The recent Jersey affordable housing update once again highlights the growing generational divide. Households today with a mean net income are unable to service a mortgage affordably on the median purchase price of a house of any size, that is, if they can even get the deposit together. Despite this, for the Jersey housing market it’s “boom time”.
A report released last week by intergovernmental economic organisation, the OECD, revealed that income inequality has been increasing since the 1990s, social mobility has stalled, meaning fewer people at the bottom have moved up while the richest have largely kept their fortunes. It also confirms that one-in-seven of all middle class households have now fallen into the bottom 20%, and across the 37 OECD countries it would now take the child of a poor family five generations or 150 years to reach the average income.
In Jersey, lauded high employment levels have not equated to decent jobs or pay, while the lack of any significant economic growth since the global financial crisis has only increased the generational divide. As the 2015 income distribution report shows, despite the overall average wage going up 2% over 5 years, workers in their 30s saw an 18% decline in their average earnings compared to an increase of 9% for those aged in their 50s. Yet it’s those in their thirties who want to start families and require affordable housing to do so.
The dominance of western neoliberal policies has meant that demand for workers has mostly benefited those at the top, with high salaries and tax breaks offered to attract a “highly skilled workforce” of immigrants to Jersey whereas, despite also high demand, teachers and nurses have seen their wages stagnate or decline. The “free-market” ideological belief in a self regulating market, where greater demand should equate to higher wages, has proven demonstrably false in Jersey, as it has elsewhere.
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For younger generations, the combination of depressed wages and rising house prices and rental costs have led to a bleak outlook of the future. It seems a difficult prospect to expect the young to believe in and contribute to an economic system that benefits them little compared to previous generations, especially when there is so much wealth to go around.
Let’s be clear, if we don’t fix these issues of low pay, wage stagnation and housing affordability, then we will not only be perpetuating a system of exploitation but we will end up cannibalising our own economic future.
How productive do employers expect workers to be when after housing and other essential costs are taken into account there’s little time or money left for them? What will be the impacts when those who couldn’t afford a home and have no assets or savings then come to retire?
A financial journalist was lambasted last year for writing that by the time you are 30 you should have at least your annual salary saved for retirement, by 40 three times, and by 50 six times your annual salary. Something most financial advisers would consider a tenet of basic financial planning but she was “savaged” because it’s considered wholly unachievable and out of reach for most in today’s economic climate.
So what’s the solution? At the moment we do not have timely enough data. Despite comments that there would be attempts to bring the income distribution report forward, and through no fault of the Jersey Stats unit, it hasn’t happened. Having to wait five years every time to find out that those who need pay rises and to get on the housing ladder the most have once again potentially lost out is simply unacceptable, this information should be available on an annual basis.
We also have no idea what the wealth gap in Jersey is, which includes assets such as houses, or how much income comes from unearned income, such as investments. We don’t know what the gender pay gap is in the private sector or how many properties are currently vacant, who owns what land and what property, which businesses are locally owned or not, and what about a potential tax gap?
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So as a start let’s have the States of Jersey and the statistics unit go further in its reporting to give us regular data that’s more precise, broader in scope and allows greater public scrutiny so that we can make better informed decisions. So that we can work towards creating a fairer society and help close the wealth gap that’s grown over the last few decades.
Today the fall out from the growing economic divide can be seen all around us, in Brexit, in Trump and in a growing far-right across Europe. Do we really want to wait and see what happens to Jersey if we don’t give families and the young the opportunity of a fulfilling future?