Bermuda’s population problem
Over the past decade, Bermuda’s population and workforce have been shrinking. According to government statistics, our population has been in a steady decline since 2010, and it is projected to keep on shrinking. Between 2010 and 2020, the Government estimates that Bermuda will have lost more than 4 per cent of its population. In two years, we will have a little more than 61,500 people living here.
A drop in the general population is a concern — a stable or growing population is key to a healthy economy. But even more troubling is that the working population, which pays taxes to support seniors’ pensions and other government services, is falling at an alarming rate.
Ministry of Finance statistics show that Bermuda has already shed nearly 7,000 jobs or more than 16 per cent of its workforce, from its peak of 40,213 in 2008.
In a recent presentation to the Institute of Directors about tax reform, junior finance minister Wayne Furbert acknowledged these job losses represent a significant loss of government revenue. This is particularly problematic at a time when the Government is facing a $5 billion debt that is costing about $500,000 a day to service.
The drop in working-age population is also a significant concern because about half of Bermuda’s residents are more than 45 years old. By 2020, the Government predicts there will be 30 seniors (65 years and older) for every 100 people of working age (15-64 years). These seniors will be collecting government pensions and taking advantage of government-subsidised healthcare.
This squeeze has the Government looking for new taxes to impose on local businesses and residents. This will add to the cost of doing business in Bermuda, which puts pressure on local businesses who hire local workers. And it will add to the cost of living in Bermuda, a reason many have left the island.
There is another solution to this problem: to grow the population.
Bermuda is a service economy; we do not have a manufacturing base, nor do we extract any natural resources to sell to the outside world. What we do is provide goods and services to tourists and to the people who live and work here. It follows that the fortunes of local businesses are therefore tied to the number of people in Bermuda.
About 22 per cent of jobs in Bermuda are held by expatriates. These are mainly people in their peak earning years who do two things to benefit the economy: pay taxes, and use Bermuda’s goods and services, thereby boosting local businesses.
Some individuals and politicians have argued that we do not need to bring in more people, or to take steps to keep long-term expatriate residents on the island, until we find jobs for all Bermudians who are unemployed.
This ignores two key facts:
• That expatriates create jobs for Bermudians
Statistically, every work permit-holder — or wealthy non-Bermudian resident — creates at least one job for a Bermudian. Even a business or an individual that does not directly employ a Bermudian buys goods and uses professional — legal and accounting — and other services provided by Bermudians.
• That Bermuda is in competition with other jurisdictions to attract international business
Thanks to aggressive measures being taken by Britain, the United States and many other large countries that view tax-efficient offshore jurisdictions as stealing their tax dollars, the amount of business and dollars in international business is shrinking. And offshore jurisdictions are fighting to attract what is left.
People looking to move and set up businesses offshore now have many choices of location. Many are also looking for a permanent new home. Jurisdictions that offer first-class business services, and allow clear and easy access to permanent residency, are eclipsing Bermuda when it comes to growth.
For Bermuda to prosper, we need to look at our population issue from a balanced and informed perspective: we need a pragmatic approach to immigration.
Our legislation was designed to restrict growth: the 60/40 rule makes outside investment in local businesses unattractive and our immigration policies discourage people who create exempt companies here from putting down roots. The term “guest worker” indicates as much.
We need to repurpose our immigration policies to keep existing international businesses here. And we need to overhaul our approach to attract, and permanently tie, new international businesses and investments to Bermuda.
Growing our population is critical to Bermuda’s success. To achieve this we must become a jurisdiction that welcomes people from elsewhere, allows those who have been here over the long term to become permanent residents, and keeps the people we already have here.
Only then will we be able to grow our economy and tax base.
• John Wight is the president of the Bermuda Chamber of Commerce
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