‘Shovel-ready’ projects could put jobless to work
Bermuda could consider launching high-value public works projects to provide work for the long-term jobless, if the unemployment impact of the pandemic persists.
That is the opinion of Stephen Beatty, the global chairman of infrastructure at KPMG, who said such a move could be socially, as well as economically, beneficial.
In an interview, Mr Beatty said that in terms of economic stimulus, the shorter-term focus should be on small-scale maintenance jobs that could help small contractors get back to work quickly.
The response to the Covid-19 pandemic has caused thousands to be laid off with restaurants and hotels the worst-hit sectors. With an uncertain outlook for many businesses, unemployment could linger.
Mr Beatty said: “If you pay people benefits you can feed them and help them pay rent. But if you pay them and get something, that's how all the great public works projects in the US and Canada started.
“If you're going to spend money over an extended period, then thinking about what investments Bermuda could make in public works is worth having a really hard think about.
“Those that get on with it will fare better than those who have social problems as a result of a lot of people having nothing to do.”
Major projects, however, were not the answer for short-term stimulus. “It takes a long time to get a big project started,” he said. “If it takes 18 months to plan, then it misses the point.”
Smaller was better in terms of helping the economy to bounce back immediately, Mr Beatty said.
Tackling long put-off maintenance projects on public buildings or roads, for example, could help smaller contractors who measured their work backlogs in days, rather than months.
“Do things that are shovel-ready, but also shovel-worthy,” Mr Beatty said.
He added that many ill-considered projects that started in the wake of the global financial crisis provided economic stimulus without bringing long-term value.
The most effective projects would have a “high labour content and high local content”, he added.
The island had an opportunity to get the domestic economy up and running now, before it reopened its borders, he argued.
Mr Beatty said: “Getting people out shopping and out doing things again is a first step that is quite low risk, given the low levels of infection.
“The next wave of infections won't come from inside the country. The equation changes when the first tourist arrives.”
He said tourism-reliant, island economies had some especially difficult choices to make “between the health of the country and the country's economic health”.
Finding the right balance was critical. “We could end up in a situation where we have the debt and the deaths,” Mr Beatty said.
“We've embarked on a strategy to flatten the curve and we've taken on a lot of financial commitments. To throw it away would mean that money got burnt.
“It's a very vexing problem, particularly in a tourism-reliant economy.”
The world of work has changed and the longer it is before a vaccine becomes available, the more permanent the changes will be, Mr Beatty said.
“I can see internal travel budgets being slashed,” he said. “With videoconferencing, I can look people in the eye and talk to them from my home, just as I can in the office. I can interview them for a job.
“Our concept of remote working and our use of electronic interface will change. I think big screens for laptops will be something everybody wants now.”
Bermuda, with a reputation as a safe place with good healthcare services, could be a popular choice for remote workers to live, if immigration rules allowed it, Mr Beatty suggested.
The question for many people will be: “I don't have to be anywhere, so where would I like to be?”
Mr Beatty said: “I could see a thousand Steve Beattys wanting to move their families to Bermuda — if there were changes in the law around people who want to make Bermuda their home.
“I could see that having a major impact on the island's economy.”
Newcomers would spend heavily on arrival setting up their new homes for remote work, providing a significant short-term economic boost, he said.
Offices will become less important. Many companies would probably have only about a fifth of the numbers in the office as in the pre-pandemic world, he suggested. Many employees may need to come in only once a week.
Social interaction would still be needed, particularly for those learning the culture of an organisation.
“We are intensely social beings,” Mr Beatty said. “That desire will always be there, we may just have to satisfy it differently.”