STRAIGHT UP TALK
THURSDAY MAY 20TH, 2004
By Zhivargo Laing
2004/2005 BUDGET MUST DELIVER JOBS
Prime Minister Christie, who is also the Minister of Finance, is set to make his third budget communication since assuming office. While he will undoubtedly have much to say on May 26th during that communication, the one thing that thousands of Bahamians want to hear him say and provide evidence of is that they will find jobs within the next fiscal year. Thousands graduated and graduating from high school and college, thousands of construction workers, thousands of unemployed or underemployed hotel workers and others have painfully endured over two years of joblessness. They look to the upcoming budget for help and hope.
The Prime Minister will have a positive global economic outlook with which to work. The world economy appears to be in full and sustained recovery. The US economy is expected to grow at rate of 4.7%, with some 3.4% growth forecasted for the 30 richest economies that make up the Organization for Economic Cooperation and Development (OECD). This robust growth is not expected to produce high inflation. This is good news for The Bahamas, which according to IMF estimates will grow by some 2.5% in this year and 3% in 2005. The question is: will this be jobless growth for The Bahamas, that is, will the economy grow but not produce much jobs in the process?
The economy of The Bahamas has grown positively for the last two years, in line with the economic recovery in the USA that began in November of 2001. Despite this growth, however, unemployment over the period has grown, reaching about 10% according to the last published figures from the Department of Statistics. The Household Labour Survey presently being conducted by the Department is likely to reveal that unemployment has remained unchanged or reduced only slightly. It will certainly not reveal any strength in the labour market of The Bahamas.
This picture is likely to improve over the next twelve months but only slightly. The best prospects for creating jobs over the next twelve months rest primarily with Kerzner International’s third phase and strong performance in the hotel sector. Kerzner’s Phase III is the only approved foreign investment announced by the government that appears to have the ability to generate a significant number of jobs over the next fiscal period and these jobs will be primarily in the construction area. According to its SEC filing dated May 4th, 2004, Kerzner International expects to commence development of its 65,000 square feet Marian Village and the Expansion of its 200 2-bedroom Units in the Harborside at Atlantis between April and June of 2004 and complete it between October and November of 2005. This will create a few hundred-construction jobs in the period. The company gives no firm dates for other elements of its $1 billion Phase III but did reveal that it expects to complete the development in the Christmas of 2006.
The favourable global economic picture should translate into strong tourism performance for The Bahamas. However, this performance is not likely to create many new jobs. Rather, it is likely to secure the jobs of presently employed hotel workers over the next fiscal period and help hotel owners pay off arrears accruing from the horrible stagnation in the hotel industry for much of the last two years. There is nothing to indicate any extraordinary growth in tourism within the next year that will create a large number of new jobs high school graduates, college graduates and large numbers of unemployed hotel workers.
What is particularly sad about the job prospects over the next twelve months is that they are extremely limited in much of the Family Islands. The best prospects exist in Exuma, Abaco and Grand Bahama, and even these islands will at best experience only slight improvement in their employment pictures over the next year. The other Family Islands will have to wait a little longer to see if any significant improvement will come to the economic situation.
Undoubtedly, the government will be tempted to generate jobs through its own hiring machinery. While it claimed to have maintained a hiring freeze over the last two years, it would not be surprising to see the records show an increase in public sector employment over the period. This stealth increase in employment in the government sector will continue over the next fiscal year and to some degree will be accelerated. This notwithstanding, budget constraints will press the government to do less hiring than it would like.
The bottom line is that despite the positive economic forecast for the 2004/2005 fiscal period, joblessness will remain a pressing concern for Bahamians and for the Christie-administration. If there is any significant relief to come, it will occur either two years out or by some miraculous development beyond the control of the government within the year.
There is no telling how long this global economic expansion will last, though positive growth is estimated into 2005. There remain some significant uncertainties that could put a damper on this positive financial picture, most of all, the war on terrorism and the situation in the Gulf. Another significant terrorist attack in one of the major economies, especially the US, or a bad turn in Iraq will have serious negative consequences for the world’s economy.
With this in mind it is important for us to be wiser and more prudent that we were in previous periods of economic expansions. Private businesses must not consume themselves with making profits in the short term. They must focus on the long term-picture, focusing on productivity, human resource training, reinvestment, global alliances and readiness for trade liberalization.
The government must focus on fiscal discipline, public sector reform, privatization and investment in education and training, among other things. The government should have a strategic approach to inward foreign direct investment, attracting investments that are tied to long-term development and sustained economic opportunities.
Readers will recall that during the 2002 general election, the PLP had a little boy on a campaign ad thanking the PLP for all it had done for The Bahamas. Frankly, it was a cute ad. “Thank you PLP for Independence,” the little boy enthusiastically and smartly said. “Thank you PLP for National Insurance,” he continued on and on. The PLP’s reference to history then during that political season did not seem to bother certain people. Today when one reminds Bahamians in a non-political season that Sol Kerzner had a five-phase development approved by the FNM administration, of which, the current third phase was one, those same people suggest that there is something wrong. Well too bad too sad for them! History is history, facts are facts and the truth is the truth! Those who want to live in the “Never Never Land” can do so. We live in the real world where reality is as stubborn as a mule.
This column reminded Bahamians that Kerzner International’s third phase was approved prior to the PLP coming to office not to lay claim to it for the FNM but to point out that the PLP was being disingenuous in its politically-timed re-announcement of it and that it had an about face on the question of Kerzner International that bordered on hypocrisy. One doesn’t get over the truth; one embraces it. One does, however, get over multiple and sizable chips that jaundice one’s view of the world. It seems that some people’s near-hatred of the FNM makes them feel that the Party should never remind the public of its accomplishments though they try to conjure up some for the PLP. We leave them to their ill-fated path.
“Truth is as impossible to be soiled by any outward touch as the sunbeam.” John Milton