By NEIL HARTNELL
Tribune Business Editor
The Bahamas must see “a real climb in GDP growth” to at least 2.5 percent every year to break the cycle of double digit unemployment rates, a governance reformer warned yesterday.
Robert Myers, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business that the slight uptick in the national jobless rate to 10.7 percent in November 2018 was merely a reflection of the continued “sluggish” economy.
Arguing that the latest Department of Statistics labour force data was of little surprise, he recalled International Monetary Fund (IMF) projections that The Bahamas needed to achieve an average annual economic growth rate of 5.5 percent between 2013 to 2018 if it was to absorb all new workforce entrants and dent existing unemployment by 50 percent - a rate it had fallen well short of.
Expressing fears that The Bahamas faced “stagnation” if it did not snap out of a decade-long low-to-no-growth trend soon, Mr Myers said “the big question” yet to be answered by any government or the private sector was why the economy has consistently under-performed.
He again blamed the ease and cost of doing business for The Bahamas’ losing its competitive edge, which has left the economy unable to produce enough jobs to absorb the 3,000-6,000 annual high school leavers or make major dents in the unemployment hangover from the 2008-2009 recession.
“They’re saying the same thing we’ve always said, which is you’ve got to focus on the ease and cost of doing business and making it more attractive and competitive for foreign direct investment (FDI) and local investors to invest in the Bahamian economy,” Mr Myers told Tribune Business of the latest unemployment data.
“What we’re seeing is a sign of the sluggish climbing momentum of the economy. It’s just as we said. There has to be a 5.5 percent growth rate to deal with the national debt and the unemployment rate. That number is no surprise to anybody.
“It’s [5.5 percent] really aggressive, and we have to work very hard to get to a trajectory of that type of growth otherwise we’re going to stagnate. We need to see at least 2.5 percent growth year-over-year. We need to see a real climb in GDP growth.”
The official unemployment data means that just over one in ten Bahamians seeking work cannot find it, representing a material number that suggests a significant segment of society is being left behind in the 21st century economy.
While the twice-yearly Department of Statistics survey represents a job market “snapshot” at a point in time, the data is particularly useful when compared with long-term trends over several years.
Such analysis reveals that the total number of Bahamians unemployed has changed little over two years, representing much of the Minnis administration’s first term in office. Some 25,135 Bahamians were deemed unemployed in November 2018 compared to 25,365 in November 2016 - a decline of just 230 persons.
“The big question is why is the economy not growing fast enough?” Mr Myers told this newspaper. “In our view, that speaks to the ease and cost of doing business in The Bahamas and regional competitiveness. We’ve also got to focus on the cost of government and the cost that offloads on the private sector.”
K P Turnquest, the deputy prime minister, acknowledged as much in Tuesday’s interview with Tribune Business, where he said: “The reality is the Government has been the major employer of record for too many years, and the burden of that public sector puts tremendous demands on the system for capital that should be employed in the private sector for more productive use.”
He confirmed that the Government’s ultimate objective was to restructure and reposition the Bahamian economy for sustainable growth through a combination of strategies involving diversification beyond tourism and financial services; improvements in the ease and cost of doing business; deregulation; liberalisation; and a reduction in bureaucracy and red tape.
Mr Turnquest, though, said it would take time to eliminate “structural bottlenecks” that have been allowed to persist for decades, with the intended benefits from the Government’s actions possibly not materialising within the next two to five years.
The Government now has to execute on its talk and plans, an area where many past administrations have been weak, with all political parties able to take parts of the latest unemployment data to make their case and support attacks on their opponents.
The Minnis administration can point to the private sector employment gains, where numbers rose by 3.8 percent to 135,135 workers in the six months to November 2018, as a sign that its strategies are starting to bear fruit.
It has also taken comfort in the 10,400 “net new jobs” created over the past 18 months since it was elected to office, including the 2,305 added during the half-year prior to the latest survey, as another indication the Bahamian economy is starting to turn.
The Opposition Progressive Liberal Party (PLP), though, can seize on the increase in the national unemployment rate even though Baha Mar’s full opening has taken place.
The Ministry of Finance itself admitted that “the rate of job growth is still not adequate to absorb the number of school leavers entering the labour market each year.” These new entrants, typically numbering anywhere from 3,000 to 6,000, always show up in the November unemployment survey if they are unable to find work, typically increasing the jobless rate compared to the May figures.
The total Bahamian labour force, including both employed and unemployed workers, has increased by over 6 percent or some 13,660 persons over that same May 2017 to November 2018 period. Translated, this means there are 3,260 more persons seeking work than there were jobs available, hence the rise in the unemployment rate since the last general election.
The pattern was repeated between the six months from May 2018 to November 2018, with 2,305 net new jobs created but the labour force, over the same period, expanding by 4,250 persons - meaning there were almost 2,000 more people than jobs created.