Housing solutions will be needed to accommodate thousands of extra workers
by Jonathan Kent
The Bermuda Government’s express desire to boost the island’s working population by 8,400 over five years has been welcomed by many in business. But how can it be achieved?
It would be hard to dispute the rationale for expanding the workforce. Government projections indicate that nearly a quarter of the population will be seniors by 2026, while the working-age population (25-64) will fall.
Bermuda’s dependency ratio — defined as the number of people aged 65 and over per 100 people of working age, will rise to 43.6, up from 28 in 2017. The fall in the number of people paying into the system at a time when those drawing from it are increasing in number is already putting strain on pensions and social services, and applying upward pressure on health insurance premiums.
With more Bermudians retiring from the workforce than young people coming into it in coming years, more from outside will be needed just to maintain the current level of full-time jobs. It would seem very clear that the vision of net growth of 1,600 jobs per year — in an economy which has lost an annual average of 684 jobs since 2008 — will require a clear, defined strategy and bold actions.
Considerations may include:
Government cannot create the jobs on its own. It will need buy-in from businesses, the confidence of investors and the understanding of the community in making the necessary bold policy decisions that have previously proved politically unpalatable.
A task force that brings together public and private sectors, as suggested recently by Butterfield Bank executive Michael Neff, would help to make it a “Team Bermuda” effort. Meeting regularly, it could also monitor progress, suggest useful actions and maintain forward momentum.
Incentives for businesses
Labour is like every other discretionary economic choice — the more expensive it is, the less people will buy. The Government influences the hiring equation, especially through the rate of payroll tax, a direct tax on employment that constitutes about 42 per cent of government revenue.
The long-discussed broadening of the tax base could relieve the payroll tax dependence and incentivise hiring. Attracting new businesses and investment at the scale envisaged will also require new incentives to enable Bermuda to compete with rival jurisdictions such as the Cayman Islands, in areas such as taxes, work permits and residency rights.
Whether returning Bermudians or expatriates, the new workers will need places to live. Recruiters and realtors are already highlighting a shortage of rental inventory of the kind of family homes and city apartments sought after by job-creating executives and incoming workers.
Incentives for owners to restore dilapidated, disused properties and for investors to develop apartment buildings in Hamilton may help. A national housing plan incorporating the implications of an influx of new residents and the changing housing needs of the ageing population, while building in sustainability parameters, could set clear targets for developers to act upon.
Aligning immigration policy with population growth target
Bermuda must compete with the rest of the world in an intense war for talent. Access to talent is a key driver of job creation and economic growth. Given that the island’s small population means it cannot hope to produce the numbers of skilled and qualified people it needs in many fields, an efficient immigration system is the conduit to talent needed by local and international companies alike.
Expat workers’ value to the economy has long been clear. They pay taxes to support government services, expand the health insurance pool and create demand for products and services. An increase in expat workers on island creates an economic virtuous circle, through greater demand in the local economy, boosting local businesses and supporting jobs growth across all sectors.
When they leave, the reverse happens. Bermuda lost a total of 8,897 jobs between 2008 and 2021. The zero-sum logic that assumes that Bermudians have more jobs for themselves when expats leave does not bear up to empirical scrutiny. For every expat job that disappeared over those 13 years, 1.27 Bermudian jobs were lost, according to data from Employment Briefs surveys.
The BermudaFirst Report of 2019 produced a practical gameplan for immigration reform, tailored to Bermuda’s sensitivities and economic needs, by taking steps including:
- Aligning Government’s goals with immigration policies
- Shifting the mindset of the Immigration Department so that it recognises the needs of businesses
- Resolving the issues associated with family and long-term residency
- Adopting a workforce approach with companies that includes understanding their business model, organisational talent needs, expectations for Bermudian inclusion and accountability milestones for meeting Bermudianisation agreements in exchange for issuing all work permits required by such companies
- Automating and streamlining the immigration process overall.
The Bermuda Government’s own position paper states: “Bermuda is facing a demographic crisis that requires strong, decisive leadership and urgent action to be taken.” Indeed — there is no time to waste.