Inflation and staffing problems place strain on island businesses – report
Inflation and staffing challenges have put additional strain on Bermuda’s businesses, according to a survey commissioned by the Bermuda Chamber of Commerce.
Delivering its Business Barometer presentation yesterday, the chamber said that the survey of local businesses had shown that most believe they are better off now than they were a year before.
However, the report noted that increased operational costs and supply-chain issues had “significantly worsened” in the past year.
“Reduced profits are being felt by many businesses as a result of rising inflation, causing a notable minority of businesses to adjust their business plans and prices,” the report said.
“Most anticipate that inflation will continue to increase over the next 12 months and expect their operating costs to follow suit.
“In the coming months, four in ten businesses expect rising costs will be the greatest challenge they face, while a third expect it to be staffing.”
The report highlighted that three quarters of respondents said the cost for their business premises had increased over the past year, and one fifth said they anticipate moving their business premises in the next year.
“Among those anticipating a move, one quarter note that the decision is being influenced by a remote or hybrid-working model,” the report said.
The report added that a quarter of businesses believe they will increase their staffing levels over the next year. However, 80 per cent of respondents said that recruitment is a challenge.
“Also, in relation to staffing, two thirds indicate that retention of employees is a challenge at their organisation,” the report said.
“Positively, most businesses report that the Government moratorium on issuing new work permits for a limited number of specific positions had no impact on their business.”
The Government recently extended the moratorium until the end of May 2023 while changing some restricted job titles.
There are now 46 jobs closed to work permit holders — and a further 11 deemed “restricted”.
Nathan Kowalski, the president of the chamber, said the survey results were “not surprising”.
“These are concerns we have heard from our membership,” he said
Mr Kowalski added: “The results are very helpful in allowing us to focus on our [government] advocacy and programmes for our members.”
Margaret Chapman, chief operating officer and partner in Narrative Research Bermuda, which conducted the survey, said it can be a springboard to generate discussion.
She said: “The survey tells us where we are at and gives us some clues about what needs to be done to support businesses.”
Government figures have detailed a year of sharp inflation, with the overall annual rate of inflation doubling from 2.5 per cent between last October 2021 to more than 5 per cent in September 2022 — the latest figures available.
While retail sales rose in value terms during the period, the increase failed to keep up with the rate of inflation.
The Government’s Retail Sales Index report said that after adjusting for the retail sales rate of inflation, measured at 6.2 per cent in September, the month’s volume of retail sales decreased 1.8 per cent compared with September 2021.
The rent sector, meanwhile, increased by 0.6 per cent year-on-year, according to the September 2022 Consumer Price Index.