We can only partly blame world events for our economic woes

FRIDAY, FEB. 3: The Great Global Recession [GGR] does play a small part in Bermuda’s economic woes. Its biggest impact is on tourism. But tourism is a mere five per cent of GDP. In 2010, tourism brought in only $384m compared to the $1,964m that International Business [IB] brought in.  IB is more affected by what happens on-Island.

However, a minority of people find that trotting out the GGR is useful when they try to deal with the part that their actions play, and have played, in helping to cause and sustain Bermuda’s economic decline.

Significant job losses in Bermuda’s private sector began in 2009 when a net 1,130 jobs were lost overall. These 2009 job losses were led by 330 jobs disappearing in IB.

By 2010, from its 2008 peak, accumulated private sector job losses hit 2,516. Private sector job losses for 2011 have not yet been reported, but they are likely to take accumulated private sector job losses heading towards 4,000 by December 2011.

And 2012 has not started well. Hundreds of still uncounted Bermudian private sector workers have lost jobs. Thousands of the remaining private sector workers have also been hit with reduced work weeks, reduced pay, overtime bans, and other income-reducing actions. [Not government guys and gals though. Back in August 2011, they gave themselves a pay raise.]

The main driver for Bermuda’s continuing economic wind-down is the decline in Bermuda’s resident [working] population, accompanied by an overall and general (except for government) non-increase in pay and incomes.

Census 2000 reported 62,059 residents and a National Workforce [NWF] of 38,017. Census 2010 reports 64,237 Bermudians and a NWF of 38,097. But Census 2010 misses the critical fact that there were 40,213 workers counted in the NWF in 2008.

Bermuda’s NWF actually increased from 38,017 (Census figure) in 2000 to 40,213 (Dept. of Statistics figure) in 2008. Then the NWF went DOWN from 40,213 to 38,097 (Census figure) in 2010. There have been even more job losses since that NWF count in 2010.

In January 2012, it is likely that Bermuda’s NWF has fallen further to around 37,000; and could hit 36,000 by year-end.

Putting it all together, it means that since 2000, Bermuda’s NWF has gone from a measured 38,017 (in 2000) up to a measured 40,213 (in 2008); and then gone down to a measured 38,097 (in 2010).

It is probably now down even further to an estimated 37,000 by December 2011.

The critical fact? Bermuda’s NWF has fallen from a 2008 high of 40,213 to a probable 2011 low of 37,000. That’s a massive eight per cent drop in the size of Bermuda’s resident [working] population.

Unemployed

In any normal economy, any drop-off in the resident working population would show up as unemployment. From 40,213 down to 37,000 means 3,213 unemployed people chasing jobs. But Bermuda’s economy is unique. Bermuda exports most of its unemployment. So us lot don’t see 3,213 guest workers wandering about our beautiful island begging us for work. But we still feel the impact of their going.

Every economy, even Bermuda’s unique economy, reflects the workings of this layman’s economic equation: Resident [working] population x incomes earned by the resident [working] population x willingness to spend those incomes = The Economy. An economist might write it: RP x IERP x WSI = E.

If all three components rise, the economy grows. If any one of the three components falls, and is not compensated for by a rise in one or both of the others, then the economy falls.

Since 2008, has Bermuda’s resident [working] population been rising or falling?

Since 2008, across all Bermuda, have incomes earned by all of Bermuda’s resident [working] population been rising or falling? [Don’t get all academic. Just look at your own income, and your family, friends, neighbours, acquaintances, workmates.]

Since 2008, across all Bermuda, has the general willingness to spend been rising or falling? [Again, look at all those around you.]

What’s the biggest driver in these three components? Is it Bermuda’s consistently falling Resident [working] population - OR - is it a different problem originating somewhere out past North Rock?

Find the bogeyman. If Bermuda’s consistently falling resident [working] population is not the critical factor; then what bogeyman — what ugly vicious evil spirit — is lurking out past North Rock and is causing this on-island economic decline that is affecting all of us lot out here at 32n64w? Must be something. Please tell me what it is, ‘cos I don’t see a bogeyman.

Note: Except for the 4,000, 10,800 and 37,000 estimates, all figures are from current Department of Statistics reports.