Falling employment income dealt the economy a $100 million blow in the year ending June 30.The decline in wages and salaries reflects job losses and the weakness of the economy, and is revealed in the latest quarterly data from the Department of Statistics.The second-quarter statistics also show that Government revenue is falling faster than public expenditure, disrupting efforts to cut the deficit.Employment income in the year totalled $3,095 million, compared to $3,201 million in the year before that, representing a fall of $106 million, or 3.3 percent.Payroll tax revenue slumped almost 20 percent over the same period, though this was principally due to the rolling back of 2010’s two percentage point rate hike in 2011.Nathan Kowalski, a chartered financial analyst and a columnist for The Royal Gazette, added that the falling payroll tax was “somewhat indicative of the declining payrolls seen across all sectors of the economy — employment income has fallen 3.3 percent over the past year”.The hotels and restaurants sector showed a remarkable spike in the second quarter, more than doubling from the same period the previous year, climbing to nearly $36 million from $16.4 million, according to the statistics.“The shining star for payroll growth is in hotels and restaurants, which saw growth of some 46 percent over the past year,” Mr Kowlaski said. “The irony behind this is this sector benefits from favourable payroll tax treatment and contributes little to Government coffers.“This is also not likely to continue if hotel receipts continue to fall year-over-year. For the past 12 months gross hotel receipts are actually negative — down 2.1 percent.”The hardest hit sector was again construction.The dramatic slowdown in the industry was reflected by wages earned in the industry falling by ten percent in the second quarter, the 11th successive quarter of double-digit decline for the sector.Total construction sector pay was $27.5 million, around 3.5 percent of the Island’s total employment earnings of $781.3 million.International business compensation, by far the biggest segment, fell two percent to $248.2 million for the quarter, but over the past 12 months it declined by 5.3 percent to just shy of $1 billion.Government made progress in cutting spending over the year through June 30, during which expenditure fell by $71 million to $1,087 million.However, these savings were eclipsed by the $77.5 million slump in revenue over the same period, as Government took in $896 million during the 12 months, compared to $973.5 million the year before.“What is a bit disheartening is the trend in the Government ledger,” said Mr Kowalski, the chief financial officer of Anchor Investment Management.“Over the past year Government expenditures have dropped 6.1 percent but revenues, unfortunately, are melting away at an even faster pace, down eight percent.”