INFLATION and the rising cost of housing in Jersey mean that most households are worse off than they were when the world went into lockdown, new figures reveal.
Official statistics released yesterday show that average household income in March was £930 per week after housing costs, a 4% decrease since 2019/20.
This is because while average income has risen by 4% in the past two years, the average rate of inflation has been more than 8%, meaning Islanders are worse off in real terms.
Over the past decade, real-terms earnings have fallen by 6%.
Once mortgages and rents are paid, a quarter of households are living in ‘relative low income’ – which is defined in Jersey as bringing in £430 per week after housing costs, or £520 before.
Overall, one-in-five Islanders are in ‘relative low income’, which broadly marries with UK figures, but when it comes to pensioners, the two jurisdictions differ.
Whereas in the UK less than a fifth (18%) of pensioners have an income of £430 per week or less, after housing costs, in Jersey it is more than a quarter (28%).
The official report from Statistics Jersey, which is based on a survey of 1,300 households conducted between October 2021 and last November, shows that mean net household income has declined by 6% over the past 12 years.
The difference in earnings between the highest- and lowest-earning households has also widened over that period. The report also showed that while benefits and tax breaks serve to narrow income inequality, rising housing costs have wiped out this contribution.
Relative low income:
Relative low income is defined internationally as 60% of the average household income, which equates in Jersey to £520 before housing costs, or £430 afterwards.
Almost a quarter (24%) of local households fall into this bracket once housing costs – which includes mortgage interest, rent, building insurance and service charges – are stripped out.
Breaking that down by household type, the biggest group of the 24% were pensioners (35%), followed by individuals of working age living alone (26%).
A third of low-income households were living in social-rented accommodation and another third were living in a qualified rental properties.
Comparisons with other regions:
By using standardised statistical methods, Jersey can be compared with other jurisdictions. Before housing costs, average household income was 51% higher compared to the UK, which fell to 41% after those costs were taken into consideration.
Before housing costs, the proportion of individuals in households in relative low income was lower in Jersey (14%) than the UK (17%). After housing costs, the difference was smaller, but the proportion of individuals in households in relative low income was marginally lower in Jersey (21%) than the UK (22%).
Although, in percentage terms, there are slightly fewer children and working-age adults on low incomes in the Island than the UK, it is not the same for pensioners. In Jersey, nearly 30% of low-income households are pensioners compared to 18% in the UK.
Before housing costs, pensioners accounted for 23% of low-income homes. Internationally, that puts Jersey’s figure among the highest in Europe, with the Island ranked 30th out of 38 jurisdictions – placing Jersey between Switzerland and Serbia, and below the UK (18%) and EU average (17.3%).
Jersey also had higher income inequality than the UK, particularly when housing costs were included, and a widening gap between rich and poor.
Using the internationally recognised ‘Gini coefficient’, Jersey ranks 36th out of 38 in Europe, with only Bulgaria and Turkey having a wider gap between high- and low-earning households.
In short, this means that Jersey has a higher level of income inequality than the vast majority of European countries.
