The true unemployment rate is probably closer to 14%

WEDNESDAY, OCT. 31: At long last, some good data.

According to the 2012 Labour Force Survey, which came out on October 17, back in May, Berm uda had 279 unemployed non-Bermudians and 3,026 unemployed Bermudians.

What was the unemployment situation five months later, in October, 2012?

In the US and UK and Canada, with millions to count, unemployment figures come out monthly. With GDP per capita still holding in the global top ten, with a wired business and private community, with an efficient Government, why did it take all these years to get that figure?

Why can’t we get this figure quarterly or monthly?

If reports indicate that unemployment has risen; then our economic managers — that is, the Government-of-this-day — will be able to respond by doing ‘something’. If, on the other hand, unemployment has fallen, then the Government-of-this-day will be able to pat itself on the back for having acted so wisely.

Either way, a steady flow of good data will always help good managers to make good decisions. A non-flow of good data prevents even excellent managers from making good decisions.

So one laurel wreath for finally producing a reliable unemployment figure. We now need to track unemployment. Good tracking data is a simple management tool that all good managers should have and should maintain. Tracking should never stop.

Two comments on this just-reported unemployment . The Survey reports 8 percent unemployment. It compares total available labour with total labour employed. The difference is unemployment. The eight per cent rate quoted applies only to May, 2012.

However, if we want an honest and real assessment of our national economy, we must look at where we were at the last recent top — and where we are now. Rather like a major corporation recognizing that it has a problem because its sales are only 8 per cent off compared to the year before; but that its sales are really 15 per cent down from four years earlier.

If it acts wisely, the corporation would focus on the long term 15 per cent down; not the one year eight per cent down.

It’s the same with Bermuda. In 2008, Bermuda had 40,213 jobs filled (Employment Briefs) and about 40,000 workers available (extrapolation from Labour Force Survey). In that same year, 2008, the Labour Force Survey suggests that there were only about 1,000 people unemployed.

In May 2010, Bermuda had 38,097 jobs filled (Employment Survey) and was reporting 2,583 unemployed (Labour Force Survey). Although the Labour Force Survey and the Employment Brief counts are not precisely the same, there is a healthy and relatively constant relationship between the two counts.

Overall, by 2010, Bermuda had lost [40,213 – 38,097] 2,116 jobs. Government acknowledges a 2010 total of 2,583 unemployed. Overall then, Bermuda had around (2,583 + 2,116) = 4,699 jobs lost or people not employed.

Those who left

Around 1,183 of the 2,116 were non-Bermudians who went back home — taking their “unemployment” with them. “Unemployment” in 2010 is reported as six per cent because it only compares on-island jobs with on-Island people. The six per cent figure ignores the 1,183 non-Bermudian people who shipped out.

The real comparison or report should include this exported unemployment. Considering this exported unemployment gives a true 2010 unemployment rate of around 11 per cent. This considers all 4,699 lost jobs. 

As with the major corporation, 11 per cent gives the real and important figure. It is uglier. It is higher. But it is far closer to reality.

Following that approach, Bermuda’s true unemployment rate for 2012 is likely to pan out to be much closer to 14 per cent. That’s a huge number!

Is this nit-picking or important?

Go back to the corporation. If it takes comfort in sales ‘only down eight per cent’, how much longer will it remain in business?

Same with Bermuda. If we take comfort in ‘only eight per cent’ for 2012, we’ll do that only by ignoring the reality of our exported unemployment. Ignoring exported unemployment means ignoring our shrinking residential population.

Having ignored these two massively important factors, we will then say that we are trying to fix our economic problems.

But the Government-of-this-day won’t do that, will they? Will they?

Second comment. In the 3,305 total counted and reported as unemployed in May 2012; what categories were unemployed?

Were all 3,305 unemployed ‘skilled labourers’? Or was there a mix of Accountants, Butchers, Carpenters, Drywallers, Engineers, Florists, and so on? Were all 3,305 from the private sector and none from Government?

3,305 is a nice-to-know number. Good national managers will need to know how this 3,305 breaks out. Without this equally vital information, good national managers are just as unknowing as a Poker Player who knows only that he holds no Aces, but that there are four Aces in the deck.

The critical question that needs an answer is: What categories of workers make up that 3,305?