long-standing  resident  and  this  may  lead  to  a  more favourable decision.

Inevitably, these decisions are subjective, which is why they are subject to review at a range of levels within the  Population  Office,  in  consultation  with  other departments, and at political level through the Housing and  Work  Advisory Group, including  the ability  of applicants  to  meet  with  Ministers  and  explain  their case in person.

In all this, the simple test is:

What benefit does the application have to the Island as a whole (bearing in mind the Island as a whole wants us to limit migration)?

In making all these decisions, great care must be taken by government.

These components – expanding and supporting higher value activity and increasing  the use of "entitled" and "entitled to work" labour in lower economic value sectors – must work together. This is because:

• If we succeed in attracting and developing high value businesses, then to limit migration we must limit the ability of lower value businesses to recruit migrants, otherwise our population could grow considerably, i.e. we have to create space' within our targets to enable high value businesses to recruit.
• If we do not succeed in developing high value areas, and only limit low value migration, then the overall number of workers could reduce, and the overall value of our economy reduce accordingly.

Our economic and migration strategies rely on succeeding in both areas. Using the new Control of Housing and Work Law

Under the old Law,  Registered Staff – Permitted and Actual businesses had licences  reviewed every 3 years, and  outside this 3 year review  point, it was not possible to  vary their licence. This  meant that businesses could  carry on recruiting migrant  labour, even as  unemployment rose.

Generally, when being  reviewed every 3 years,  licences not being used were  removed. In this way, 1,600  unused licences for migrant  workers were removed  between 2010 and the end of  June 2013.

However, significant unused capacity remains, since migrants are staying longer and becoming "entitled to work" after 5 years.

This unused capacity also

shows, however, that vacant  Decisions made to grant, remove, and refuse licences are not always or  permissions for registered staff

even usually being used for

new migrants. Rather,

businesses only recruit when

they need to, and they

generally recruit the best

candidate.

The table (right) shows the decisions made by the Population Office and Ministers.

This system has meant, over time, that within any sector, some businesses employ substantially more migrant workers than their competitors and have the licence to do this. For example, if a licence was granted in a time of low unemployment and those licences have continued to be used, they may contain more permission for migrant workers than other businesses. Licences also reflect terms and conditions. Businesses that pay less have more difficulty attracting labour than their direct competitors and may have been given permissions in the past to ensure they could recruit and remain viable.

Currently, there is not a level playing field between businesses, with some holding many more permissions than others, even where those businesses are substantially the same. This means they do not need to compete equally for staff. The below table is illustrative of this, analysing the average proportion of migrants employed in a sector, and those businesses with the highest number of permissions:

The  new  Control  of  Housing  and  Work  Law  introduces  new  powers  to  support "entitled" or "entitled to work" employment and to limit "registered" or "licensed" employment, which can improve the above unevenness. For example:

• At any time, permissions for "registered" or "licensed" staff that are not being used can be removed from an existing licence.
• At any time, conditions can be  imposed so that all new recruits  must be "entitled"  or "entitled to work", unless express permission is obtained for specific "registered" or "licensed" recruits. Time limits can be placed on the length of time that those recruits can be employed.

These powers are extensive. They create the ability to intervene at any point. The only limitation is that the Law cannot be used to require a business to terminate a person's employment (other than where a permission to employ that person has expired or where a licence had not been granted).

Controls over Housing

The controls over housing contained in the new law are about segmenting the housing market  to  ensure that  only "entitled"  or "licensed" persons  can  occupy  qualified property (with their dependents). The new Law also ensures that only "entitled" and "licensed" persons can purchase freehold property.

In this way, access to the qualified housing market is protected from the additional demands that migrants would otherwise place on that market.

At the same time, the new law has extended security of tenure and tenancy rights to "registered" and "entitled to work" people. They are now able to lease the registered property in which they live, and enjoy the same tenancy rights as any other person, such as protection against eviction.

Population Register

A register of names and addresses has also been introduced under the new law. The intention is that migration objectives can be more frequently assessed, rather than await a Census every 5 or 10 years, or rely on annual statistical estimates.

The Statistics Unit will be reviewing the register and validating its accuracy over a period of time. This is to acknowledge that the Statistics Unit need to be satisfied that the register is a statistically accurate record of the population over time before they accept it, and also to recognise that it will take time for the Population Office to achieve this.

At the same time, the Population Register as maintained by the Population Office is able to be linked to other departments to improve their record keeping and to enable customers to receive a more streamlined service and this is gradually taking place. The Social  Security  Department  and  Population  Office  are  now  linked,  and  we  are advanced in linking up with other Departments.

Post Implementation Review

The law will be reviewed once it has become more established and within the first 12 months of operation, i.e. by July, 2014. This review will particularly focus on:

• Exemption periods (periods whereby businesses and individuals can work in the Island without needing permission)
• The 5 year "entitled to work" rule
• Whether a photograph on the registration card is needed to ensure compliance
• Process, systems and legislative amends to ensure the Law meets its purpose/to remove lacunas, etc.
• Optimising customer service.

In the meantime, as more essential improvements are being identified, they are being remedied. For example, processes for school leavers have been substantially improved and  resource  is  being  directed  to  continually  improving  the  quality  of  our  data, including "pre-qualifying" as many people as possible in advance of them applying for a registration card.

We  will  also  be  reviewing  other  complimentary  measures  around  migration,  for example, access by migrants to public services. This is a complex area, with different rules  prevailing  in  different  departments,  often  for  a  good  policy  reasons. Nevertheless, it is an important area for review.

Conclusions

Migration policy is not a single decision as to "what number" of people we should seek to permit into Jersey each year. It is a set of decisions around what our objectives are, and a sustainable package of policies to achieve those objectives.

Over the last 50 – 60 years, this package of policies has focused on maintaining industries such as hospitality, retail, and agriculture in the face of significant external competitive pressures and on the development of our finance industry as a wealth generator, as well as pursuing diversification opportunities where presented.

This has provided a strong economic base on which a range of public services have been affordable. This package, however, has involved migration. While seeking to protect our countryside, these migrants have placed additional demands on public services, infrastructure, our environment and housing.

It seems unsurprising then, that Islanders report themselves as feeling "very satisfied" with their lives, while being concerned about migration, unemployment, housing, and our environment

For the long term future, the "right" policy package for Jersey will be considered as part  of  "Preparing  our  Future",  in  continued  dialogue  and  consultation  with stakeholders.

In the meantime, and based on the 2012 Strategic Plan, the Council of Ministers have pursued and introduced a range of policies to secure a balance between our economy, environment, and community, with some of the more pertinent and prominent being:

Getting People into Fiscal stimulus to support businesses and employment Work while the global economy remains fragile.

• The Economic Growth and Diversification Strategy, including Innovation Fund, and enterprise strategy.
• The  Finance  Industry  Strategy  based  around  the McKinsey Report.
• Improving our skills base through the development of a Skills Strategy.
• Back to Work to support job seekers and prospective employers.
• Improving  work  incentives, for  example,  through Income Support sanctions.

Manage Population The new Control of Housing and Work (Jersey) Law. Growth and migration The  Housing  and  Work  Advisory  Group  limiting

permissions, focusing on higher social and economic value workers.

• Development of an interim Population Policy.

House our Community Revised  Island  Plan  to  provide  more  affordable

homes for rental and purchase.

• Housing  Transformation  Programme  – including establishment of a Strategic Housing Unit, a Housing Company and investing in social housing.
• The Starters Home Deposit Loan Scheme to support first-time buyers.

These policies are focused  on  the fundamentals that  will  change and reduce our reliance on inward migration, such as increased participation, improved productivity, and  targeted  migration  focused  on  higher  social  and  economy  value;  with complimentary measures to improve public services and the affordability of housing. They are, of course, not a full list of the actions. They are also noticeably, medium- to long-term plans.

It is counter-productive to simply limit lower value migration if we cannot improve productivity or attract sufficient numbers of higher value migrants as part of an overall reduction in migration levels, otherwise our economy will simply contract as we will have  less  workers  overall.  This  is  another  reason  to  be  gradual  and  carefully considered in reducing our reliance on migrant labour.

As to how this translates into population targets, it does not precisely do so. Decision- makers  need  to  work  toward  migration  objectives  in  a  responsive  manner  (i.e. listening and moving forward at the pace that businesses and Islanders can reasonably manage) and controls, whatever those controls are, cannot be so precise as to achieve an exact specified migration target in any one year.

Having  said  this,  the  public,  the  Assembly,  the  business  community,  and  other stakeholders, need to have a reasonable understanding of where migration policies are being directed, and to approve that direction, or not. Equally, the public sector needs agreed planning assumptions so that services for Islanders can be planned.

As  such,  and  in  advance  of  the  completion  of  Preparing  for  Our  Future,  and recognising that net migration has averaged +600 in the 3-year period from 2010 to 2012, it is proposed that a planning assumption be adopted whereby we plan for average net migration +325 persons per year.

It should be a clear that our objective is that a greater proportion of our migration relates to higher economic and social value activities, such as new inward investment businesses or existing high value businesses, in line with the Economic Growth and Diversification Strategy, while equally recognising that other industries need time and support in moving toward a more "local" labour force.

This planning assumption of +325 builds upon the outcomes of the Imagine Jersey 2035  and the 2009  Strategic Plan process,  and  expressed public  opinions,  which appear to have remained consistent for a number of years.

This +325 number is also reflective of the planning assumptions being used by States Department as  they are  planning services  into the  future, and  long term  policies approved by the Assembly.

This  planning  assumption  would  then  be  re-set  by  "Preparing  for  Our  Future", inclusive of detailed analysis of the different population scenarios in the Statistics Unit Population Model.

Appendix 1: Extracts from Statistics Unit Population Model (scenarios of net migration – net nil; +325: +500)

Appendix 2: Surveys and consultations about population and migration

The public have expressed their views on population over many  years, including through the media and, increasingly, social media. The overwhelming mood seems to be one of strong concern about migration, usually because of employment, house prices, and the impact on our environment, services and infrastructure.

On the other hand, the business community, through a variety of means, including through their representative bodies, have consistently  expressed  views around the importance  of  migration  in  providing  the  workforce  the  Island  needs  to  remain economically successful.

These are not statistical or even necessarily representative views, but the frequency with which they are raised means that they cannot be ignored.

As to more statistically robust ways of assessing public attitudes, the Jersey Annual Social Survey is a very useful tool. The 2012 Survey, in particular, showed that:

• Islanders believe the top 4 priorities of government should be:

• Migration (58%)
• Affordable Housing (42%)
• Unemployment (39%)
• Protect countryside and open spaces (36%)

These areas where ranked above public services, low taxes, and business growth. In that sense, all 4 of the highest priorities of government as expressed by Islanders are either directly or indirectly about migration. Indeed: 77% of adults were very or fairly concerned about current levels of inward migration into Jersey.

• On deeper  "How concerned are you that future inward migration could" examination, a

significant  majority of  people were

Very concerned Fairly concerned Not very concerned Not at all concerned

...increase demand on schools and hospitals

also either very

or fairly

...reduce number of jobs for current residents

concerned

about the

...lead to less countryside and open spaces

impact of

migration on

...increase house prices and rents

schools and

hospitals, local

...lead to more housing in built-up areas

jobs, our

countryside

and housing,

illustrated:

These messages  How acceptable is future inward migration to Jersey if it...' were then

somewhat  Very acceptable Fairly acceptable contradicted,  Not very acceptable Not at all acceptable whereby:  ...leads to better public services such as education and

• A majority

health

found inward

migration  ...makes sure we haagveeinegnpooupguhl awtoiornkers to support the either very or

fairly

...helps to maintain businesses and job opportunities ...means our pensionable age can be kept as low as possible ...keeps taxes for individuals low as possible

acceptable if it

improved

public

services,

supported our

ageing

population,

helped

business and

employment,

and kept

pension age

and taxes low.

This division between being very concerned about migration and related issues, but being more accepting if it supported public services, maintained workers and kept pension age from rising, and keeps taxes low, is the precise difficulty faced by policy makers also.

This division was also very apparent in Imagine Jersey 2035. The highest priority areas for government were identified as (respondents were able to choose 3 options):

• Protecting our green spaces (50%)
• Controlling population levels (50%)
• Healthy economy (45%)
• Low taxes (42%)
• Maintaining public services (41%)

The exercise also highlighted that the most acceptable solution to our ageing society was growing the economy (60%) and the least acceptable solution was allowing more people to live and work in Jersey (50%).

The consultation exercises around the Strategic Plans also highlight the same concerns and issues. Migration is consistently a very high concern but Islanders also want good public services, a healthy economy, etc.

Perhaps the best indicator of all, however, is one that simply looks at how Islanders feel about their lives.

On this, Jersey ranks as one of the best places to live on the Statistics Unit's Better Life Index (being particularly strong on incomes, jobs, living space, and sense of well- being and ranking most poorly around the affordability of housing).

Appendix 3: Population Policies immediately prior to the 2012 Strategic Plan

Financial and manpower implications

The Interim Population Policy will require up to 2 additional FTE to support the increased levels of licence review, noting the intention to focus the Law in particular on businesses with above average permissions for their sector. This is expected to incur  additional  staff  costs  of  up  to  £80,000.  These  financial  and  manpower implications will be met within existing financial and manpower allocations.