OFFICIAL wage figures indicate a downturn in the island’s economy, the Social Security minister has indicated. Deputy Mary Lowe said that the statistics from her department threatened to damage the credibility of the States’ growth policy to cope with financial losses caused by corporate tax reform.

‘From a social security perspective, there are indicators of some reduction in the buoyancy of the economy,’ she said.

Contribution income from employees and employers increased by 5.7% last year, but was below budget and failed to match the 6-9% increases seen since 2000.

In the first quarter of 2006, contribution income was up just 3.9% on the same period in 2005, which again was below budget. At the end of June, there were 219 people unemployed, 22 more than in June 2005. More than 700 people claimed invalidity benefit for long-term sickness, a rise of 55 on the previous year.

‘This is factual data and I can only speak on the actual numbers, which are accurate,’ said Deputy Lowe, who opposed the Policy Council’s zero-10 solution.

‘There has been a decline in contributions – they have gone up, but not as much as in the past and we have noticed a reduction, not a large amount, but still a reduction, in those working in finance this year.’

She said she had passed these warnings on to senior States colleagues prior to the tax debate.

‘Contributions have not increased as we would have liked – they are definitely slowing down. It’s our responsibility to ensure that States members have an informed debate.

‘Now more people are looking at this more closely because of the go for growth, so it is important that they are looking at the baseline of the current situation,’ she said.

The department was taking proposals to uprate benefits and contributions to the States at the end of the month and was proposing that pensions and other benefits should increase by 3.4% from January, in line with the cost of living.

It is the first time in five years that the increases have not beaten inflation. Deputy Lowe said that the decline in contribution growth had played a part in holding the benefit increases down.