Bermuda's Economy

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Bermuda's Economy

Dependent on international business and tourism, almost everything has to be imported

To refer to this webfile, please use "bermuda-online.org/economy.htm" as your Subject

Important first points

Bermuda has a high-cost economy. The World Bank rates it as # 1 in the world in GNI - Gross National Income. Most of its money comes from being an International Business center or offshore jurisdiction - some would say tax haven for corporate entities (not for their employees). It is also a long-established tourism resort. It has no natural resources of its own in its 21 square miles, no oil, no gas, no heavy industry. It is one of the most isolated yet highly populated places anywhere in the world and one of the most regulated, with controls on what non-nationals cannot do that no other jurisdiction in the world imposes. Lack of citizenship to newcomers except after 10 years of continuous and living-together marriage to a Bermudian, lack of citizenship to children of non-nationals, plus their consequences of inability to vote, inability to buy property except in certain circumstances only, are merely some of them. All these mean that for most non-Bermudians including all from Britain who come to Bermuda to work in jobs Bermudians cannot or will not do or want, there can be little chance of staying beyond their Work Permit term, with no security of tenure, no prospects of citizenship, no opportunity to buy a house or condominium at the same price levels as Bermudians. But for their international business employers, it is a different story. Many were either incorporated in Bermuda or have moved their corporate headquarters to Bermuda, for international tax reasons. Why? Because Bermuda levies no taxes on their world business activities. So far, Bermuda offers them far more in assets than in liabilities. It pays them to come here, for as long as Bermuda's advantages as an offshore jurisdiction outweigh those of competing jurisdictions. It continues to do so for the international corporate entities, but not to their non-Bermudian employees for the reasons given above. Plus, it it is not true to say Bermuda has no taxes. It has no capital gains tax, true, but the other direct and indirect taxes it levies on managements, their staff, business visitors and tourists are many and they can be so very heavy that overall Bermuda's cost of living is one of the highest in the world, if not the highest, nearly three times more than in the UK and nearly four times more than in the USA. They include a direct income tax, in the form of an Employment tax, payable by employers and employees. It is based on what is earned from employment. It is currently nearly 15% with employers paying some and employees paying the balance. Bermuda Government Customs Duties averaging 35% of wholesale costs, translating into 100% or more at retail level, and Bermuda Government Annual License Fees on automobiles averaging $590 per auto. These are merely a few examples of why Bermuda has an appreciably higher cost of living than direct taxed and indirect taxed jurisdictions.

Bermuda has no double taxation treaties of any kind. This does not affect nationals of most other direct-taxed countries who live and work in Bermuda but it means that nationals of countries like the United States of America and the Philippines who live and work in Bermuda are liable to taxes on their Bermuda income over a certain amount, without any kind of tax rebate from their own country. A form of taxation treaty with the USA gives USA resident taxpayers in Bermuda a more than $80,000 discount off their US taxes payable, partly because the overall cost of living overseas - in places like Bermuda - is recognized as much higher than in the USA.

The Year 1999 Bermuda Tax Review, although paid for in full by Bermuda taxpayers, has not to date been made public, despite complaints.

Annual Economic Activity Survey

Done every April and May and released later in whole or in part, on the basis of economic information solicited by the Bermuda Government's Department of Statistics from businesses and organizations including retail stores, hotels, guest houses, banks, utilities, schools, restaurants and sports clubs.

Main industries are international business and tourism

British Bermuda is a North Atlantic business & tourism center. Not in the Caribbean, it is the only part left of British North America after the USA and Canada got their independence.

There is a public sector Bermuda Government Department of Tourism web site which includes what offices in Bermuda and overseas it operates at Bermuda taxpayers' expense.

Tourism's 2009-2010 Budget cut and staff slashed

2009. Air arrivals in the second quarter were the lowest seen in almost 30 years, with 74,979 tourists flying to the Island between April and June. The figure is the lowest since a modern recording system was introduced to the Department of Tourism in 1980 and a 14.27 percent decline compared to the same period last year, when 87,445 tourists flew to the Island. Cruise arrivals were down 3.7 percent for the period, with 124,552 people visiting, and overall arrivals, which include yacht visitors, were down 7.98 percent compared to the same period last year. In total 203,061 people visited the Island during the second quarter this year. All tourist accommodations, except small hotels, showed a decline during the three month period with an overall decline of 16.49 percent. But the figures were an improvement on the first quarter of the year which saw air arrivals drop 22 percent and overall visitors drop 27 percent, when compared with 2008. The year to date figurers reveal 235,524 people have come to the Island, compared to 265,479 visitors for the first six months of 2008, a decline of 11.23 percent.

In mid February 2009, the Bermuda Government's Department of Tourism's budget to March 31, 2010 was cut by eight percent. An estimated $32.48 million will be spent on tourism this year, down from $35.30 million last year and $42.07 in 2007/08. The Department has also shed 27 jobs in the past year, from 78 to 51, all as a result of the restructuring of the North American Tourism Office.

As part of Tourism's '400th anniversary sizzling summer offer', more than a dozen participating hotels in Bermuda offered guests a credit of $400 for stays of four nights or more. And four-night packages as low as $672 a person including accommodation at hotels like Surfside and The Wharf suites were offered from gateway cities such as New York and Boston. High-end luxury properties are discounting more and that business and corporate travel as well as meetings and conventions are off significantly, which also has a greater impact on the larger hotels.

All visitors by state or country of origin

The USA is shown first because it has more visitors to Bermuda than all other countries combined, about 75 percent in total.

USA - Mid Atlantic

USA - North East

USA - South East

USA - Mid West

USA - West

Canada

Newfoundland	Nova Scotia	Prince Edward Island	New Brunswick	Quebec East	Montreal	Quebec West
Other Quebec	Ontario East	Ontario Central	Toronto	Ontario West	Ontario North	Other Ontario
Manitoba	Saskatchewan	Alberta	British Columbia	Yukon	Northwest Territories	Unclassified

Rest of the world

Tourism is the major pillar of the economy in employment. It employs thousands more than international business. All the latter's accommodation, service and travel needs developed as an adjunct of tourism. Bermuda caters to thousands of business visitors as well as tourists. So an exception is made in the case of hotels to the rule of local companies having to be at least 60% beneficially Bermudian owned. Non local hotel investors may provide the foreign capital required to build and maintain an up market resort hotel.

With their labor intensity, size, heat and light needs and other factors, they bear the biggest burden of the Bermuda Government's up-front payable labor related employers' taxes, fuels' import duties and other hotels related costs. Since 1989 more than a third of Bermuda's hotel rooms have been lost. Bermuda is a quality but very high cost destination. The Bermuda Government makes no secret of the fact that it does not want low-income tourists, expects them to be earning good incomes and charges them accordingly. They are mostly 35 years old or more, 60 percent with college degrees and annual income of at least US$ 75,000 per person. A high 35% to 40% are repeat visitors earning much more each and staying an average of 6.2 nights, the majority in April through October.

As of December 31st, 2008 there were 57 licensed properties, 3,000 rooms and an estimated bed count of 5,998. They exclude the scheduled opening of the Tucker’s Point Hotel in April 2009. In recent years, Bermuda's tourism industry has been overtaken hugely by International Business as Bermuda's principal revenue-earner (see Bermuda's International Business Industry: a Profile.

Average median salary per person island-wide

In 2008, it was calculated as $66,183. In 2008, the average in the banking and international business sector was estimated as US$ 78,896. Many earn far more. Median incomes of Bermudians stood at $62,559, non-Bermudians stood at $81,315. High median salaries included actuaries at $175,378, lawyers at $180,499 and auditors at $100,000. Job benefits went up with 10,551 getting annual bonuses and 3,541 getting stock options. More than 2,300 workers got mortgage subsidies or rent subsidies while more than 1,800 got travel allowances. The percentage of Bermudians in the workforce fell from 74 percent in 2001 to 70 percent in 2008

With Gross National Income (GNI) of more than US$ 99,500 per capita, the World Bank rated it #1 in the world.

Balance of Payments

Bermuda’s balance of payment surplus jumped an astonishing $347 million in 2006 to reach $901m, with big rises in income from travel, business services investment income and employee salaries more than offsetting a near doubling of the deficit in the Island’s transportation services sector. Even though Bermuda imports goods and services to the tune of $2,482m, it ends up with the near billion-dollar current account surplus because of the $3,382m of goods and services it trades back to the rest of the world. For comparison the Island’s largest trading partner the US has not enjoyed a surplus since 1991 and recorded a deficit of $856.7 billion last year. Bermuda’s surplus in 2004 was $403m, in 2005 it was $554m, but last year it shot up to $901m. The biggest driver for the surplus was the exporting of labour and services to the international business sector, where receipts jumped to $3,382m from the $2,666m recorded in 2005. On the negative side of the equation the dependence on imported goods and services amounted to $2,482m, a year-on-year increase of $370m, creating the final surplus of $901m (the extra million apparently coming through ‘rounding’ up). The yearly picture was completed after the fourth-quarter figures for 2006 were released by the Department of Statistics, showing Bermuda made a current account surplus of $194m with the rest of the world during the final three months of the year, an $87m improvement over the same period in 2005. The goods trade deficit for the whole of 2006 went up $133m to $1,068m, the value of goods imported was $1,094m compared to goods exported from Bermuda which were almost half the 2005 total, at only $26m. The increasing demand for local businesses to service the needs of international business on the Island was evident in the $129m jump in the domestic services sector to $563m. Business services accounted for $557m to the current account surplus, with $846m in receipts for services to non-residents and a decline in payments for overseas services ($288m). Increased visitor numbers in 2006 helped the travel services portion of the balance of payments to a $41m boost to bring in a surplus of $231m. Local businesses sold goods and services valued at $508m. Bermudians also spent more overseas, rising $38m to $277m compared with 2005. There was an almost doubling of the cost of transportation services in the economy with the 2005 deficit of $140m jumping to $270m. Government services that were recorded as a deficit of $23m in 2005 ended up as a $44m surplus in 2006. Looking at the quarterly figures, during the final three months of 2006 the goods trade deficit went up $34m compared to the 2005 period to $266m. That was also a $17m jump from the third quarter of 2006. Imports to the Island far out-weighted exports with $271m worth of imports coming in between October and December compared with only $5m of exports. The value of Bermuda exports was down $2m on the previous quarter and down $6m year-on-year. Wages, salaries, investment income and other employee benefits paid to residents working in the international business sector formed a strong component of the positive current account. Total receipts from non-residents grew $171m to $814m. There was a $27m surplus in travel services, up $7m from the same period in 2005, with tourists to the Island spending $27m more in Bermuda than Bermudians spent during overseas trips. Transportation services presented a $75m deficit for the quarter, which was $10m higher than the previous quarter, but business services gave a $45m surplus increase to $143m compared to the last quarter of 2005.

Bermuda Government, Bermuda's largest employer, spender and revenue earner

With 47 paid legislators (36 in the House of Assembly plus 11 in the Senate), for a total of about 38,500 registered voters, a ratio of legislators to voters more than twelve times higher than the average equivalent in virtually any other country, and with in excess of 13 percent of the entire workforce working directly or indirectly by it. In February 2009, the Bermuda Government workforce - excluding the Government-owned quangos - exceeded 5,815 - in less than 21 square miles. Thus it can be readily seen how the Bermuda Government is exceedingly expensive for Bermuda's individual taxpayers, companies both local and international, business visitors and tourists, to finance and maintain. It is Bermuda's single largest beneficiary of tourism revenue.

Bermuda Government imposed methods of direct and indirect taxation and fees have become complex, bewildering - and why Bermuda is such an expensive place for locals and residents to live, companies to operate and tourists to visit. The tax structure puts a burden directly on locals, business visitors and tourists and penalizes tourism dependent industries.

In every year without exception, Government spending has increased appreciably, to the highest ever total of $850 million in 2008. Since the final closure of the American, British and Canadian military bases in 1995, recouping the $60 million they yielded yearly has become a Bermuda Government priority, with a mix of tax increases and new taxes. In terms of total employers, only the international business sector generally, with 4,701 employees in thousands of different businesses in 2008, has fewer employees than the government.

Government's salary bill has jumped more than $60 million in two years. An estimated $343 million will go on salaries in 2009/10, up from $339 million in 2008 and $283 million in 2007, an increase of $60.4 million or 21.3 percent since 2007/08. An estimated 5,815 people will be employed by Government in 2009/10, up from 5,754 last year and 5,569 in 2007/08, a rise of 246 or 4.4 percent in two years. Meanwhile Government has cut its travel budget from $7.4 million last year to $6.3 million, a fall of 14.2 percent. That move comes after criticism of soaring travel expenditure, which trebled in the decade leading up to 2008. In 2008 Premier Dr. Ewart Brown announced Ministers would exercise greater oversight and care concerning how taxpayer money was spent on travel, as part of cutbacks which included the axing of advertising in The Royal Gazette. Political commentator Stuart Hayward, a long-time critic of lavish travel at the taxpayers' expense, said: "Government travel is one area where it is most difficult to show value for money. Part of the reason is that there is often little real value for the money spent. Far too often Government travel involves luxury accommodations, upper class seats on short flights, lavish receptions and gourmet dining, which are rarely justified and even more rarely revealed to the public in detail. We would prefer to see deep cuts in the amount and style of travel, cuts that recouped the apparent extravagances of recent years. The reduction compared to last year is welcome, but last year's travel figure was itself an extravagance and should not be considered a benchmark."

Bermudians versus non-Bermudians in the workforce

In February 2009 almost one in three jobs on the Island were held by non-Bermudians in 2008, after a 3.5 percent increase in the number of guest workers, Government figures show. Although the number of jobs in the economy increased slightly in 2008, the number of posts held by Bermudians fell for the second straight year. Employment data for 2008 also showed that the expanding Civil Service was the biggest producer of new jobs in the Bermuda economy last year. Non-Bermudian workers totaled 12,968 in 2008 or 32.4 percent of the workforce although included are 1,957 spouses of Bermudians. The percentage of jobs held by Bermudians has declined steadily in recent years, from 73.4 percent in 2002 to 67.6 percent in 2008.

Business attire

Many locals wear dress Bermuda Shorts and their ensembles as standard business attire. Especially from May through October. If you prefer, you can attend business meetings in conservative business suits. Bring what you expect in a conservative, upscale resort. Lightweight natural fiber clothes are better for the hot and humid summer. Bring sports clothes, swimsuits, and a raincoat or light wind breaker during the day, and casual cottons, such as light dressy sweaters or wraps and cocktail type outfits for ladies, sports jacket and tie for men, by night. In November through March, bring light wool clothing or fall weight casuals, sweaters, raincoat and warmer jacket, wind breaker or coat. For evenings, use casual elegant lightweight woolens including sweaters or wraps - and for gentlemen, a suit or sports jacket and tie.

Casual upscale sportswear is acceptable in restaurants for lunch but many restaurants and night clubs require a gentleman's ensemble to include a pair of long trousers and jacket and tie in the evenings, or official dress Bermuda shorts with full jacket and tie and long knee length hose ensemble. Formal dress attire is not required. Swimsuits, abbreviated tops and short shorts should be used only at beaches and pools. There are no nude or semi nude beaches in Bermuda and indecent exposure is an indictable offense. Bare feet and hair curlers are not acceptable anywhere in public. If you jog, wear standard running shorts and shirts.

Business hours, types and times

The local time is Atlantic time - one hour ahead of Eastern Standard Time in the USA. Locally owned or majority Bermudian owned business houses - the only ones allowed to trade with locals and visitors - operate Mondays to Fridays or Mondays to Saturdays except public holidays from 8:30 or 9 am to 4:30 or 5 pm. Banks close to the public earlier, at 3 pm but have ATMs island wide 24 hours a day. Most retail and other establishments are open six days a week including Saturdays but except for public holidays, usually to 5 pm, occasionally later. Only a few stay open until 9 pm for certain peak periods but some larger grocery stores will stay open every night except Sundays and public holidays to 10 pm. Only a few retail establishments, small grocery stores and non hotel restaurants are allowed are open all day on Sundays. The larger grocery stores are restricted to 1 to 5 pm on Sundays.

Business protocol for first visits

Come armed with solid business credentials including bankers' and other referrals. Only registered local attorneys (barristers at law) may incorporate companies - Bermuda doesn't have the kind of "do it yourself" system found in many other countries. Give adequate notice of your visit if you wish to have appointments. Certain policies and restrictions apply. Non nationals acquiring Bermuda real estate are required to pay a significant acquisition tax to the Bermuda Government based on the sale price. Most non locally owned companies cannot own local real estate. Investment by non nationals in a "local" company is limited to an individual or collective maximum of 40 percent (except for investors in leasehold hotel properties). Operating costs and dividends paid are similarly apportioned. However, you may hold 100% of the stock of a Bermuda incorporated or registered "international" (in other words, not local) company which does not trade in the local marketplace except with other international companies.

Companies and their categories

There are more than 15,300 Bermuda based international companies, 2650 local companies, 430 overseas partnerships and 940 other non residents, many with a global business empire. They include subsidiaries of 75% of the Fortune 100 and their European equivalents. Only 235 or 3.4% of the internationals have local offices, yet account for 75% of internationals' spending. In insurance and reinsurance, Bermuda has an industry capital base exceeding US$ 35 billion and gross premiums of US$ 24 billion. It ranks with Lloyds of London and New York as a global leader.

Exempted companies, or international companies. Most focus on international activity. To protect local business interests, the Bermuda Government will not normally allow the formation of an exempted company in banking. However, some quality international banking organizations may, under certain circumstances, apply to form an exempted company for international or multinational general trust, investment and executorship activities. By qualifying as exempted companies, these corporate entities are not subject to any restrictions on foreign ownership. They can be either 100% owned by non-Bermudian interests or anywhere from 100% to 80%. Bermudians cannot hold more than a combined 20% interest in any one exempted company or partnership.

Continuation or Permit Companies. Also Exempted Companies. These are incorporated outside Bermuda but are permitted to operate from Bermuda in the same way as exempted companies. They evolved originally to meet certain special situations, for example when the United Kingdom's exchange control restrictions once prevented incorporation in Bermuda, or where tax treaties made it disadvantageous to incorporate in Bermuda. Others are encouraged to do so, for strategic reasons.

Local Companies. Beneficially owned by Bermudians and operating in the local marketplace, they are NOT "exempted" companies. The legal requirement that they must be at least 60 percent beneficially owned by Bermudians goes further. To avoid non Bermudians controlling local companies through pyramiding or secret agreements, corporate shareholders of local companies must themselves be at least 60 percent owned by Bermudians to qualify as Bermudian owners and with at least 60 percent Bermudians as directors. They provide support services. They include local accounting, banking and legal firms.

Cost of Living

See Cost of Living Guide in Bermuda. Bermuda's retail prices are high mostly because of the Bermuda Government duty rates on imports, the Government's single biggest source of revenue - and the Government law requiring all local companies except hotels to be at least 60 percent Bermudian owned. So non-Bermudian companies with substantial bulk purchasing power cannot enter the local market as investors and part owners to give much needed economies of scale in local costs of goods to businesses, residents and visitors in the same unrestricted way they can do so elsewhere. Despite these drawbacks, Bermuda's overall economy remains good, even if it is artificially so. Except that export earnings from international company businesses based in Bermuda now greatly exceed tourism earnings from people who visit Bermuda on vacation.

Current Account Surplus

The Department of Statistics released a July 2009 report stating the current account surplus rose by $65 million, to $320 million, when compared to the same period as 2008. Part of the reason for the surplus in the current account is less was spent on purchasing overseas goods, something that can indicate a shrinking economy. The balance of payments report covers all economic transactions between Bermuda and the rest of the world. Despite a decline in receipts, the current account recorded a larger surplus in the first quarter of 2009 as payments declined at a faster rate than receipts. A surplus of $320 million was recorded in 2009 compared with $255 million in 2008. Payments for importing goods fell 22 percent, to $242 million, when compared to last year, the lowest level since the first quarter in 2005. Income receipts also fell by $118 million and investment income declined by $147 million.

In early 2009 Bermuda's current account surplus more than halved over the fourth quarter, dropping to its lowest level in at least three years, as a fall in travel revenue and a rise in job losses in the international business sector took effect. The Department of Statistics' Balance of Payments report for the fourth quarter of 2008 revealed that the Island's current account declined by more than $110 million to $80 million for last year's fourth quarter compared to $191 million for the same period in 2007. The goods account recorded a deficit of $276 million in the last quarter of 2008, but service transactions realised a surplus of $122 million during the same time, representing a $25 million increase year-over-year. Meanwhile, the surplus on Bermuda's income account fell to $233 million in the final quarter of last year. The report warned that there was no guarantee the trend of the current account surplus being eroded would be reversed in 2009, with a deficit becoming a high possibility in the future. It said that for every quarter over the past decade, the Island's balance of payments had achieved a current account surplus, while the surplus averaged $222 million quarterly for the past five years alone. A surplus for Bermuda means more is produced than is spent, with the economy saving more than it invests. However, because the Island has high demand for its services, it is able to charge a higher price for them, reflected in a more expensive tourism product and a higher wage incurred for labour services offered to international businesses compared to other countries. While it may lead to increased savings, ultimately, it might mean a lower demand in the future as the country prices itself out of being competitive, the report surmised. Conversely, it argued that a current account deficit may not necessarily be harmful, inviting foreign investment, but by bringing an end such a long streak of surpluses could in fact serve to erode investor confidence in the economy and discourage the very inflow of foreign funds needed to spur growth, adding that Bermuda should aim to maintain its status as a net lender to the rest of the world.

Employment

The figures below do not include race. It is estimated that of Bermuda's current total resident population of about 65,400 about 38,674 or 62 percent of all employees in Bermuda are black, with whites and others about 24,726 or 39 percent.

Total working population (excludes juveniles, retirees and those unable to work)	39,457
Hotels, restaurants and clubs	5,607
Public Administration (excludes employees in Bermuda Government-owned hospitals and quangos	4,054
Banks, insurance and real estate	3,359
Business services	3,330
International entities	3,201
Average employment income overall for the population and all ages ($55,000 in government, $78,666 in private sector including international insurance company executives based in Bermuda)	$36,414
Hours worked per week	33.3
Unemployment - among Bermudians allowed to work	estimated 3 percent
Male employees	50 percent
Female employees	50 percent
Bermudian employees	70 percent
Expatriate employees (on Work Permits)	30 percent

Overall, women outnumber men in population (32,019 compared to 30,258 men) in the community services, education, financial sector, retail and wholesale trades. Men outnumber women in the transport sector. Nearly 75 percent of the new jobs created in 1999 were in professional and managerial posts. Non Bermudians number 7,521 persons. Work Permits (see separate file) are required to be applied for by all employers (except the Bermuda Government) of non Bermudians without local spouses. The Bermuda Government reaps a healthy annual revenue benefit from the desire of employers to employ non Bermudians.

The majority of employees in Bermuda work for a relatively small number of businesses. Some 113 companies, representing just over 3 percent of the total number of locally based business organizations, employ 18,517 people, 54 percent of the entire work force. In the international sector, 262 non-Bermudian companies with an active physical presence employ an average of 8.7 persons each. By contrast, some 2,741 organizations, nearly 75 percent of all employers, provide a total of 4,422 jobs, representing 22 percent of the work force. Most employers in this category employ five or fewer people.

Employment Rights. Under the Employment Act 2000, employees are entitled to legislated benefits from employers. They include two weeks holiday (vacation) after one year; no unauthorized docking of salaries or wages; a written contract after one week's employment; a 40-hour week; time and a half, or time off, after 40 hours, with possible exemptions; paid Public Holidays; a rest period of at least 24 consecutive hours each week; 8 days paid sick leave per year; unlimited time off to attend ante-natal classes for pregnant employees; 8 weeks paid and 4 weeks unpaid maternity leave after one year; statutory notice period; bereavement leave of 3 days unpaid or 5 days unpaid if traveling abroad; disciplinary procedure; time off for court duty, voting, meeting of Government Boards, Bermuda Regiment, Reserve Police, Senate or House of Assembly; notice of 1 week if weekly paid, 2 weeks if bi-weekly paid, 1 month in any other case; employers cannot sack employees for complaining about their treatment; an employees can take an employer to the Employment Tribunal for unfair or constructive dismissal.

Gross Domestic Product (GDP)

Bermuda had the highest gross domestic product per capita in the world, $5.85 billion in 2007. But 80% of it is provided by the international business sector. It went up by 9.4% in 2007 when this 21 square mile Island with 67,400 residents generated $5.85 billion of wealth - more than $91,477 per person, compared to 10.3% in 2006. Next highest is Qatar at $87,600 and Luxembourg, with $79,400 for 2007, and Jersey in third. Far behind are the USA ($45,800), Canada ($38,600) and UK ($35,000). GDP is the market value of all the goods and services produced and is mainly due to the expansion of the international business sector. Bermuda Government spending as a proportion of GDP is the highest in the world at over 69.9%.

Gross National Income per Capita (GNI) and Purchasing Power Parity (PPP)

Bermuda may be only 21 square miles in total land area, an extremely small part of the world in geographic measurement but is so affluent that the World Bank has reported Gross National Income (GNI) of more than US$ 89,935 in 2006, expected to be over $99,000 per capita in 2007. Thus the World Bank has rated Bermuda #1 in the world in GNI, far exceeding other offshore centres, Norway, the USA, Canada, UK, etc.

Health Care and Major Medical insurance

More extensive than the basic Hospital Plan (HIP). See Hospitalization and Health Care Support Groups. Unlike in Canada, UK and Ireland where basic coverage comes with the taxes one pays, there is no National Heath Plan or equivalent in Bermuda. You will need good insurance coverage from day 1 in Bermuda. Bermuda employers are required by law to provide at least HIP immediately, with Major Medical after the probationary period. The better employers will be more generous, with Major Medical applying immediately. Do not agree a contract with any Bermuda employer that will not give you Major Medical from the day you begin work. If you will be working as a temp with an employment agency, be aware that the law requires your employer to insure you, not the client of your employer if you are not working in your employer's office. Be aware that there are no standard plans or standard premiums, each employer's plan is different, plans cover employees and when applicable an employee's non-working spouse and any children only, not relatives or friends, apply only in Bermuda and increasingly in recent years, cease when you quit employment or retire or reach the age of 65, whichever comes first. How it affects retirees is now of such concern that it was announced that lawmakers would seek to address this to some degree. It has not yet happened. In a 2004 comparison undertaken by the Bureau of International Economic Development, the costs of health insurance in Bermuda are now the most expensive in the world, 10% higher than in the USA and significantly higher than in Canada, UK, Europe, Japan, Australia, New Zealand and elsewhere. Premiums in 2004 increased by about 8-12%. Because of prolonged disputes between local insurance companies and medical doctors, that in some cases made insured patients at local hospitals pay up-front, the Bermuda Government enacted in late 2002 The Public Health (Hospitals) Regulations 2002 and The Public Health (Clinical Laboratories) Regulations 2002 under the Public Health Act 1949.

Home ownership

In Bermuda, prices have risen by nearly 180% since 2000 and in 2008 to date are at least $990,000 for a house with an apartment ($540,000 in 2000) and $1 million - $995,000 ($545,000 in 2000) for an average 2/3 bedroom median single dwelling house. These figures are obtained from current Coldwell Banker JW Bermuda Realty statistics. Housing costs are on average 400% more than similar properties and plots in the USA and Canada - about US $160,000 and 280% more than in UK. Small periodic increases in social security pensions and salaries have lagged far behind the overall rate of inflation of housing. In the USA, according to CNN on May 8, 2005, a 30-year mortgage can be obtained at an interest rate of 5.6% but in Bermuda it is 9%.

Only 42% of Bermudians own their own homes, the lowest rate in the developed world. Only 21 percent of locals own their own homes with a mortgage and 23% of locals without a mortgage do so, compared to an average of 64 percent overseas. Only a small percentage under the age of 50 do so, compared to over 60% elsewhere. Here is the shocking breakdown:

	Under 30	30-39	40-49	50-64	65+	Total
Own with mortgage	7.1%	19.5%	29.42%	27.41%	11.4%	21.1%
Own without mortgage	2.1%	5.6%	12.1%	31.1%	60%	22.8%
Rent	85.9%	71.0%	55.1%	37.9%	23.0%	51.9%
Rent free	4.8%	3.9%	3.4%	3.7%	5.5%	4.1%
Not stated	0.0%	0.1%	0.2%	0.2%	0.2%	0.1%

30-year mortgages are now available to qualified persons from the local banks at interest rates totaling about 9 percent per annum (7 percent plus finder's fee). The required monthly payment of a 30 year mortgage of an average $975,000 Bermuda property is $6,090 but the average monthly Bermudian take home pay is $3,569. Bermuda banks require a household to make in excess of $12,000 a month to meet average 30 year mortgage payments. Plus, they need a $250,000 down payment, as a bank will not lend more than 85% of the appraised value of the property. Thus a far greater number of Bermudians than non-Bermudians in other countries are denied the opportunity of home ownership. The number of households that can afford to buy the average Bermuda property is 5,064 of the 19,505 households in Bermuda making over $108,000 a year.

The Bermuda Housing Corporation has built several thousand properties which it has sold to Bermudian families. The original idea was to provide subsidized housing to Bermuda's lower income families. But by international standards of subsidized housing costs, these are extremely expensive.

Household Income

Statistics

Imports and overseas spending by residents

Practically everything in Bermuda is imported, except for what is generated by the secondary industries shown below. In 1999, Bermuda imported $620 million worth of goods, more than at any time earlier. By far and away the greatest portion came from the USA, despite the odd fact that shipping costs from Britain and Europe are not more expensive than from the USA.

Residents alone - not companies - spent $360 million in 2007 on overseas travel and purchases. In Bermuda, the average duty rate for dutiable goods exceeds 30 percent. 85% of all visitors are from the USA and assume, incorrectly, that in Customs exemption of duties for visitors - from wherever they may be - and returning residents, Bermuda has the same very generous laws as the USA. Unfortunately, this is not the case. By comparison with the USA, Britain and Europe, in this regard Bermuda treats its visitors very severely and its returning residents with laws and regulations the democratic countries would not dare impose.

Normally, in the USA, for visitors or returning residents, the duty-free allowance or exemption from Customs Duty is $400 per trip, but from November 4, 2002, it has been raised from November 4, 2002 to $800 (from $400) for those who have not used the exemption in 30 days.

Visitors may bring in, duty free for personal use only while they are in Bermuda, their clothes and articles like cameras, golf bags, 50 cigars or 200 cigarettes or 0.454 kilos (1 pound weight) tobacco; 1 liter of liquor or wine and a $30 gift allowance. If they bring in any more in gifts or their value, they can be charged a heavy rate of duty - over 25% of value - unlike in USA, Britain and Europe, where it does not matter whether your gifts are for yourself or a member of your family or associate or a complete stranger.

This is not a good reflection on a place that claims to be a tourism resort and international business centre without parallel and which has much higher rate of affluence and GDP per square mile than the USA, Britain and most of Europe. It is incredibly stingy by comparison.

Returning residents are allowed an allowance of only US$ 100 (until 1989 it was US$400 a person, reduced in 1990/91 to US$250 a person and subsequently reduced yet again to the present US$100 per person) before they pay duty on items they bring but visitors are not entitled to such an allowance. Items brought in by visitors and residents that are not within their duty free category incur a stand import duty rate of 22.25% of purchase cost. Produce receipts from a retail store satisfactory to the Customs Department of actual purchase price of the items or be prepared for the Customs Department to assess items for your payment of duty at much higher Bermuda prices. This is applied vigorously. To avoid being arrested and having goods confiscated, do not try to import goods into Bermuda without paying the duty.

Only Bermudian legislators consider themselves exempt from laws affecting other people, like Customs inspection and payment of duty. It was reported in The Royal Gazette on page 9 of Thursday, September 13, 2001 that Bermuda Customs and Immigration have a long-standing practice of giving preferential treatment to local legislators returning from abroad. Other Members of Parliament have confirmed to this author that they too - not just the Premier and Ministers - do not pay any Customs duties unless they wish to do so voluntarily. Most don't wish to, so will not. Nor are they searched. It is not a policy, technically payment of Customs duty applies to everyone, but individual Customs Officers have the authority to use their discretion and not levy duty in the case of legislators.

Pensions

Not Social Security see separately, but private pension plans. While 65 for men and women is when those eligible will get Social Security, private pension plans can be more generous in lesser age and certainly more generous in pensions. But in Bermuda they can be offered only by approved local insurance companies, not the "exempted" or "international" variety registered in Bermuda but not corporate citizens. The National Pension Scheme Act 1999 became effective on 1st January 2000. It removed many of the anomalies and restrictions currently existing in some private corporate pension plans offering coverage to some but restricting others. It creates some portability for plans of all employers and employees. It helps ensure that working people, once they become senior citizens and retire from working, will have an adequate income without hardship. All employers, whether local or international or exempted must comply, for every employee whether Bermudian or non-Bermudian of from 23 years of age who works a minimum of 720 hours per year. Minimum contribution rates are based on pensionable earnings per year. Approved insurers under the Act are:

Poverty Line

There is some poverty. Some Bermudians are less affluent than others, mostly those who cannot make ends meet, including many single parent families and those who have a permanent disability of one kind which overseas would give them some disability allowance and other concessions but which in Bermuda do not. Some Government financial assistance, via the Ministry of Health and Social Services, is given to Bermudians only who are pensioners, or not pensioned by former long term employers, who don't own and have to pay to rent a home and don't have a job or any private income and have virtually no savings; or are qualifying single parent families; or certain others (on a discretionary basis) who are permanently mentally or physically handicapped; and certain able-bodied but unemployed or under-employed individuals not earning sufficient income to live on; and those who are born locally or overseas and are twins or triplets or higher. There is also a housing allowance program for Bermudians only with temporary rent payment difficulties because 99 percent of all Bermuda properties are hugely over-priced to rent or buy.

In July 2008 Government has released its long-awaited low income study, 'Low Income Thresholds for Bermuda Households in Need' which pitches the poverty line at incomes of less than $27,000 per annum for a single person and $76,000 for a two-parent family with two children under 16. The study found 11 percent of households fell below the new threshold, which equates to 3,050 homes. It contrasts with Census 2000 figures which showed 30 percent of households fell in the poor or near poor category. The study found that the highest incidence of low income households occurred for single and two parent households with young children and in elderly adult households. The Department of Statistics spent just under two years researching poverty and low income models from different countries, getting feedback from local groups and consulting with international academia and organisations. Poverty is a very complex concept to define and measure, particularly in affluent and wealthy countries such as Bermuda. So 'Low Income Thresholds' or LIT measures were developed as indicators to identify and assist Bermuda households that are economically disadvantaged or simply less well off. The LIT study revealed that in 2007 there were 3,100 households in Bermuda currently living below established low income thresholds which range from $27,000 per year for a single adult household to $76,000 a year for a family of two parents and two children younger than 16 years old. LIT measures were derived from a nutritious low-cost food basket as approved by the Government Nutritionist combined with essential services that families need such as education, health and transportation. They show that in 2007, the minimum expenditure a single parent household with one child needed to ensure a nutritional diet of food was $4,271 per year or $11.70 per day; housing cost averaged roughly $61 per day or $1,893 per month, the cost of fuel and power totalled close to $9 per day while health care costs averaged $7.20 per day. The LIT measures will be used by the Department of Financial Assistance to make annual adjustments to help paid to families and the new figures have already helped work out a threshold for free child care assistance. Other programs such as free public transportation, an affordable health care system and subsidies for the elderly will certainly help to alleviate the financial burden that some households face. Government will track the long-term impact of Government spending on the economic and financial positions of families in need. Families struggling to make ends meet are urged to contact the Department of Financial Assistance.

Thus, in July 2008, the Child Day Care Allowance Act 2008 was passed, to pay child care bills for Bermudian families or single parents earning under $70,000 a year. The financial threshold was set at families earning less than $70,000 using new statistics culled from the poverty study released by Government. The incomes of all the biological parents would be assessed, whether they were living together or not.

Public Debt

In January 2010 Bermuda's net public debt, excluding the $200 million guarantee to Butterfield Bank, was about $679 million. Public debt is a Government obligation that results from borrowing when tax revenue is insufficient to finance Government expenditure.

Rent Control

All homes and apartments (flats) with an annual rental value (ARV) of less than a certain amount are subject to rent control. This has applied anew since August, 2000 with the Rent Increases (Domestic Premises) Control Amendment Act 2000. It updated the Rent Increases Domestic Premises) Control Act 1978. Before then, only homes built before 1983 and with an ARV of less than $9,900 were subject to the controls. The legislation increased the number of rental units affected by rent control from 3,600 to 13,300 or 48 percent of Bermuda's residential units. This is a good benefit for people who do not live in up-market houses or apartments and do not own their own homes. But it means that the minimum rent for a 2-bedroom apartment is now at least $1,400 a month and often much higher.

Secondary industries

Agriculture does not play a significant role in Bermuda's economy. Only a small area of land is under cultivation. Food supplies are mostly imported, with fresh meat from the USA, produce mostly from the USA and Canada, and diary products and goods from a variety of other countries including the USA, Canada, United Kingdom, Republic of Ireland and New Zealand. However, Bermudian farmers do provide some Bermuda laid eggs, at a premium price; grow a variety of bananas, grapefruit, oranges, other fruits and vegetables; and produce milk from herds of cows. Until the beginning of the 20th century, when much more local land was under cultivation, there was a steady and thriving export market for citrus fruits and onions. When certain locally grown fruits and vegetables are in season (and premium priced) temporary embargoes are placed on the importation of competing produce from abroad, to allow the farmers to make a decent livelihood. Bermuda has ideal growing conditions for a large variety of vegetables and they are considered superior in every way to imported varieties. But the high cost of local labor puts them into the premium price range. There are also some commercial growers of flowers who supply a variety of long stemmed cut flowers for the local market.

Other secondary industries include artistic works; beer brewing; carbonated beverages bottling; cedar wood souvenirs; condiments; concrete block and related products for building purposes; diary products such as cream and ice cream; glass-blowing; ornamental iron working; paint manufacture; and perfumes and toiletries preparation. But these are mostly only specialty items with very small export markets.

Senior citizens

To see how their status and benefits compare to other countries overseas, see Senior Citizens in Bermuda.

Social security

In Bermuda, this means solely a senior citizens' pension from the Bermuda Government in direct proportion to the premiums paid in by an employee and employer, not the multitude of other provisions included in the Social Security provisions of the USA. In Bermuda, there is a compulsory contributory pensions plan administered by the Government for all employees of private sector employers, with employers and individual employees employed for more than four (4) hours a week each paying 50% of the premium. It pays benefits to qualifying retirees. The Contributory Pensions plan, its proper name, is exactly what it implies - a pension plan for people who contribute to it. As such, it is their entitlement, not a charity. Nor is it confined to only Bermudian employees. Non Bermudian employees are eligible and required to be covered as well and are fully entitled to whatever benefits they accrue under the plan's provisions. The Contributory Pensions plan maximum payout per month to fully eligible beneficiaries is at a far lower rate than in the USA or Canada even though the cost of living overall in Bermuda is over 300% higher.

In contrast, in the United Kingdom the Old Age Pensions Act was enacted on August 1, 1908.

Current deductions from wages or salaries apply under section 4 of the Contributory Pensions Act 1970.

Category of insured person	Payable weekly by Employee in BD$	Payable weekly by Employer in BD$	Total
Employed person over school leaving age and under 65	$30.40	$30.40	$60.80
Employed persons over 65	-	$30.40	$30.40
Self-employed persons over school leaving age and under 65	$60.80	-	$60.80
Self-employed persons over 65	$30.40	-	$30.40
Voluntary contributions under 65			$60.80

When private corporate pensions are offered, they are in addition to the Government administered Contributory Pensions plan shown above.

Unemployed

Once, the only Bermudians of employable age who were unemployed were the unemployables. This is no longer the case. Bermudians most affected by the down sizing are those without formal academic or professional qualifications. In contrast, the only non Bermudians unemployed are mostly spouses and dependents of employed non Bermudians. Some don't have to work, so don't. Others can't work because of Bermuda's Work Permit rules that stipulate Bermudians only in certain non-professional categories of employment.

Delaware	District of Columbia	Maryland	New Jersey	New York (highest number of visitors
Pennsylvania	Virginia	West Virginia	Connecticut West

Alabama	Arkansas	Florida	Georgia	Louisiana	Mississippi
North Carolina	Oklahoma	South Carolina	Tennessee	Texas

Illinois	Indiana	Iowa	Kansas	Kentucky	Michigan
Minnesota	Missouri	Nebraska	Ohio	Wisconsin

Alaska	Arizona	California	Colorado	Hawaii
Idaho	Montana	Nevada	New Mexico	North Dakota
Oregon	South Dakota	Utah	Washington	Wyoming

Australia	Austria	France	Germany
Italy	Japan	Sweden	Switzerland
Other Europe	Others	United Kingdom (about 10 percent of all visitors)