The International Labour Organisation has warned that small island economies such as Bermuda remain highly exposed to global price shocks, even as Latin America and the Caribbean record some of their most stable labour indicators in more than a decade.

Speaking at the launch of the ILO’s Labour Overview 2025 yesterday, Ana Virginia Moreira Gomes, the organisation’s regional director, said Bermuda’s structure left it particularly vulnerable to imported inflation and rapid wage pressures.

Recent data show Bermuda’s inflation rate eased in 2025, then rose slightly to 2.0 per cent in July, illustrating the cost pressures regional economies also face.

“Global price shocks similar to those affecting Latin America translate quickly into local inflation, because there is little domestic production to buffer costs,” she said.

She added that Bermuda’s small and highly specialised labour pool meant “wage pressures can spike faster”.

This can increase business costs if pay growth outpaces productivity, worsening inflation.

She added that in service-driven economies, “wage increase must align with productivity improvements to avoid evolving competitiveness in tourism and international business”, and emphasised the need for frameworks that prevent wage-price spirals.

“In small economies, wage-setting mechanisms that preserve purchasing power, while linking increases to productivity, are critical,” she said.

In Bermuda, the minimum wage rose to $17.13 per hour from September 1, following Wage Commission recommendations to keep it in line with inflation. The commission has suggested that minimum wages should be reviewed every two years using inflation data so that pay keeps pace with price increases.

The ILO report shows the wider region recorded moderate but steady employment gains in 2025. Labour force participation averaged about 63 per cent, while the employment rate rose to nearly 60 per cent. Unemployment continued a multiyear decline, reaching roughly 6 per cent — one of the lowest levels in 15 years — as more people entered or returned to the labour market.

But the ILO cautioned that strong averages mask persistent structural gaps. Informality remains a defining regional feature at 46.7 per cent, leaving nearly one in two workers without formal protections.

Women and youth continue to face the steepest barriers: the male participation and employment rates are both 22 percentage points higher than those of women, while women’s unemployment is two percentage points higher. Youth unemployment remains nearly three times the adult rate, and 56 per cent of young workers are informal.

“The region cannot be content with averages that seem positive. We need active policies that promote decent work, equality and protection,” Ms Moreira Gomes said.

The ILO also highlighted widening disparities across countries, age groups and economic sectors, as well as the rise of digital platform work. New survey findings show that among online platform workers, higher education levels are associated with higher earnings. This is evidence of a shifting labour landscape that requires updated regulatory frameworks, she said.

Locally, a recent report showed total jobs in Bermuda rose by 1.8 per cent between 2023 and 2024, but employment for Bermudians themselves has barely changed, only increasing by 0.1 per cent. Likewise, median income grew by about 1.3 per cent in that period, but when seen against inflation at 2 per cent, the gains lag and result in workers struggling to afford the cost of living.

Gerson Martínez, the report’s lead economist, warned that headline improvements do not capture the underlying pressures shaping the future of work.

“Employment is transforming,” he said. “While some indicators are improving, we need to look below the surface.”

The Labour Overview 2025 follows the Punta Cana Declaration adopted at the ILO American Regional Meeting in October, reaffirming commitments to formalisation, decent work and reducing structural inequalities.