Chamber: Bermuda must diversify economy
Bermuda has to attract new businesses to the Island to diversify its economy, the Chamber of Commerce said yesterday.
Nathan Kowalski, co-chairman of the Chamber’s economics committee, said a rash of mergers and takeovers in the reinsurance industry as the sector reacts to changing market conditions would lead to jobs losses.
Mr Kowalski, a chartered financial analyst and a columnist for The Royal Gazette, was speaking after Government released its 2014 job market employment briefs — which showed more than 800 jobs were lost between 2013 and last year.
The survey showed that there were 33,833 jobs counted in 2014 compared to 34,277 the previous year and that 13 of the 16 employment sectors experienced a fall in the numbers of staff.
But the number of jobs in the international business sector rose by 169 positions — boosted by higher demand for actuaries and underwriters.
Mr Kowalski said: “We are concerned, however, that this growth will be ephemeral in nature as the rapid consolidation we are witnessing in the reinsurance sector is likely only to accelerate job losses in Bermuda’s largest private sector industry over the next year or two.”
And he added: “The recent employment brief contained some concerning figures.
“The loss of over 800 jobs now brings total filled positions to 33,475 — much lower that the ten-year average job level of nearly 38,000.
“We are now down almost 7,000 jobs from the peak seen in 2008, or about 17 per cent. This highlights the increasing risk of Bermuda’s denominator problem — a shrinking working base that is supporting escalating entitlements, healthcare and debt servicing.
“The ratio of consuming sectors to wealth-creating sector jobs has shifted by about 10 per cent since 2008.”
Mr Kowalski added that the non-profit sector, which includes the civil service, continued to become an increasing part of the overall economy.
He said: “Wealth-creating industries have shed 6,807 jobs since 2008. Non-profit, social, and the public-administration sector has added 69 jobs since then.
“This further exacerbates the denominator problem as each private-sector employee — wealth creators — needs to pay more for the Government and support services.”
Mr Kowalski added that a 5 per cent increase in median salaries from $60,688 to $63,897 between 2013 and August 2014, when the survey was carried out, had exceeded the inflation rate and provided “real wage growth for workers with a job”.
But he warned: “The sobering reality is that wage growth that continues to outstrip global wage inflation risks is pushing us into an uncompetitive position for services and products that we export.
“Real wage growth that accompanies employment growth would be a welcome sign of a stabilising job market.”
And Mr Kowalski said that companies continued to struggle in 2014.
He added: “Bermuda needs to quickly attempt to begin the process of diversifying its economy where practical to offset some of its more challenged or mature dominate industries.”
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