The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian employment will not fully recover to pre-COVID and Dorian levels until 2025, marking a six-year stretch where the economy has endured elevated jobless numbers.

The Government’s just-released Fiscal Strategy Report, drawing on International Monetary Fund (IMF) projections, said the unemployment rate will only come down to pre-Hurricane Dorian numbers by 2024 and 2025, when it is forecast to drop to 10.6 percent and 10.3 percent, respectively.

This compares to the 9.5 percent unemployment rent calculated by the then-Department of Statistics’ bi-annual Labour Force Survey for May 2019, the last such locally-driven assessment of employment conditions in The Bahamas. No survey has been carried out subsequently due to the COVID-19 pandemic.

The Fiscal Strategy Report, though, argued that the IMF’s projections were “conservative” compared to anecdotal evidence provided by the reduction in COVID-related unemployment benefit claims, which suggested the jobless rate might be coming down faster than the Fund’s forecasts.

However, the timeline given by the IMF is in line with recent forecasts that the Bahamian economy will recover its pre-COVID size and output by 2024. Job creation tends to lag economic growth, hence the 2025 date for a return to pre-Dorian jobless levels. And John Rolle, the Central Bank’s governor, recently said under-employment is now a more serious issue than unemployment.

“As a result of job losses associated with the health and safety protocols, and economic downturn, attributed to the COVID-19 virus, IMF estimates place unemployment at end-December 2020 at 25.6 percent,” the Fiscal Strategy Report 2021 said.

“With the implementation of emergency orders after onset of the pandemic locally, which allowed for furloughing of staff in lieu of termination, a large proportion of the Bahamian labour force also found themselves underemployed.

“Notwithstanding expected improvements in vaccination rates in major tourism source markets, relaxed travel restrictions and pent-up demand for travel and leisure; the recovery to pre-COVID-19 output levels is expected to be protracted.”

Many observers felt that, at the COVID-19 pandemic’s height between March and November 2020, when lockdowns and other restrictive measures were at their peak, the Bahamian unemployment rate may have reached as a high as 50 percent due to a combination of terminations and furloughs.

“As a result, unemployment levels in 2021 were forecast by the IMF to improve to 21.5 percent from an estimated 25.6 percent in 2020, more conservative than informal estimates generated based on NIB administered COVID-19 unemployment assistance,” the Fiscal Strategy Report added.

“Over the medium-term, unemployment rates are expected to return to pre-COVID-19 levels, improving to 15.2 percent in 2022, 11.5 percent in 2023, 10.6 percent in 2024 and 10.3 percent in 2025.”

Recalling the last locally-derived unemployment data, the report added: “As a result of the limitations on the movement of persons due to Hurricane Dorian and the COVID-19 pandemic, the collection of specific employment and labour market data by BNSI (Bahamas National Statistics Institute) was interrupted for the first time in more than a decade.

“In its last published Labour Force Report (May 2019), BNSI estimated 22,635 unemployed persons (9.5 percent as at May 2019) across all islands.” However, the Fiscal Strategy Report sought to suggest that the reduction in COVID-related unemployment benefit claimants indicated that jobs and the economy may be recovering faster than the IMF has anticipated.

“The deterioration in unemployment conditions is verified by the 40,258 claimants receiving unemployment assistance from the National Insurance Board (NIB), and the Government’s unemployment assistance programme administered by the NIB between March to December 2020, with an estimated $203.1m disbursed,” it said.

“As evidence of the improvement in employment conditions in 2021, the number of claimants still receiving this unemployment support by October 2021 declined to 17,154.” Meanwhile, the Fiscal Strategy Report projected that inflation will jump to 4.2 percent this, increasing from 3 percent in 2021, due to the supply chain crisis and the ramp-up in post-COVID global demand.

“In line with trends in output, IMF estimates indicate price inflation was expected to increase in 2021 to 3 percent from a minimal 0.039 percent experienced in 2020 amidst global supply chain shortages as countries rebound,” the Fiscal Strategy Report said.

“In line with output trends, inflationary levels are similarly expected to increase to 4.2 percent in 2022 before gradually returning to historic levels of 3.2 percent, 2.9 percent and 2.7 percent in 2023, 2024 and 2025 respectively.

“While recent efforts have been made to diversify the Bahamian economy, inclusive of focusing on food security, The Bahamas remains a net importer of most items consumed locally. As such, inflationary levels will continue to be sensitive to the current supply chain shortage.”