FRIDAY, OCTOBER 28: Amid all of the comments, suggestions and queries arising from Regeneration of Bermuda’s Economy — which appeared in last Friday’s Bermuda Sun — one area that stands out as requiring further clarification is the aspect of why international business and the foreign workforce (white and blue collar) is a vital and integral part of Bermuda’s economy and Gross Domestic Product (GDP).

What is Gross Domestic Product?

The monetary value of all finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

Impact on Economy and GDP

Following is a breakdown of our population and how it impacts on our economy (all figures used are approximate):

In 2009 the death rate was 365 and there were only 635 births. The birthrate also continues to decrease. According to the recently released 2010 Census, the Bermudian population remains static, not moving.

Throughout the next set of points, it is important to keep in mind that our population growth is static and the effect that this has:

Bermudian workforce is a maximum of 27,000.

Historically, any time our national workforce count falls below 40,000, our economy is not viable.

Our 40,000-strong national workforce comprises  27,000 Bermudians and 13,000 non-Bermudians.

In 2011 our national workforce  dropped below 37,000 and we are unsure of the figure for 2012.

We must increase our employment level to 40,000 from its current decreasing level in order to make the economy viable. We need foreigners to fill the gap.

In 2009 and 2010 foreign worker manpower declined by an average of 4.5 per cent each year and continues to decline. This has a direct affect on the Bermudian.

As the foreign worker leaves, the economy begins to shrink, which translates into less foreign currency earnings and less jobs for Bermudians.

The foreigner in the international sector creates jobs for Bermudians at a certain level and pay bracket. If the international business sector diminishes/leaves, the job that the Bermudian enjoyed at a certain level is now gone.

Bermudians are likely to find work but not at the level they had previously enjoyed. A Bermudian may only take a lower level job if they are forced to meet their financial commitments. It is difficult to tell someone who has been working in the international sector that they now have to work in the local sector for half the pay they used to get. This means that the Bermudian’s standard of living falls.

Click here for a graphical representation of the close link between growth in Bermuda’s economy and the rise and fall in the guest worker component of Bermuda’s national workforce.

Between 1996 and 2010, the chart shows that the high / low difference in guest workers is 13,033 / 7,748 for a high/low difference of 5,285. The high / low difference in Bermudians is 28,881 / 26,247 for a high/low difference of 2,634.

The chart shows that rises and falls in GDP per capita follows the rise and fall in the number of guest workers, many of whom are international business workers. The very small rises and falls in the Bermudian component do not have any noticeable impact. 

International business brings in $0.85 of every dollar that enters Bermuda’s economy. International business and its direct supporting services provide employment for about one third (11,400) of Bermuda’s national workforce. As far back as 1996, Bermuda’s GDP and GDP per capita grew only because of the influx of human capital in the form of guest workers.

Bermuda’s GDP and GDP per capita rises when imported human capital rises, and falls when imported human capital leaves. Therefore, since the Bermudian population is static and cannot fill all the positions necessary to maintain a viable national workforce count, we must increase the amount of imported human capital to stimulate the economy, give Bermudians the level of employment they desire and stop the decline in our standard of living.

Download the chart