By Jonathan Channing
AS someone who has stood for election and devoted significant time and mental energy to envisioning Jersey’s future – particularly with digital innovation as a core consideration – I feel uniquely positioned to write this stark but honest column, outlining what a digital future, or the lack thereof, may look like for Jersey and the potential consequences of getting it wrong.
While at first glance Jersey’s economy may seem healthy and robust, and its medium-term prospects relatively stable, such an outlook is short-sighted. Jersey has indeed succeeded in consolidating its position as an International Finance Centre and reaping the economic rewards. However, in a global economy largely sustained by debt-fuelled growth, jurisdictions such as Jersey will undoubtedly face pressure as larger economies adjust by returning to value-backed capital positions and focusing on reducing national deficits. To retain its position as an International Finance Centre, Jersey must adapt. If it fails to evolve, like autumn leaves falling, aspects of its economy could decline.
Yet, it’s not all doom and gloom. Family offices will likely remain a significant driver of business for the Island, although traditional offshore banks will continue to feel the tightening grip of regulatory measures due to their broader range of services and the complexities involved. This underscores why growing offerings in the digital space and planning for the disruption of digital are so important to the Island’s future. This, of course, hinges on the appetite to adopt a position of innovator over consolidator.
The Island risks undergoing an economic downturn in the next decade or two. To mitigate this downturn, the Island must be clear about the population’s skill base, the rate of upskilling needed to meet the demands of the emerging future job market, and the proactiveness of fiscal policy that aligns with these goals. Innovation is all about speed: the speed of adoption, the speed of decisions and the speed of progression. Disruption is on the horizon in unprecedented amounts; the coming age of autonomous AI will be the industrial revolution of our time. History tells us that while disruption can lead to net economic positivity in the long term, in the short term it can spell displacement of the labour force, contraction of government tax intake and widespread societal challenges for jurisdictions that have not been ready to adopt and adapt. This was observed during the Industrial Revolution, where economies that failed to meet the adoption curve experienced economic decline and displacement underscoring the importance of carefully considered action over knee-jerk reactions.
In my view, Jersey is one of those jurisdictions that suffers not from a lack of investment but from a lack of support for human capital. While it has invested in societal dynamics and long-term planning, Jersey has two distinct camps of human capital that could serve as net positive innovators: one consists of highly paid individuals who are greatly restricted, and the other comprises those who may not receive economic rewards but are genuinely interested in seeing a bright future. Unfortunately, these perspectives often do not align with established thought processes and local power structures, which leaves these individuals feeling both marginalised and frustrated. These two subsections of Jersey’s human capital are essential for informing a holistic vision that can address future challenges. However, Jersey has successfully disengaged both camps, resulting in a position of negative human capital innovation. This situation fosters a culture where many individuals simply “plod along” without questioning the broader dynamics at play, which can lead to economic stagnation. Compounding this issue is an ageing population and a lack of autonomy in the decision-making factors that contribute to economic success. Jersey’s current model is characterised by its inability to create sufficient value independently to run the society in the way to which people have become accustomed; instead, it largely relies on facilitating the proceeds of value generated by other countries. While this position can offer certain advantages, it is also precarious, as economic prosperity is directly linked to jurisdictions that create value. Those that generate wealth possess regulatory levers that facilitating jurisdictions lack. Therefore, there is a critical emphasis on the need for jurisdictions to cultivate high levels of human capital within the innovator sub-bracket. More innovative-minded individuals are essential for maintaining relevance and value in jurisdictions that facilitate rather than create value.
One key consideration will be the reform of qualifying factors for entitled residency and whether someone should gain residency after five years if they have not met the skills attainment brackets necessary to transition into more sustainable sectors of the future economy. It is crucial to ensure that they remain net positive contributors rather than simply attaining residency after five years, only to have their roles replaced by autonomous robots. Roles that could see a decrease in demand in the next decade or two include bar staff, carers, labourers and farmers (mostly in labour-intensive industries). With companies like Tesla showcasing the impressive performance of their products and predicting that the cost of the Optimus robot could be around $30,000, it’s fair to say that commercial viability will drive the replacement of lower-skilled roles with cost-effective robotic labour. However, it is likely that drives for productivity and the cost of complying with regulations will result in the loss of back-office jobs in the financial-services sector. This, coupled with the potential for larger employers to engage in jurisdiction shopping and increased scrutiny on low-tax jurisdictions, could lead to historically high unemployment rates. Limiting residency based on predicted future economy skills will help mitigate this risk and reduce the potential financial burden associated with helping those with entitled status who may be disrupted to get reskilled and re-enter the economy. A proactive approach to planning for bold and unprecedented decreases in the civil service, along with a back-to-basics approach to prepare for potential short-term detriment in economic growth, will also be a key factor in the short to medium term.
If Jersey is to transition from an International Finance Centre to a “Silicon Beach”, it must evolve into the digital era, embracing cryptocurrency, tokenisation and data trusts, and AI could unlock new economic horizons while reshaping its role as an International Finance Centre. Cryptocurrency and tokenisation have the potential to decentralise traditional finance, expanding opportunities for accessible, transparent asset management while positioning Jersey as a leader in innovative financial services. Data trusts offer a transformative approach to data custodianship, enabling Jersey to steward valuable datasets ethically, with applications spanning from healthcare to infrastructure. Meanwhile, the race for AI supremacy underscores the importance of high-quality data and scalable technology infrastructure, placing Jersey in a unique position to leverage its established legal framework in support of responsible AI development. Together, these digital advancements offer Jersey a pathway to redefine its legacy. Jersey’s future prosperity will ultimately rest on how well it performs against these four critical measures of strength:
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The Strength of Diverse but Committed Human Capital – While Jersey can attract and cultivate human capital, retaining it requires more than just economic incentives. If the prevailing “Jersey Way” culture alienates rather than integrates, we risk fostering a self-interested workforce that lacks cohesion. A balanced approach that fosters unity between locally originated talent and incoming expertise is essential.
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The Strength of Alignment – As the idioms go, Rome wasn’t built in a day, and it takes a village to raise a child. Jersey can no longer afford to operate with misalignment and “wilful blindness”.’ Political and societal inertia will only deepen if the Island’s stakeholders continue to pull in disparate directions.
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The Strength of Future-Proofed, Pre-emptive Policy and Regulatory Foresight – Jersey must recognise what lies within its control and act accordingly. There is a need for capable human capital in both political and civil service spheres – individuals skilled in crafting forward-looking policies and demonstrating regulatory foresight.
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The Strength of Adaptability and Agility – Given its unique position, Jersey must cultivate one of the most adaptable and highly skilled populations to stay relevant. A synergised workforce, equipped to navigate the rapid pace of digital and economic change, will be key to thriving amid the AI digital revolution.
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Jonathan Channing works with businesses to better understand neurodiversity and bridge the communication gap that is often present in organisations. In addition to this Jonathan has a keen interest in stoicism, broader philosophy and Jungian psychology. Jonathan also stood for election as Deputy of St Saviour in 2022.
