The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An outspoken businessman believes November’s increased unemployment figures are proof the Government’s economic policies are not working, as he asked: “Who wants to open a business in the Bahamas now?”

Dionisio D’Aguilar, Superwash’s president, told Tribune Business that the 1.4 percentage point jump in the jobless rate in the six months since May 2014 showed the Christie administration was not focusing on pro-growth policies.

Tribune Business’s analysis of the Department of Statistics’ data shows that the number of persons unemployed in the Bahamas has increased by 14 per cent since the current government took office, the growth rate being twice that for both the total workforce and number of Bahamians who are employed.

The findings from the Department’s November 2014 Labour Force Survey are especially ill-timed from the Government’s perspective, given the optimistic economic message that Prime Minister Perry Christie sought to convey in his New Year’s address.

Apart from Value-Added Tax (VAT), Mr D’Aguilar said the Government’s public statements about National Health Insurance (NHI), mandatory pensions and a minimum wage increase showed it was concentrating on social, voter-pleasing issues.

He warned that such talk, which gave notice of further cost burdens being heaped on the private sector, was further eroding already-fragile confidence and discouraging businesses from investing in job-creating expansion.

Mr D’Aguilar then suggested that Prime Minister Perry Christie’s Cabinet had been “hijacked by the socialist wing”, naming Shane Gibson, minister of labour and national insurance, and Fred Mitchell, minister of foreign affairs and immigration, as two members of this group.

Suggesting that some in the Government were defying reality by believing they, and their policies, were right, Mr D’Aguilar said Baha Mar’s late March 2015 opening would be a help, but no panacea.

The Cable Beach development is poised to hire 5,000 workers, but the former Chamber of Commerce president said this would, in theory, only reduce the jobless number from 31,540 to 26,540.

With the official Bahamas-wide unemployment rate standing at 15.7 per cent in November, up from 14.3 per cent in May, the Superwash president said the Government needed to focus on making it easier to do business, adding: “The only growing industry is numbers.”

Mr D’Aguilar told Tribune Business: “This is a clear warning signal to the Government that their policies are failing to create employment. There is no way that this is unexpected.

“All this talk about a minimum wage increase, National Health Insurance, pensions, VAT; all this talk about making it more difficult to do business in this country is clearly creating a hike in the unemployment rate.

“The Government is not focused on creating an environment conducive to business and foreign direct investment. The Bahamas is an increasingly more expensive place to do business.

“We’re so focused on controlling businesses with Price Control, E. J. Bowe.... Who wants to go into business in the Bahamas?”

The Christie administration has publicly stated that higher GDP growth rates are one of the four cornerstones of its fiscal turnaround plan. As well as Baha Mar, it is pointing to Albany, Genting’s Bimini investment and Memories’ involvement in Grand Bahama as signs of improving investor confidence and increased foreign direct investment (FDI) flows.

Yet, not surprisingly, senior figures in the Free National Movement (FNM) seized on the increased unemployment numbers.

K P Turnquest, the Opposition’s deputy leader and finance spokesman, told Tribune Business: “We queried the statistics in May, and advised the Government then it was premature for them to be bragging about a reduction in the unemployment rate.......

“We still have a significant amount of work to do to grow this economy and rein in our [government] expenditure to ensure we don’t overtax the business sector to carry this large government.”

Mr Turnquest, though, agreed that the November 2014 increase in the unemployment numbers likely includes the effects of last year’s crop of high school graduates entering the Bahamian labour force.

Studies have shown that it takes up to a year for many young Bahamians to secure a job, meaning that many high school leavers entering the workforce in summer 2014 will likely have ended up boosting the year-end unemployment statistics.

Analysis of the data, though, confirms that the Bahamian economy is still growing nowhere near fast enough to absorb an estimated 3,500 annual high school graduates plus those who are already unemployed.

Department of Statistics data for the past three years shows that the raw unemployment numbers, and the rate, have remained stubbornly high ever since the Christie administration took office.

The total number of persons unemployed in November 2014, some 31,540, is the second highest figure for those three years after May 2013.

That number represents a 14 per cent increase on the 26,655 persons found to be unemployed in May 2012, around the time the Progressive Liberal Party (PLP) won the general election.

Over the same May 2012-November 2014 period, the total Bahamian labour force (employed and unemployed persons) has expanded by 6.7 per cent, from 188,310 to 201,040.

And the employed labour force has risen from 160,650 to 169,500, a 5.5 per cent growth.

The Department’s data clearly shows that the number of unemployed Bahamians, percentage wise, has increased at a far greater rate since this administration took office than the labour force or number of employed workers. Its percentage increase has been more than double that for the latter two indicators.

And both Mr D’Aguilar and Mr Turnquest expressed fears that the unemployment rate will further increase, especially if VAT’s implementation leads to a fall-off in consumer demand and reduced business profits.

“I think that as businesses adjust to this VAT and the extra burden it will cause, they’re going to be looking at ways to cut costs,” Mr Turnquest said, “and one of the easiest ways is to look at payroll and try and tighten up and make do with less.

“That is particularly true when you have the Consumer Affairs Commission looking over your shoulder and questioning any cost recovery efforts businesses feel necessary. If that bears out, you’re going to see a further increase in the unemployment rate.”

Messrs D’Aguilar and Turnquest also agreed that Baha Mar would provide temporary relief, the latter also questioning if the development would merely suck workers away from other Bahamian businesses as opposed to creating new jobs.

“You can’t continue to give your people benefits, and can’t continue to increase their salaries, when unemployment is going up. We all want to do that, but don’t have the luxury to do that,” Mr D’Aguilar told Tribune Business.

“Our people want growth and jobs. They don’t want lousy unemployment. Mr Christie has allowed his Cabinet to be hijacked by the socialist wing of his government, the Shane Gibsons and the Fred Mitchells. They are so misguided in thinking they’re doing the right thing by the Bahamian people, but they’re not if the people don’t have jobs.”

Mr D’Aguilar said the private sector had been “screaming from the hilltops for years” for a plan to improve the ‘ease of doing business’ in the Bahamas, adding that it now needed “to catch ourselves after VAT”.

Pointing to Superwash’s annual re-investment track record, he said the laundromat chain had established a new Gibbs Corner location in 2013; created a Saunders Highway presence last year; and was planning to convert a Soldier Road warehouse into its latest outlet this year.

“People say I take a lot of risks, but I have to,” Mr D’Aguilar told Tribune Business. “I’m investing in the country. It’ll get me a couple of dollars, and if people didn’t do this we wouldn’t have a country.”