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Can we retool education, training systems?

In an era where Donald Trump is asserting the privilege to be as racist as he wants to be while claiming that he is just being politically incorrect, we in Bermuda can watch the spectacle emerging to the west of us with little satisfaction.

America clearly is going through a once-in-a-generation inflection point as is the world in general, including us in Bermuda.

And while for some it began in 2009 there is a strong case that it really began in the early 2000s during the economic boom and/or bubble that had too many of us believing that the good times would go on for ever.

With the so-called beginning of this uneven economic recovery, let us not presume that chapter has closed entirely.

Frankly, there is emerging a new normal now, the contours of which are becoming clearer by the day and this may be just as problematic for us as was the recession itself.

In June I presented a paper to the House of Assembly that explored the impact of technological change and how as a consequence, its by-product, technological disruption, was transforming our labour market and our economy more broadly.

But it also examined how technology was enabling our globalised economy in ways that are still evolving, especially as it relates to issues such as outsourcing.

It used to be that a new small to midsize reinsurance company or brokerage would domicile in Bermuda and locate or establish senior staff and second-tier management expertise in Bermuda.

That is no longer the case. The new normal while continuing to see some senior management positions established here is also one in which senior and/or technical positions and the tasks that characterise such professions such as actuarial, accountancy and even legal research are being increasingly outsourced to places like India.

The Organisation of Economic Co-operation and Development (OECD) projects that 40 per cent of all college graduates by 2020 will be from India and China. One can then assume that India will continue to produce tens of thousands of graduates in science, technology, engineering and science (STEM education) over the next decade and many of those graduates will be hired by Indian outsourcing companies to perform the tasks that currently are performed in Bermuda and elsewhere for a fraction of the cost.

This new trend is especially problematic for a number of obvious reasons not the least of which is that it further diminishes the economic multiplier effect from having these companies domiciled here. In other words it ensures that there are fewer residents at an executive level to go around in the form of people taking on mid- to high-end rentals and procuring other goods and services throughout the economy. That, in the absence of these additional executive level staff, will not take place.

This post-recessionary headwind will likely further inhibit Bermuda achieving annual economic growth rates of between 2½ to 3 per cent that so characterised the previous period pre-2009.

And the above is not theoretical, as a newly established insurance brokerage firm has done exactly the above by deciding to outsource essentially its actuarial department if you will to the sub-continent.

It will still retain on-island its head actuary and other senior management but instead of him or her supervising three or four fellow Bermuda-based actuaries, he or she will now supervise those tasks being undertaken thousands of miles away, facilitated of course by the best that technology has to offer.

As to the bottom line, it is simple; instead of paying approximately $150,000.00 for an experienced actuary on-island, the start-up will spend well south of $50,000 per man or woman to get the same job done.

India, along with other countries, is no longer just a place for call centre hubs as it was in the 1990s; it has successfully moved up the global value chain by harnessing the human capital that it is aggressively investing in with respect to education and training.

How this will further erode the vaunted Western middle classes that became such a feature of the post-Second World War environment in just about every Western nation is becoming increasingly clear, as a growing number of white-collar professions are essentially commoditised by way of outsourcing or eliminated entirely by advancing technologies that are increasingly taking over these somewhat complex tasks entirely.

That is why the new normal may also be reflective of what is called the jobless recovery.

Bermuda is not immune to these trends. Even during the greatest economic boom in Bermuda's history during the 2000s jobs were being lost — more than 3,000 of them in this labour market alone — owing to the adoption of advanced technologies and outsourcing.

For over a decade Bermudians were being squeezed, firstly by the importation of low-cost foreign labour which really hit those Bermudians hard who had a high school education or less. However, now we are finding that even highly-trained professionals with undergraduate degrees or better are at risk across a range of occupations of being marginalised by way of this still evolving labour market. The task ahead of us is whether like the Indians and others we too can retool our education and training systems while embracing a culture of innovation to enhance our competitive advantage in the global context?

And we have already seen the face of failure in this regard: that being the estimated 500 or more Bermudians, including whole families, who have migrated to the United Kingdom over the last three to five years alone.

•Rolfe Commissiong is the Opposition MP for Pembroke South East [Constituency 21]

Indian model: in this 2008 file photograph, chairman and chief executive officer of consulting and technology company Accenture, William D Green, speaks during a press conference in Mumbai. Accenture invested US$776 million in training during the company's fiscal year ending on August 31, 2007. The Accenture Management Development Academy in India was the latest example of the company's commitment to advancing its employees' professional and technical skills. India has moved up the global value chain by harnessing the human capital that it is investing in with respect to education and training

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Published December 29, 2015 at 8:00 am (Updated December 29, 2015 at 2:41 pm)

Can we retool education, training systems?

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