The Bahamas Employers Confederation P.O. Box N-166 Nassau, Bahamas

PRESS RELEASE

For Immediate Release: Monday, July 22, 2002
For Additional Information Contact:
Brian Nutt, Bahamas Employers Confederation

Businesses Cautious on Economy According to Survey

The overall economy of The Bahamas, while showing marginal signs of recovery, remains highly vulnerable according to the results of a survey of businesses conducted by the Coalition of Private Sector Organizations, an umbrella group of private sector organizations comprising the Bahamas Chamber of Commerce, the Bahamas Employers Confederation, and others.

The uncertainty continues to reflect the considerable changes which The Bahamas has experienced over the past eighteen months. Businesses point to a number of overlapping factors including the U.S. recession, the financial services blacklisting, the Bay Street fire, the terrorist attacks in the U.S.A. on September 11th 2001, Hurricane Michelle and the recently enacted labour legislation.

The survey conducted throughout June was directed at a cross-section of business categories and sizes. The results reflect the views of approximately 96 businesses with a reported labour force of nearly 17,000 employees.

The survey conducted by the Coalition of Private Sector Organizations had four key objectives; to measure business performance for the last six months and expected performance for the next six months, to provide an indication of the general economic outlook, to gain a greater understanding of the issue of productivity and its affect on businesses and the economy, to determine how the recently enacted labour legislation has affected businesses and the economy.

Sixty-five percent of businesses report that sales and profits are down over the past six months and these trends are expected to continue for most businesses over the next six months. Capital spending, which is a key indicator of economic growth, is down or stagnant for more that three out of four businesses (78%).

The number of businesses reporting a net loss for the year is 22%, and of those who expect a profit 64% report that profits will be lower than anticipated. According to the Coalition report, this is especially troubling indicating that many businesses do not have the capacity to absorb an additional shock, having little or no equity reserves.

The fragility of the economy and of business confidence is underscored by the fact that sales and profit projections were already adjusted downward by most businesses last year. Now, nearly a year later businesses are seeing losses and profit reductions greater than they anticipated when they made downward adjustments. In a similar survey conducted by the Coalition of Private Sector Organizations in August, 2001, 51% of the businesses anticipated a decline in profits.

Despite the concerns of the overwhelming majority of businesses which are still experiencing a loss or decline in business activity, 65% believe that the economy is recovering. The pace and extent of the recovery is unknown. Eighty-Five percent believe we are still feeling the impact of September 11th.

While some businesses have reduced employment levels slightly and others are planning some reductions, most businesses are holding the line on making significant reductions in their employment levels. It is assumed that this is being done to a degree by employer loyalty to their employees, and in anticipation of being able to meet employment needs upon recovery. The retention for some employers comes at the expense of profits and capital spending.

Businesses point to productivity as one of the most important factors tied to the success of their business and the economy. More than four out of five companies (81%) report that employee productivity is affecting their business and cite the lack of basic work ethics and lax attitudes towards time as major factors affecting their company, the economy and the nation.

More than nine out of ten employers indicated that the recently enacted labour legislation has had a negative impact on the economy with 22% of them reporting that it has had a significant impact.

The findings and recommendations from the survey are being shared with Government, the business community, and the general public to provide them with a better understanding of our nation's economic standing, immediate and mid-term outlook, the critical need to address productivity issues, and how the labour laws are affecting the economy and could impact it further in the future.

Survey Summary of Findings & Conclusions