The most recent average earnings report published by Statistics Jersey showed that, taking inflation into account, the average wage paid to Islanders declined during the past 12 months, which is the first time this has happened in six years.
Average earnings increased by 3.5 per cent for the year up to June 2018, which was 0.9 per cent higher than the same time last year. But the retail price index – the official measure of inflation – was 4.5 per cent, meaning the actual spending power of Islanders decreased by one per cent.
Would-be home owners might be particularly concerned, as the latest House Price Index report indicated that the cost of buying a property in Jersey increased by six per cent over the same period.
Greg Boyd, a senior economist for the States, said that a number of factors seemed to be driving the inflation rate up, but he felt it was particularly due to increasing housing and fuel costs.
‘Average earnings increased by the most since 2008, but because of the high inflation, we actually saw the first real terms decrease in six years,’ he said.
‘In terms of the [rising] inflation, it’s not as easy to say what the causes are this year as it was last year, when it was down to the falling exchange rate [which increased the cost of imports].
‘There a few things, like housing costs going up due to the rise in the Bank of England exchange rate, which will affect anyone with tracker or variable rate mortgages – that’s about half the market in Jersey.
‘Also, motoring as well as fuel and lighting costs increased, which was due to the price of oil going up.’
He added that it was unlikely that there would be any respite from high inflation levels in the near future.
‘The Fiscal Policy Panel [an independent group of economists that advises the States] are predicting 4.2 per cent inflation over the year, so it looks like we are going to have this level of inflation for a while,’ he said.
According to the average earnings report, the median average weekly earnings of full-time equivalent employees was £590 per week, while the mean average weekly earnings of full-time equivalent employees was £740 per week.
The long-term wages trend was also bleak, according to the report, with statistics indicating that real terms earnings had remained stagnant since the turn of the century, having increased by just 0.3 per cent since 2001.
By comparison, there was a 13 per cent real term increase in wages over the course of the 1990s.
Deputy Kirsten Morel, the chairman of the Economic Affairs Scrutiny Panel, said that the report was ‘really concerning’.
‘Out of the nine years where there has been negative wage growth since records started, five of them have been in the past ten years,’ he said.
‘It’s really concerning that only two sectors experienced wage growth above the rate of inflation. On the positive side, the business tendency survey indicated that firms in the finance sector are expecting to see increased profits.
‘I hope that these profits are passed on to employees’ wages, which will in turn help stimulate other sectors of the economy.’
The only two sectors that saw average earnings increase by more than the inflation rate last year were construction, where wages rose by a ten-year high of 6.7 per cent on average, and agriculture, which saw a 5.7 per cent increase.
Workers in the Island’s financial services industry and public sector both experienced lower-than-inflation wage increases, with nominal earnings increasing by 2.9 per cent and 3.1 per cent respectively.
The figures did not take into account bonuses paid in finance, however, which would have added roughly £130 to the average weekly wage of a worker.