We underestimate international business at our peril

This time it was Kim Wilson, Minister for the Economy, and Kevin Grant, president of the BPSU.

Speaking at the recent AGM of the Bermuda Chamber of Commerce, Ms Wilson said: “The Government recognizes that international business is critically important to the economic well-being of our people, particularly in terms of job creation.”

On page two of The Royal Gazette on Saturday, April 30, Mr Grant is reported to have said: “If international business is going to play a huge role in our economy...”

What terrified me was how both publicly displayed a misunderstanding of Bermuda’s economy and its real workings.

Fact one: Our economic survival is entirely dependent on a steady inflow of foreign exchange. 

Beyond North Rock or Challenger Banks, the Bermuda dollar is worth zero.

Fact two: Currently, about 88 cents out of every foreign exchange dollar arrives in Bermuda because of, or through, the functioning of those elements of international business that still have a footprint in Bermuda.

Ten cents of that dollar comes from leisure tourism.

Government directly brings in just two cents.

Fact three: From 1994 to 2008, all economic growth in Bermuda happened because inter-national business’s footprint expanded.

In 1994 Bermuda had a total workforce of 34,143. By 2008, some 6,070 new jobs had been added. The peak was 40,213 filled jobs.

All that job growth was in international business, its supporting services and infrastructure.

Fact four: In 1994, there were 26,930 Bermudians filling jobs in Bermuda.

By 2008, there were only 250 additional Bermudians filling jobs for a total count of 27,180 Bermudians.

The other 5,820 newly added jobs  (6,070 minus 250 is 5,820) were all filled by non-Bermudians.

From 1994 to 2008, all of Bermuda’s economic growth happened only because of a twin influx of foreign capital and foreign labour.

Without adding foreign labour, Bermuda would have had zero or even negative economic growth.

Fact five: In 2010, Government reported 38,095 people (2,118 fewer than in 2008) filling jobs in Bermuda and that GDP was down about 10 per cent from 2008.

This is according to the National Economic Report on Bermuda for 2010.

So Mr Grant saying “if international business is going to play a huge role in our economy....” was terrifying.

Specifically, the word “if” terrified me.

Tourism became a second string foreign exchange earner more than 20 years ago in 1990, when steadily expanding international business began contributing the greater proportion of Bermuda’s foreign exchange dollars.

By 2000, international business was providing more than 70 per cent.

Mr Grant’s “if” ignored that change.

His “if” was like a man standing before a massive mountain declaring that he saw nothing.

Ms Wilson’s recognition of international business’s “critical importance”, but linking up with her assertions about preserving and reserving and protecting Bermudian jobs, jars with Bermuda’s post-1994 economic reality.

Salaries

In 2011, every Bermudian job — private and Government sector — depends on the wellbeing and the footprint of international business in Bermuda.

Lose international business and Bermuda loses Bermudian jobs as well as a humongous chunk of foreign exchange earning capability.

Tourism’s current national income contribution of less than $400 million is not even enough to pay Government’s basic $470 million Parliamentary and Civil Service salaries and BIU wages.

International business is not just of critical importance. It is of singularly critical importance.

It is the only real game in town, a beating heart in a healthy and beautiful person. 

Heart beating? Person looks good. Heart stops? Decay begins.

Despite the desire for re-election and the consequential willingness to pander to PLP and BPSU voters, neither person should ignore the first four facts I have just detailed.

Now that Ms Wilson and Mr Grant are aware of those facts, they should publicly demonstrate the same level of enlightenment shown by the likes of Business Bermuda CEO Cheryl Packwood.