By NEIL HARTNELL
Tribune Business Editor
The FNM’s deputy leader yesterday warned that the Bahamian middle class was under “consistent assault” from job losses and increased taxes, with this country fast becoming “a nation of haves and have nots”.
K P Turnquest said income inequality in the Bahamas had been exacerbated by the 2008-2009 recession and the economy’s travails ever since, with good-paying, middle class jobs set to take a further hit from Scotiabank’s likely imminent downsizing (see other article on Page 1B).
And, with Scotiabank said to be reviewing its physical presence in several Family Islands, Mr Turnquest expressed fears that several would “go backwards” and see their economies negatively impacted should the bank pull out.
And the FNM deputy expressed concern that the Bahamas was taking a reactive, rather than proactive, approach to reviving its economy, suggesting that it seemed to be “still sitting, waiting” for foreign direct investment (FDI) projects to find it.
“We’ve seen a consistent assault on the middle class through job losses, taxes, the ease of doing business,” Mr Turnquest told Tribune Business. “All of these things are affecting that class of people above the poverty line, the lower income line, who are trying to hold on.
“This [Scotiabank’s impending restructuring] is not good news, and we are, as a country, still sitting, waiting for something to happen rather than trying to make it happen. I worry for the middle class. It’s a serious thing. Options are becoming few and far between.”
The situation again illustrates just how vulnerable the Bahamian economy, and wider society, is to the potential fall-out from business retrenchment and associated job losses.
Jobs such as those thought to be in jeopardy at Scotiabank (Bahamas) pay an average annual salary of $40,000 and upwards, well above this nation’s average per capita income of $23,000-$25,000.
The disappearance of such posts will thus squeeze an already-pressured Bahamian middle class even more tightly, with the ripple effects from the lost income and purchasing power felt right through the economy.
The commercial banking industry has been one of the staples underpinning this nation’s middle income earners, yet this ‘pillar’ has become wobbly in recent years, with Scotiabank’s fellow Canadian-owned institutions - Royal Bank of Canada and CIBC FirstCaribbean - embarking on downsizing programmes of their own.
“We’ve done well in financial services,” Mr Turnquest added, “but with all the regulations and international pressures coming on, and international domestic banks showing similar trends in terms of reductions in employment, none of this portends well for the middle class.
“We’re fast becoming a country of haves and have nots.”
His comments were echoed by a high-level banking industry source, speaking on condition of anonymity, who agreed that income inequalities were becoming a pressing issue for Bahamian society.
The source said the gulf/divide between ‘haves and have nots’ was already causing concern in so-called ‘first world’ countries, and added: “The wealthy are getting wealthier, and the poor people are getting poorer.
“Those in the middle are disappearing. Income inequality is a huge issue, and it’s a big problem in the Bahamas.”
The marked income inequalities in the Bahamas are already viewed as an aggravating factor contributing to this nation’s crime and other social problems, especially given that the wealth and opulence of places such as Atlantis and Lyford Cay co-exists within sight of relatively poor inner city communities on New Providence.
Mr Turnquest, meanwhile, voiced concern for Family Island economies should Scotiabank elect to close branches in any of those locations.
The bank has a wide Out Island presence, with branches in Exuma, Eleuthera, Andros and Long Island, all of which have been considered vulnerable to the desire by Scotiabank’s Canadian office to reduce what it sees as an ‘over-banked’ presence in the Caribbean/Latin American region.
“In a lot of those Family Islands, they depend on those local banks to conduct business,” Mr Turnquest told Tribune Business. “That [any branch closures] would make it very difficult.
“We’re going backwards. We’re becoming a cash society, and in a cash society there are no savings, so the long-term will not be very good for the islands unless they can find replacements like Commonwealth Bank, Bank of the Bahamas, to take over, take on the risk and help them develop.
“It is very difficult for any island that does not have regular banking activity. Banking and development go hand in hand. Where there’s an absence of one, there’s an absence of another. That’s not very good.”