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Dire warning over growing economic divide

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Retired economics lecturer Craig Simmons raised concern about the growing economic divide in Bermuda (Photograph by Akil Simmons)

The widening gap in earnings within the Bermuda workforce increases the potential for civil unrest, a Bermudian economist has warned.

Speaking at the Royal Hamilton Amateur Dinghy Club yesterday, Craig Simmons, a former member of the Government’s Wage Commission, had a dire warning for the Hamilton Rotary Club luncheon.

Mr Simmons raised the spectre of the French Revolution and expressed concern at alarming statistics which highlighted growing income gaps.

“Bermuda’s economy is predicated on social peace,” the retired Bermuda College economics lecturer said. “We cannot afford to have fragmentation.”

He said the income of blue-collar workers in Bermuda has been declining steadily for the past 20 years.

“Since at least 2005, blue-collar, inflation-adjusted incomes have been going down, while white-collar, inflation-adjusted income has been going up,” he said. “There is a gap and it is getting wider.”

“What I see is a bifurcation,” Mr Simmons said. “I hear blue-collar people talking about the price of food and I cannot help thinking about the French Revolution.”

He said West Hamilton and North Hamilton were like different worlds.

“It is hard to believe they are in the same country,” he said. “That kind of disparity in a place as small as Bermuda does not bode well.”

Craig Simmons told the Hamilton Rotary Club of the potential for unrest because of the increasing gaps in earnings (Photograph by Jessie Moniz Hardy)

Mr Simmons said that at the time of the French Revolution, King Louis XVI and Queen Marie Antoinette did not worry about the possibility of revolt until they lost their heads at the guillotine.

“These things are not announced,” Mr Simmons said. “No one says there is going to be a revolution next week, or there is going to be social unrest.”

According to the November 2022 Labour Force Survey, a median gross annual income for the working population was $65,725. The survey only considered primary employment.

Women made $4,481 more than men, or had a 7 per cent higher median gross annual income.

“Women tend to earn north of the median income,” Mr Simmons said. “This started in 2009.”

He thought this was partly because since the 1990s, women have earned more bachelor and masters degrees than men.

In terms of economic earnings, according to the 2016 Bermuda Census, White men earn the most, followed by White women, Black women, and Black men.

The statistics do not divide out expatriate workers from Bermudians.

“The difference between White and Black women’s income is relatively small,” Mr Simmons said. “There is a huge gap between White men and Black men.”

As far back as 2016, Census figures showed a huge disparity between the earnings of White and Black men.

Mr Simmons shifted his focus and pointed to a few global government programmes that have been successful in fighting poverty.

“Arguably, one of the most successful, is the Economic Income Tax Credit programme in the United States,” he said.

The EITC helps low to moderate-income workers and families get a tax break. Those who qualify can use the credit to reduce the taxes they owe.

Another successful programme he highlighted is the Bolsa Familia in Brazil, which provides financial aid to poor Brazilian families. In order to be eligible, families must ensure their children attend school and get vaccinated.

Mr Simmons also mentioned the guaranteed basic income scheme which Canada tested in the 1970s.

Because impoverished families, in the experiment carried out in Dauphin, Manitoba, Canada, were guaranteed a basic income, they could afford to send their teenagers to high school for longer, instead of forcing them into the workforce to help the family.

Mr Simmons said it worked well, with community income increasing and educational outcomes improving, until a conservative Canadian government shut it down.

He called for more dialogue on the topic of addressing poverty in the community.

“I believe in democracy,” he said. “We need to check our egos at the door and then sit around as a group and really have honest and fruitful discussions about it.”

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Published May 21, 2024 at 6:24 pm (Updated May 23, 2024 at 8:39 am)

Dire warning over growing economic divide

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