New research by PwC Channel Islands suggests that Jersey and Guernsey could grow their economies by almost £700 million a year.
By improving workforce participation, the islands could also generate more than £150 million in additional annual tax revenue.
Published on 9 July, the report highlights how boosting workforce numbers through increased employment rates within the islands’ existing population could contribute significantly to sustaining long-term prosperity and growth. Within the report, opportunities to maximise human capital in the Channel Islands are explored, as well as an examination of the untapped talent available right here on the doorstep.
The report emphasises that a shortage of skills is the biggest threat to local business’ prospects, whilst ageing demographics and a potential decline in the working age population in both islands is set to severely constrain economic growth in the years ahead. In particular the report notes:
- By 2040, it is projected that for every ten people of working age in the Channel Islands as a whole, there will be four older islanders (over 65). In Guernsey, the pressure is especially acute. It is projected that by 2040, for every two working age people there will be one older islander.
- In Jersey, the percentage of young people (aged 15 and below) slipped from 18% of the population in 2001 to 15% in 2023, and is expected to fall to below 13% in 2040. In Guernsey, the percentage of young people is expected to fall by the same amount, but will remain around 15% going into 2040, mainly due to the declining total population.
- The Channel Islands could look to New Zealand as a model of where workforce participation is higher and is making a positive impact towards the health and wellbeing of the population and that of the public purse. If the Channel Islands matched New Zealand’s employment rates today:
- Jersey’s workforce could be boosted by 3,100 more employees, its GVA increased by £280 million per annum and tax revenue increased by around £65 million per annum
- Guernsey’s workforce could be boosted by 4,500 more employees, its GVA increased by £410 million per annum and tax revenue increased by around £89 million per annum.
Within PwC’s latest piece of research, several reasons are identified as to why people leave the workforce or limit their participation, including sector-specific forces; employer perceptions and unconscious bias; lack of flexibility, skills and confidence; and financial pressures. In response to these challenges, the report makes the case for many impactful actions for policymakers, employers and Islanders to help boost the local workforce and drive economic success, including establishing a Retirement Commissioner, making childcare more affordable and work more flexible, and facilitating a culture of lifelong learning.
Commenting on the report, Leyla Yildirim (pictured), Chief Strategy Officer, PwC Channel Islands, said: “We’ve known for a long time about the ‘looming’ issue of an ageing population, but measures to mitigate against it have been limited. It is now of critical importance to focus on workforce participation if the islands are to avert a demographic ticking time bomb and achieve their growth potential in the coming years.
“The good news is that a big part of the answer is right here on our doorstep. Boosting workforce numbers through increased employment rates within our existing population, particularly amongst women and older workers, could contribute significantly to sustaining long-term prosperity and growth in our islands. Local businesses and third sector organisations would have access to a larger talent pool; governments could generate additional tax revenue; and islanders could benefit from the health and wellbeing boosts associated with working longer and being active in later life. Our report brings to life the reality of just how significant a focus on workforce participation could be, with the islands’ economies potentially benefiting to the tune of almost £700 million each year.”
