The cost of doing nothing
By now, everyone understands that Bermuda’s economy is, and always has been, reliant upon foreign money. From Furness Withy in the 1920’s to the creation of the US bases during the 1939 -1945 World War to the huge investments by Daniel K Ludwig (Southampton Princess Hotel) and Hotel Corporation of America (Sonesta Beach Hotel) in the 1960s to the Saudi Royal family (Elbow Beach Resort) and ACE and XL investors in the 1990s to, the Tucker’s Point Hotel in the 2000’s, Bermuda has needed foreign investment. Bermuda has also always relied on an element of foreign labour. Starting out, it was the hospitality workers during 1930 to 1993. In 1994, there was a definite shift to International Business (IB) workers. A key feature of the switch was that the 1930-1993 foreign workers came to Bermuda to supplement Bermudian efforts to play host to up to 491,000 land staying visitors and a high of 154,000 cruise visitors. But when the shift came in 1994, a big chunk of the foreign workers replaced the visitors. These foreign workers became Bermuda’s new ‘business’. Essentially Bermudians shifted from hosting tourists who stayed an average five days, and then went back home; to hosting business residents who stayed 365 days, but who spent far more than the five-day tourists could ever spend. From 1994, Bermuda’s business model changed. Tourism receded. International Business (IB) replaced it. In 2010, Tourism brought in $384 million, while IB brought in $1.9 billion. That’s $5 from IB for every $1 from Tourism. To help us all understand what we’re grappling with, since 1994, but particularly since 2002, this is what has happened with Bermuda’s economy and workforce. [All figures are from the Department of Statistics.] Year Total WF B’dian WF Foreign WF GDP and Bermuda’s economy 2002 37,768 27,716 10,634 $3.9 billion…growing & expanding 2005 38,947 27,313 11,634 $4.9 billion…growing & expanding 2008 40,213 27,180 13,033 $6.1 billion…growing & expanding 2011 37,399 26,187 11,212 $5.5 billion (?)…shrinking & reducing As we can see there seems to be a link between the total workforce number and our GDP. As the workforce increases so does our GDP. If the workforce shrinks, so does our GDP. This also applies to government revenue. Therefore, if we look at previous trends and make some projections, the following two scenarios are what can happen: Year Total WF B’dian WF Foreign WF GDP and Bermuda’s economy 2014 36,000 26,000 10,000 $5.0 billion(?)…shrinking & reducing 2017 34,000 26,000 8,000 $4.8 billion (?)…shrinking & reducing (See first chart) If we sit back and do nothing about trying to stimulate the economy we will probably see our economy continue to shrink. Job creators who see the economic and business climate continuing to deteriorate will move to a more favourable jurisdiction taking job opportunities and their foreign cash with them. Year Total WF B’dian WF Foreign WF GDP and Bermuda’s economy 2014 38,000 26,000 12,000 $5.8 billion(?)…growing & expanding 2017 40,000 26,000 14,000 $6.2 billion (?)…growing & expanding (See second chart) However, if we open up the system through some changes in policy and legislation and make Bermuda attractive to overseas investors and job creators, there will be more job opportunities for Bermudians. Once our economy begins to grow, the marketplace will begin to dictate that we need more people in the workforce in order to keep up with the demand for services. However, as shown in the chart above we would have to import more foreign workers to fill the gap as we would have exhausted the Bermudian workforce supply. Bermuda’s negative birthrate A newly uncovered fact is that counting Bermudians only, Bermuda actually has a negative population growth. The still emerging truth is that the only reason that Bermudians seemed to increase between Census 2000 and Census 2010 is that in the years from 2000 to 2010, the Government-of-the-day made 2,073 grants of Bermuda Status, thus creating over 2,073 ‘new’ and additional Bermudians. [48,746 Bermudians in 2000 vs 50,565 Bermudians in 2010 = 1,819 more Bermudians] Without those grants of status, in the ten year period between Censuses 2000 and 2010, the number of Bermudians would have fallen by eighty-six (86), meaning FEWER Bermudians in 2010 than there were ten years earlier in 2000. This is not a huge fall in numbers. But all by itself, it is a hugely important stand-alone fact. It is a fact and factor that must play a huge part in all national current and forward planning and policy development. The biggest fact and absolutely key factor is that our Bermudian workforce is fixed at something between 26,000/27,000. This workforce is not growing. It will not even reach 30,000 unless there are wholesale grants of Bermuda Status to 3,000 or 4,000 non-Bermudians. If you look at the example that we give, you will see that the number of Bermudians is relatively constant. You will see that the real change is in the number of foreign workers. When you plug in the fact that even with 2,073 Status grants the number of Bermudians is still actually decreasing, then you will, or should, understand that Bermuda’s unique economy and business model is uniquely reliant on the presence of a foreign workforce. You already know, and at the outset we reminded you, that Bermuda is utterly reliant on foreign cash, and always has been. A thorny personal issue Today, in the midst of Bermuda’s unique but declining economy there stands an ordinary Bermudian who today says: “I see and hear all of that. But I’ve just lost my job. I now don’t have a job. I see a foreigner here who is doing a job that I believe that I can do.” That Bermudian man or woman then says: “I am a Bermudian. This is Bermuda. I need a job. I need it right now.” The consequences of assembling all the facts that we have given you are that the only possible way forward is to grow Bermuda’s economy and thus create more job opportunities for the 26,000 base group of Bermudians. In the national business model that now exists, by growing the economy back towards the 40,000 worker level, we will obviously create more jobs as well as more high-pay job opportunities for Bermudians. In growing the economy, we will require more manpower. As we have shown you, Bermudians are a shrinking or non-growing group. We have to import people in order to replace Bermudian shrinkage. We then have to import another tranche of foreigners to grow the national business base and start moving back up towards a $6.0 billion GDP. Bermuda’s national economy cannot and will not grow or regenerate if we rely solely on Bermudians. If we do get it wrong and concentrate our efforts on preserving jobs for Bermudians; we will, absolutely, find that Bermuda’s economy will continue to wilt and die a slow death. The best interests of all Bermuda and all Bermudians will be served when Bermuda’s economy stops shrinking and starts expanding again. As cruel as it may seem, the strident cries of “I need a job now” will have to be listened to while all efforts real, strong, energetic but disciplined efforts are made to get foreign investors to re-invest in Bermuda; get foreign executives and high-level personnel to re-locate to Bermuda; set up their financial or other global services in Bermuda; and then operate their global businesses from Bermuda. This is how we will ultimately satisfy the Bermudian man or woman who is today saying: “I need a job right now.” Any stop-gap measures that see Work Permits pulled will simply cause the continued erosion in growth and a continuing reduction in Bermudian incomes as Bermudian workers continue to spiral down into low and lower paying jobs. This is the kind of economic change that is shown in our first chart. Our second chart shows what will happen if Bermuda takes the right national steps. Regenerating Bermuda’s economy and moving it back into economic growth requires a larger and wider worker base. This is the only way forward. This is not an easy decision to swallow. But, for Bermuda and all Bermudians, it is the only decision that will actually work.
Get involved and send us your thoughts. This continues to be a collective effort by all Bermudians and we need your continued support, comments and ideas. For further information or to express your comments e-mail Suzie Arruda at email@example.com or visit us on Facebook - Regeneration of Bermuda’s Economy.