WEDNESDAY, FEB. 8: Seventy-two years ago, in 1940, the Bermuda Government required all government employees to take a pay cut. The Bermuda Police Force took a 10 per cent pay cut. Obviously, in 1940, Bermuda’s economy was in bad shape. Why?

Because in September 1939, a little guy with a little mustache started a little war that became the big Second World War.

Seventy-two years later, why is a Bermuda Government again asking its government employees to take a pay cut? Why?

No big war. Obama’s USA reports rising employment. The EU is still stuck in its economic morass. The BRIC’s [Brazil, Russia, India, China] are achieving real economic growth. In 2011, Tourism in Bermuda rose materially. So the whole world is not in a massive one-world economic recession.

This time around, the answer lies heavily within and amongst us 50,565 Bermudians.

In 1994, us 50,565 Bermudians became part of Business Bermuda. Regardless of whether we knew it or even liked it; in 1994 Bermuda exited the primary business of tourism and entered the new primary business of International Business.

Things went well for 14 years. In 2008, Bermuda hit an economic peak.  Supported by a hugely expanded national workforce of 40,213 and a total resident population of about 68,000, GDP hit $6.07bn. That economic peak was reached because people — foreign people — had come into Bermuda to live and work amongst us Bermudians. But even as our economy was peaking, us lot were showing deep resentment against those ‘foreigners’.

We expressed some of that resentment through the CURE legislation (1994), the Term Limits policy (2001), Immigration and Protection Amendment Act (2002), the Marriage Amendment Act (2002), and the Land Purchase Amendment Act (2006).

There was a consequence. In 2007, in the private sector, there was a trickle out of just 31 workers. In 2008, a wee stream as 113 private sector people disappeared from the workforce.

Then, in 2009, 1,130 private sector people poured out.  In 2010, some 1,240 private sector people flooded out of the workforce. From 2007 to 2010, a total of 2,514 people left the private sector element of Bermuda’s national workforce.

Some 1,183 — or 47 per cent — were ‘foreign’ workers who also left Bermuda.

Foreign worker disappearances continued all through 2011. They continue in 2012. Right now, our national data collection systems cannot tell us how many.

However, we do know that Bermuda’s resident working population and therefore its general resident population are still falling. As Bermuda’s population [resident and working] declines, Bermuda’s national economy must and will decline.
Bermudians see and experience this national economic decline through Bermudian job losses, cutbacks on overtime, pay freezes, un-rentable apartments, un-payable mortgages, and a myriad of other personal and family financial impacts.

Now the ultimate. Supposedly job secure and thought to be well-protected, government employees have now been told that they must take a pay cut.

Fifteen months ago, in October 2010, in this newspaper, I penned this sentence: “So Government must immediately and substantially cut Government spending.”

Personnel costs too high

I followed up with a December article on the then new ‘Bernews’ that said that Government should institute a 15 per cent pay cut. Then, no government action. Then, no Government response.

Now, fifteen months later, Government is proposing  a pay cut. This suggested eight per cent will prove the first of a series of further cuts and more reductions in Government’s too high personnel costs.

These personnel cost cuts are required so that Government can meet its way too high debt service costs.

In 2012, the combination of just these two costs [personnel and full debt service] sucks up $0.75 out of every $1.00 of revenue that Government manages to receive.

With Government revenue declining, this 75 per cent suck-up is completely unsustainable. The eight per cent pay cut is the first honest acknowledgement of that.

But with no event like Hitler’s war happening, why is the Government-of-this-day forced to do what the Government-of-that-day was forced to do? What recreated the need?

General Government overspending and consequential massive borrowing began on April 1, 2004.

Four years into this overspending process came the Great Global Recession of 2008. This has now combined with the locally generated and politically supported pushback against those ‘foreigners’ who came to our 13,000 acres to do their international business.

The combining of these four facts — overspending, consequential borrowing, global recession, political pushback — has created Bermuda’s present economic situation.

For Bermudians, that combination creates the same impact on Bermuda, as did Adolf Hitler in 1939. The proof is in the 2012 demand for a pay cut for all government employees.

Three Bermudian factors joined one external factor. All four factors have together created the need for the pay cut. Only Bermudians can fix the locally created factors.

Over the past two years, I’ve been delivering true, honest, and factual assessments and descriptions of where Bermuda really stands and of what has really been happening.

I promise that I’ll continue.

If you want facts and truths, stay with me...