Why ‘permanent residency for CEOs’ won’t work
There are a number of things that Government got right in its recently announced policy to grant Permanent Residency to international business executives who have a proven track record of creating jobs for Bermudians. Unfortunately, in trying to balance the needs of various parties, Government struck a compromise that makes the policy ineffective.
On the positive side, the Government correctly identified the problem. Over the last eight months, a number of top executives have left Bermuda and others are contemplating doing the same.
It is a big deal when a CEO leaves Bermuda because other executives know that one of the best ways to move up the corporate ladder is to stay as close as possible to the CEO. So when he leaves, other executives often follow, and the Bermudians that work under these departing executives often lose their jobs.
The spin-off effect of this hurts other Bermudians as well. Restaurants and retail stores suffer a fall in sales, landlords suffer a fall in rents, hotels have fewer overseas businessmen coming for meetings with these executives who no longer live here, charities suffer a fall in donations received, and Government’s payroll tax revenue falls, which causes an increase in the deficit and further cuts in social and other Government services. In other words, just about everyone in Bermuda gets hurt.
In addition to correctly identifying the problem, Government also correctly identified that often both business and non-business factors contribute to the CEO’s decision to leave Bermuda. Sometimes those non-business factors are beyond Bermuda’s control for example, the CEO merely likes big cities like New York more than he likes the more outdoorsy life Bermuda has to offer. But other times, the CEO is simply worried that his children, as non-Bermudians, have little future in Bermuda and so it is best to raise them in a country where they can live as fully participating citizens.
Unfortunately, the next part of the policy the Government got wrong. Government thought that by offering CEOs and other top job creators the opportunity to obtain Permanent Residency, these executives would be persuaded to remain in Bermuda. What Government failed to recognise was that effectively each of these top executives can already work and stay in Bermuda as long as they like we’d be crazy not to renew their work permits, and they know it. So in effect they are receiving very little when they obtain Permanent Residency.
More importantly, the offer of Permanent Residency at a price tag of $120,000 risks turning a gesture of inclusion into an insult. From the executive’s point of view, the Government is saying that we want you to live in Bermuda and create lots of jobs for us, but we don’t want you to be one of us. Instead, we will offer you and your family the right to become second class non-citizens for which we will charge you $120,000.
In fairness, Government had other interests to consider when deciding upon this policy. The problem is that many black Bermudians believe (with good reason) that for generations the white ruling class had imported white expats and gave them Bermuda Status in an attempt to water down the voting power of the black majority. So a policy granting status to predominantly white executives would have likely attracted criticism.
The better compromise would have been to set a very low maximum number of grants of status to executives each year. If Government were to simply amend the policy so that each year Bermuda Status would be granted to a maximum of, say, five top executives who have a proven track record of creating jobs for Bermudians, then the policy would have truly created a valuable incentive for these executives without materially affecting the power of the black vote.
Finally, the grant of Bermuda Status should be free friends don’t charge friends when they give gifts of gratitude.