By NEIL HARTNELL
Tribune Business Editor
The Bahamas must get its economy "back into business as quickly as we can" to combat the rising poverty and inequality exposed by a recent household survey, the deputy prime minister said yesterday.
K Peter Turnquest told Tribune Business this was the only sustainable solution to the Inter-American Development Bank's (IDB) finding that the percentage of Bahamian households reporting income below the minimum wage near-tripled to 47.6 percent during the first six weeks of the COVID-19 lockdown.
"Obviously from an economic point of view, a financial point of view, we're not surprised by it," Mr Turnquest said of the multilateral lender's findings, "because we all know that when the economy was locked down it had a devastating effect on families and individuals.
"We do recognise this has a direct effect on the consumption economy, which makes up the bulk of the domestic economy, so to that extent it has a knock-on effect. A simple answer is that we need to get the domestic economy up and going, but we also need to work out how to get the external markets moving.
"The Government will continue to work on its [investment] approvals process, and hopefully it will get people back to work and the economy starting to generate again."
With the Minnis administration having only budgeted to continue its COVID-19 assistance to businesses and individuals until end-September 2020, Mr Turnquest added that it was "in everyone's interests to get the economy going".
The deputy prime minister conceded that The Bahamas' heavy dependency on tourism as its primary foreign currency earner and job creator meant it had little choice but to re-open and revive the industry in the near-term, especially since true economic diversification into other industries will be a medium to long-term project.
"It all depends upon the economy and what happens once we start opening the borders," Mr Turnquest told Tribune Business. "We've been saying all along that we have set a timeline of late October/early November as the latest when we will start to get back into the tourism business.
"That's the Ministry of Finance's forecasting, and the minister [of tourism] will speak to the timeline, the risk and how we will mitigate the risk on Monday, and move from there."
The IDB's findings were drawn from an online survey, which attracted replies from 910 Bahamian families, and took place in the final two weeks of April 2020. While the COVID-19 pandemic is a fast-evolving situation, and much has changed since then, the results give an insight into the depth and breadth of the economic and social fall-out sparked by the pandemic.
"The percentage of households reporting income below the minimum wage increased from 16.1 percent in January 2020 to 47.6 percent in April 2020," the IDB said. It added that this was driven by three factors, with 50.8 percent of households reporting business closures and 50.2 percent suffering at least one job loss.
While some 75.1 percent of those furloughed said their employer had promised to take them back, it is unclear how many of these commitments have been followed through. A further 18.4 percent of Bahamian households lost rental income due to the COVID-19 shutdown.
The brunt of the economic fall-out was felt by lower income Bahamian households, raising fears of growing poverty and social inequality that may last well beyond COVID-19. "Households that reported earnings below the minimum wage in January 2020 were more severely impacted, particularly from employment loss (80.6 percent), compared to middle and high-income households (50.2 percent and 35.1 percent, respectively)," the IDB survey found.
Mr Turnquest yesterday said such concerns were being felt globally, and not just confined to The Bahamas. He acknowledged that COVID-19 was having a "disproportionate" impact on lower income Bahamians, who were "finding it more difficult to hold on" compared to their wealthier counterparts, which was why the Government had targeted its assistance initiatives towards them.
"It's one of the effects of the pandemic we have no control over," Mr Turnquest said. "We have to do our best to support them over the interim period and get back to business as quickly as possible."
He also acknowledged the "systemic historical problem where we have low levels of savings" after the IDB survey found less than four in 10 Bahamian households had adequate reserves to cope with COVID-19.
Mr Turnquest added that savings were critical to enable Bahamians to "ride through" whenever they "have a wrinkle or bump in their life plan", but said the high cost of living and ordinary expenses made it difficult for persons to build up such a cushion.
"We have to look at the question of a livable wage and what that means in terms of addressing the cost of living in The Bahamas," he continued. "These are all issues being discussed but at this stage it's too early to talk about. It's an historical, systemic problem that at some point we have to deal with."