Businessman: Unemployment will get worse before it gets better
Guardian Business Editor
Published: Oct 25, 2013
An end to long-running government-funded infrastructure projects, the implementation of new taxes, concern over value added tax (VAT) implementation and “negativity about foreign investors” have all likely impacted employment figures, leading to a rise in joblessness, a top businessman has contended.
Former Bahamas Chamber of Commerce and Employers Confederation President Dionisio D’Aguilar said that a lot of “uncertainty” currently exists in the business community and he expects unemployment to “get worse before it gets better”.
He was responding to findings that unemployment overall in The Bahamas rose from 14 percent to 16.2 percent, with New Providence’s unemployment standing at 15.9 percent, and Grand Bahama’s at 19.5 percent.
In the last labour force survey, the results of which were released in February 2013, unemployment in Nassau stood at 13.1 percent, while in Grand Bahama it was 18 percent.
“It’s not unexpected, and it will get worse before it gets better. Absolutely. The Government of The Bahamas has a $500 million hole it needs to fill. The introduction of VAT is an attempt to fill that. Where is that money going to come from? The economy as it exists now. With that, the government is taking that money and applying it to the debt.
“So I think it’s inevitable that the economy will get worse before it gets better. The only saving grace is Baha Mar and what effect that may have on job creation.”
Referring to what he described as “negativity” towards foreigners that has risen in recent times in public statements by politicians, D’Aguilar said he feels that this is going to dampen investment levels.
“I think that’s scared off a lot of people who want to come to The Bahamas to invest. We have a regime that tells people we are not open to foreigners. When you take all of these things together you see a dampening of the economy and higher unemployment.”
Godfrey Forbes, president of the Bahamian Contractors Association, told Guardian Business that a depressed construction sector likely contributed to the unemployment figures as they currently stand.
“I think for us here we know that in the construction industry there have not been much new projects coming on stream that people are activity engaged in. You’ve had projects that are still going on that were going on from last year. Some of them are coming to completion and overall when you look at what has been going on with Baha Mar we’ve had the earlier stage, where some of the local contractors have been given contracts to carry out certain preliminary work, but now the major superstructure is all the way up and I don’t think there are as many local contractors there.
“Now the airport is winding up, so you are finding people who are basically being laid off because of that project coming to an end.
“Unfortunately there has not been much new projects being started, and even though the government has taken initiative to do some new things, it’s still very small in terms of contracts executed. The government housing project which we anticipated to be going on now seems to have not got off the ground.
“So when you take all of those factors, you can see that the construction side is down, and when that is down there are other areas related to construction that are also impacted.”
In its recent Monthly Economic and Financial Development report for August, The Central Bank of The Bahamas noted that mortgage disbursements for new construction and repairs - as reported by commercial banks, insurance companies and the Bahamas Mortgage Corporation - fell by 15.1 percent to $23.8 million, after a 24.9 percent decline a year ago.
The dominant residential segment decreased by eight percent to $23.8 million, following a sharp reduction in 2012, while the commercial component had no recorded disbursements for the period, versus $2.2 million in the prior three months.