We need a workforce of more than 40,000

Speaking in the House of Assembly on  December 6, 2013, PLP MP Walton Brown, erred on a critically important matter. 

MP Brown said: “… Mr Lister [MP, Ind] and the Government continue to refer to 2008 as the reference point for determining the optimal workforce … That was the height of ... a booming economy where we had a very, very large workforce, most of which was
increased by foreign
labour. So that was the
exception.”

MP Brown went on: “But what I keep hearing is … Let’s take that exceptional year, 2008, as the new reference point. That is why we have the argument that the optimal workforce was 40,000 because that is what it was in 2008. But if you go back to 2000, we had a strong and robust economy then — we did not have a workforce of [40,000]. So I am still concerned that we have a fixation on this 40,000 when there is no clear demonstrable reason why that should be the optimal workforce.”

MP Brown’s idea of “a fixation on this 40,000” demonstrates a lack of understanding of the fundamentals that apply to Bermuda in 2014 and beyond. His reference to Bermuda’s economy in 2000 amplifies this fact.

Debt Service Cost

In MP Brown’s base year of 2000, GDP was $3.74bn. Filled jobs count was 38,017. Debt Service Cost [DSC] was $15.1m. Each filled job had an average annual GDP output of $98,377. In 2000, the annual GDP output of 153 filled jobs, a mere 0.4% of filled jobs, covered DSC of $15.1m. So in 2000, 153 workers worked just to pay DSC.

The sidebar shows how this filled job to DSC ratio changed between 2000 and 2014. The numbers went the wrong way with more and more filled jobs needed just to cover annual DSC.

In 2014, some 3.0% of all workers may be needed just to cover DSC. But way back in 2000, it took just 0.4% of all workers to cover DSC. The table shows that since 2008, in relation to each other, the GDP and filled job count numbers have gone, and are still
going, the wrong way.

The Fix? Grow GDP. How?  Only two ways! 

In 2014, if the filled jobs count floats to 34,000, then EVERY worker’s annual GDP output must instantly improve 650% to reach $1,047,000. This gives GDP of $35.6bn but would only require 154 filled jobs [0.5% of the 34,000 filled jobs] to cover today’s DSC of $161.2m.

However, with GDP stuck at $5.3bn, with annual GDP output per filled job staying around the $160,000 level, it will take around 1,000 filled jobs just to cover this year’s $161.2m in DSC. 

So EITHER we add filled jobs [more workers] or we have a Superman type 650% increase in worker productivity. 

With GDP at $6.4bn, 40,000 filled jobs at an annual GDP output of $160,000, and DSC at $165m, it would take 1,031 workers to cover $165m DSC. 

But 1,031 is 2.6% of 40,000 filled jobs. So this is an
improvement from 3.0%.

With GDP at $7.2bn, 45,000 filled jobs at an annual GDP output of $160,000, and DSC staying at $165m, it still takes 1,031 workers to cover $165m DSC. But this is now 2.3% of 45,000 filled jobs. An even greater improvement.

DSC is a constant. GDP results from a different equation. Filled jobs and output per worker are the only real variables. Their interactions follow unchangeable mathematical laws.

The key? The total filled jobs in Bermuda. This translates directly into people working in Bermuda.

Between 2000 and 2013, there was an increase in the proportion of annual worker outputs that had to be committed to DSC. 

This meant a matching decrease in the proportion of workers left over to sustain a healthy economy. This becomes easily
obvious when comparing MP Brown’s base year of 2000 to any of the years 2008 to 2014. 

A St David’s Islander might describe the situation as: “Dolly, nah ve got more bleddy bies bailin’ dan rowin’…”

There is no “fixation on … 40,000”. Instead, anyone making a common sense honest examination of known facts must conclude that a larger workforce is the only answer.

If Bermuda is to avoid an impending economic implosion, 40,000 cannot be a “fixation”. Now, 40,000 is too low. To avoid implosion, Bermuda’s filled jobs count must go far above 40,000. 

It’s just plain common sense.