Day of reckoning will come for the bloated public sector

WEDNESDAY, JUNE 13: Globally, in nations where workers are counted in millions or hundreds of thousands, sociologists and economists group people into Under Class, Working Class, Middle Class, Upper Middle Class, and Upper Class. With only 37,399 workers, Bermuda has only two classes. Protected Workers. Unprotected Workers *. Bermuda is uniquely different.

Bermuda’s 7,902 PW’s consist of Government and Quango employees (7,855) plus elected/appointed Parliamentarians (47).

At 29,497, Bermuda’s UPW’s are the majority. The 7,902 PW’s make up the rest of Bermuda’s 2011 worker count of 37,399. The UPW’s support and pay for the PW’s.

In Bermuda, before BC**, in 2006 there were 33,014 UPW’s paying for 6,672 PW’s. So 20 UPW’s were working and paying taxes for every four PW’s. In 2011, 15 UPWs had to work and pay taxes to fund four PW’s. Obviously, the burden carried by the UPWs was much lighter in 2006BC. Even farther back, in 2000BC, the burden was lighter still with twenty-four UPWs carrying four PWs.

PW protection first shows up in their pay packets and work circumstances. In August 2011, PWs received an average 1.45 percent pay increase. This pay increase was opposite to what had been happening with the UPWs. Since 2007, UPWs have been suffering job losses, pay cuts, and in 2011 hundreds were working reduced hours.

In February 2012, there was talk about a pay cut for the PWs. This pay cut was supposed to happen for 1st April 2012, but it has still not materialized. PW pay packets for 30th April and 31st May 2012 were unchanged. No reduction in actual pay-in-the-pocket. So PWs have kept the benefit of their August 2011 pay increase.

Other things add to PW protection. The BTUC now encompasses all Unions. Of Bermuda’s nine trade unions, only two [Musicians and Electricity Supply] are non-government. These two unions have a combined maximum membership of about 400. The non-government elements in the BIU and BPSU add up to about 1,000. All the remaining unionized persons, about 7,000, belong to the ‘government unions’ ***.

Made up of both white and blue collar workers, these 7,000 unionized government workers negotiate face-to-face with Government — essentially themselves. About 85 percent [6,000] of this government group can vote. With this symbiotic relationship, they have created a very high degree of political protection for themselves.

Proof? UPW numbers began declining in 2007. 33,014 UPW jobs in 2006 down to 29,497 in 2011 for 3,517 UPW jobs lost. Conversely, PW’s grew steadily. 6,672 PW jobs in 2006; peaking at 7,987 in 2009; settling at 7,902 in 2011 for 1,330 PW jobs added. And don’t forget that 1.45 percent August 2011 pay increase.
With just two classes, Bermuda’s national workforce and its demographic composition are unique.

When ‘foreign experts’ (and some local) overview and study Bermuda, do their analyses, and then make their expensively purchased pronouncements; they always miss this central and unique socio-economic fact. Instead, they pour Bermuda into the mold of their home country before pronouncing as if Bermuda had the five classes found in other societies and economies.

Does this matter? It sure does.

Even if their numbers do not actually grow, Bermuda’s PWs will still grow relatively because Bermuda’s UPWs are shrinking. If, one year from now, PW’s have held at 7,902 and UPWs have shrunk to 28,000, then there will be only fourteen UPWs to pay for every four PWs.

Plainly, each paying-in worker has to carry a heavier and heavier burden. Just as plainly, that kind of inverse — or reverse — imposing of the tax burden for PWs cannot continue.

About 40 per cent of today’s $1.2bn National Debt was taken up and used to pay for Government’s steadily rising personnel and other current costs. With Debt still climbing, the percentage allocated to Government’s personnel costs continues to increase.

Like a sunset, the time of reckoning for re-allocating the burden for paying for and supporting Government’s 7,902 PWs is steadily approaching. The time is coming when PWs will have to share the same pain that their unprotected brothers and sisters began suffering in 2007. Right now, PWs are still being paid for — barely — by the steadily shrinking group of UPWs.

Either government will act sensibly and will institute a controlled retrenchment; or Bermuda — all PWs and all UPWs — will suffer the chaos of a forced financial solution — when, once again, the money runs out!****

*Recent example… PWs marched in the KFC ‘affair’. Post Office actual losses for 2011/12 are $9,572,000. Planned losses for 2012/13 are $8,062,000. Since 1996, PO total losses exceed $45m with mail volume falling from over 20m pieces to 10.9m pieces in 2011/12. With over 200 staff, no significant staff reductions have occurred or are planned. Full protection.

**BC — before Brown/Cox.

***The other five unions are: Association of School Principals; Bermuda Union of Teachers; Fire Services Association; Police Association; Prisons Officer’s Association. All these consist of Government employees.

****Money ran out, for the first time, in March 2008. Government has been cash-strapped ever since and, today, can only function with an overdraft facility.