Bermuda needs to get a grip on the rising rate of inflation or risk seeing businesses close and job losses, Bermuda Employers? Council president Eddie Saints has warned.

Mr. Saints, speaking after last week?s release of the Consumer Price Index which said the annual rate of inflation had reached 3.9 percent in September, said employers were very concerned about the steady increase in the rate.

?It is literally inching up by a decimal point each a month and there is little confidence that it will not stop,? he said.

?This raises real questions about the cost of doing business in Bermuda when employers are already stretched and have to look for ways to lessen costs to remain viable.?

On top of inflation, Mr. Saints said employers were trying to find money to fund the April increase in the Employment Tax and employers and employees were also having to pay for increases in social insurance payments and double digit health insurance increases.

?Employers just do not have the ability to absorb these rising costs of doing business,? he warned. ?It is a huge worry for the viability of Bermuda firms.?

Mr. Saints also disagreed with Finance Minister Paula Cox, who said last week that she did not believe the 4.5 percent salary increase given to civil servants would be a benchmark for other wage negotiations.

And he said paying for the increase would work its way through the entire economic system.

?This will hugely add to the cost of doing business.?

Mr. Saints said he was concerned that Bermuda was entering an inflationary spiral, where the high rate of inflation led to high wage increases, which in turn led to prices of goods going up as businesses tried to pay for labour costs.

?With inflation now at 3.9 percent, this will add to the cost-push inflation cycle where people want to match their increases,? he said.

?That can only end when employees negotiate salary settlements which focus on more benefits rather than on payroll increases. So we need to be more creative.?

But he said that would be difficult when unions have a baseline of a 4.5 percent salary increase and a baseline of 3.9 percent for inflation.

Mr. Saints said Government needed to come up with fiscal policies which would cap inflation.

?Government should be looking for real causes of cost-push inflation,? he said.

?Measures could include a temporary reduction in fuel duties. There are tax increases or reductions that could control this growing cost of inflation.?

He added that if Home Affairs Minister Randy Horton passed amendments to the Employment Act that would end the ?opt-out clause? for paying time and a half for overtime, this would also add to businesses costs at the same time that it could have the effect of reducing the number of hours that people were now working.

?There are many employees working overtime because they need the extra money,? he said. ?Businesses may cut back on overtime that people depend on. This no flexibility approach will add further to costs.?

?We know that this is not an easy task for Government due to external pressures, but we look towards Government and the financial services sector to come up with solutions to the problem.?