Young entrepreneurs are Bermuda’s future engine - economist
Young entrepreneurs and the “gig” economy could be the engine that drives Bermuda towards economic recovery and full employment, according to a top economist.
Craig Simmons said that, while large corporations had adapted technology in order to reduce staff numbers, small businesses could thrive in the current economic climate.
Mr Simmons, a senior economics lecturer at Bermuda College, spoke out after Government unveiled its Budget for the next fiscal year on Friday.
He said: “These are unprecedented times and so we need new thinking. The gig economy is here and it is our young people who are in a position to leverage that economy.
“It is our young people who understand the gig economy. They have seen their parents get burnt working for one company their entire lives and they have a different way of thinking.”
Mr Simmons welcomed Government’s pledge to provide more financial support to the Bermuda Economic Development Corporation (BEDC) in the next year.
“But there’s only so much that Government can do and Government has already got to the end of its tether,” he said.
“It has some massive debt and will probably have to go back to the markets to refinance that debt, which means, as far as job creation is concerned, the private sector has to step in.”
During his Budget presentation, Mr Dickinson said that Bermuda needed to “fan that innovative spark” to kick start “the next wave of economic activity”.
He said: “History shows that, following pandemics, human societies rebound with accelerated innovation and development.”
He noted that Government gave the BEDC an additional $12 million in funding in the wake of the coronavirus pandemic – and that further funds were in the pipeline.
“We will, through legislation and regulation, create an environment that encourages innovation, entrepreneurs, businesses, and start-ups,” Mr Dickinson said.
“Examples range from an energy regulatory sandbox that will allow Bermuda to benefit from innovative technology in the energy sector, a marine development zone, and exploring options to encourage FinTech and digital players to innovate on the island.
Last night Mr Simmons applauded that approach – but said the private sector, and banks in particular, needed to play a bigger role in helping new small businesses get off the ground.
He said: “You have got to take care of health risks of Covid-19 first. Only once you’ve got that got under control can you address the economy.
“In the first stage of Covid-19, the finance minister provided fiscal support in terms of unemployment benefit.
“He’s now made a transition to second stage in providing support for entrepreneurs. That’s good news because that’s the group that will make a difference.
“In any economy, job creation boils down to entrepreneurs. Recovery is salient to entrepreneurs – they’re the ones who can think outside the box and create.
“We really need to find people who have skin in game and then give them the resources to create. ’Skin in the game’ needs to be our mantra moving forward.”
Mr Simmons said that banks were now in a strong position to help start-ups financially.
“They haven’t been this strong since 2005,” he said.
“Their loan/deposit ratio is below 100 per cent and so are on a firm footing and in a position to do some lending – banks have wiggle room.
Mr Simmons said there was nothing surprising in Finance Minister Curtis Dickinson’s presentation.
“He’s doing what he has to do at the moment,” Mr Simmons said.
“He’s holding the slack tight. When you’re in a storm, you don’t take any drastic action. You pull down your sails and ride the storm out.”
And he warned that, although Mr Dickinson was able to keep his promise of no new taxes, “higher taxes will have to come” at some point.
“But that’s in the future and I think that’s the right approach given that we’re in the middle of a crisis.”
“But I’m optimistic. We’re in a crisis, but if anything, the worst businesses are the ones that are started during booms.”