pull-outs.

It should also plan ahead to take over free services provided by the US -- such as running the Airport.

That is the conclusion of Premier the Hon. Sir John Swan's Task Force On Employment.

"The majority of Bermudians directly employed by the Bases are in occupations common to the hospitality and construction industries.

"Government's best course of action to offset the losses from the Bases' reductions and closure will be to redouble its efforts to improve tourism to compensate for lost exports and jobs.'' The report drives home the huge economic blow of the military withdrawals.

The Canadians have already pulled out and the US Naval Air Station is to close next September. The Royal Navy's HMS Malabar, is also to be shut down.

The three bases -- employing some 148 Bermudians -- pumped $47.8 million directly into the economy, the report stresses.

Up to 50 homes in the western parishes have been rented by personnel from Canada and the US Navy Annex, it adds.

The closures will result in a $1 million loss in rents.

"Although the magnitude of US reductions is unknown the inescapable fact is Bermuda will lose significantly. The magnitude of the loss will be directly proportional to strength reduction.'' The report states Government and the Bermuda Electric Light Company will probably be the biggest losers.

For both the challenge will be how to replace the loss, and raise alternative money.

"Some downsizing has occurred with the US Navy and direct employment has declined from 1987 to 1991.

"Fortunately, the USNAS's contribution to the local economy has increased, creating an offsetting increase in secondary employment.

"So far overall employment has remained the same but we should expect to start seeing the effects of downsizing in 1993.

"This report has not dwelled in any detail on the free services provided by the US Navy.

"However, Government ought to plan ahead as to how it will cope and what it will be prepared to authorise the private sector to do if it became necessary to undertake some or all of the free services currently provided.'' The report says HMS Malabar had made a contribution to Bermuda's economy, describing it as "not insignificant''.

HMS Malabar employs 17 Bermudians, and channels $2.12 million into the economy, the report adds.

The Royal Navy provides services to the community free which otherwise would cost Government about $40,000.