People in Bermuda get one of the highest pay scales in the world. Yes that's true. Bermuda economy still enjoys one of the highest per capita earning in the world.
In 2009, the average annual salary of a serviceman in Bermuda was over $56,000. And many earn much much more than that. So happy to know this? Thinking of a job in Bermuda?
Now hear this out. Bermudians have world's one of the highest cost of living. Yes, they have to spend a lot to survive.
That's because virtually everything in Bermuda is imported. Bermuda has no natural resources like oil, gas, gold or anything. Due to lack of adequate farming land, agriculture in Bermuda is also very limited. Almost 80% of the food has to be imported. And there is heavy import duty levied on all goods that are imported. So prices are often quite scary.
In spite of that, Bermudians earn enough to have a healthier life style compared to people in many other countries.
Living Standards in Bermuda
Although there is no sales or income tax in Bermuda, the cost of goods including food is pretty high. It forces Bermudians to earn a minimum pay which is far higher than anywhere in the world. Although there is hardly any poverty in Bermuda, the low income line is around $27,000 per year. If one is below this earning line, one is said to be poor in Bermuda and will struggle to survive without an aid. Check out cost of living to know what it takes to be living in Bermuda.
In 2007, only 11% of the Bermudians were below the low income line. This band mainly consist of single parents with no full time job, senior citizens or the disabled persons. By the way, Bermuda unlike other countries in the world, makes no concession for the disabled or the senior citizens, and life is quite hard for them. UPDATE June 2011: Senior Citizens to get a three per cent pension increase from August 2011.
Many of the Bermudians hold more than one jobs in the island to maintain their living standards and to pay off their home loans. See Life in Bermuda to know what one of my friends in Bermuda had to say on her own life. She by the way runs a well known boating tours in Bermuda along with her husband.
Real estate in Bermuda
If you hear the average price of a house in Bermuda, you will think that they are only meant for the millionaires. While that's largely true, many average Bermudians still make it by slogging out their initial life with more than one jobs. An average house costs close to a million dollar in Bermuda.
While there is no sales or income tax in Bermuda, there does exist a fairly heavy property or real estate tax. So if you look at an average Bermudian life style, a couple would typically take up two jobs each. They will save every penny they can to buy a land over a period of few years. Once they have the land, they will get good loans by mortgaging their land property and start building their own house while still living in a rented apartment.
Finally when the house is built, they will rent that out so that the loan liabilities can be paid off from the rentals itself. In about 15 years or so, they will clear out all their loans and shift into their own proud home. Looks simple? No, it's a lot of hard work!!
So what are the main industries in Bermuda? The two top industries that continue to control economy of Bermuda are the International Business and the Tourism Industry.
While the international business in Bermuda has been on the rise with over 15,000 international companies having set up their operations in Bermuda, the tourism industry has been going through some rough patches over the last few years. Tourism had always remained the second most important industry in Bermuda. Between International business and Tourism, Bermuda receives over 70% of its total foreign currency earnings.
The international business is mainly around insurance, re-insurance (i.e. insuring another insurance company), captive insurance, and fund and trust management. Bermuda runs the third largest re-insurance in the world and second largest captive insurance domicile. To know more about the this sector, checkout Bermuda's Insurance Industry.
This sector has spent an estimated $2 billion in Bermuda and provided large number of jobs. International business contributes 24% of the total GDP of Bermuda as per 2009 reports.
Over the years, prudent financial management of Bermuda has made it a global magnet for the international business. An independent body called the Bermuda Monitory Authority (BMA) has gained control of all the supervisory and regulatory rights from the Bermuda Government. BMA oversees the international business with complete transparency, coordinates with US and international community, and ensures that there is no money laundering, fraud or other financial crimes.
A recent report from KPMG has stated that the island's legislative framework is almost fully compliant with international standards. Bermuda has recently received a Sovereign rating of AA+ from Fitch which a global credit rating agency. Check out Bermuda Sovereign Ratings for details.
Coming to Tourism in Bermuda, it has shown some declining trends, mostly compounded by the global recession. A little over 550,000 tourists arrived in 2009, a decline of over 100,000 people compared to 2007. Hotel occupancy rates have also decreased in 2009 to close to 51%, down from 59% in 2008. See Bermuda Hotel Occupancy Rate in 2009/2010 for more updates.
Visitors contributed an estimated $330 million to the economy of Bermuda in 2009, down from $402 million in 2008.
Jobs in Bermuda
Bermuda had always followed the trend of US economy as well as the global economy.
For example, in early 1990s due to economic downturn, about 2000 people lost their jobs in Bermuda because many work permits were not renewed. There was a similar impact in 2001-02 as well, although to a far lesser degree.
Although International Business used to be the top employment provider in Bermuda, it's no longer so.
Estimated jobs in 2009 in International Business has been about 4,400, down from about 4,750 in 2008. Whereas wholesale, retail and repair services provided about 4,750 jobs and Hotels & Restaurants about 4,700 jobs in 2009. Bermuda Government is the largest employer in the island. As per 2009 estimates, average job salary in Bermuda was $56,000 per year and an annual pay of less than $27,000 means that one is below the poverty line.
2012 Update on Bermuda Jobs: Department of Statistics in Bermuda released the Labor Market Index (LMI) report. As per the report, in 2011 there were a total of 37,399 job holders compared to 40,213 in 2008. The average annual gross earning in 2011 is $59,364 which shows an increasing trend over the previous years.
2011 Update on Bermuda Jobs: The economy has been harsh on the People of Bermuda. A study showed that around 3,000 jobs have been lost between 2009 and January 2011. The most affected sectors are telecommunications, construction, international business and retail. The age bracket between 55-64 have been most impacted. Despite such figures, the insurance and reinsurance sectors are offering average annual salaries ranging to $200,000 per annum even in such economic conditions. Additionally the 22 major companies in the insurance/reinsurance sector have pumped in close to $1 billion into Bermuda's local economy. This sector employs about 1,700 people out of which 34% are non-Bermudians or expats.
Bermuda Import and Export of goods
Bermuda virtually has no natural resources. Almost all the manufactured goods and foodstuff are imported. In 2009, import was to the tune of $1 billion. Items that Bermuda imports includes food, clothing, household goods, machinery, transport, chemicals, live animals and miscellaneous items.
Much of the import is from US (about $800 million). The other major supplying countries to Bermuda includes UK, Canada and some parts of the Caribbean Islands.
Import in Bermuda has been rising over the years. Duties on import has been a major source of revenue for Bermuda. In financial year 2009-2010, the import duty constituted 24% of the revenue amounting to about $225 million.
Such heavy import duty has its impact on the prices of the goods in the island. Although there is no additional sales tax, you will still find the prices fairly high in Bermuda compared to the other countries like US or even UK.
Bermuda's exports has been quite limited and has been shrinking over the years. In 2009, only $25 million worth of exports has been done. One of the major items of Bermuda export is the fragrance from Easter Lilies that are used in making perfumes. Other items of export includes pharmaceuticals, semitropical produce and light manufactures.
Other areas of economy in Bermuda
Bermuda Agriculture products
Agriculture, which was a major industry in 1920s, was given up slowly. Fertile land for cultivation in this already tiny little island was becoming rare to get. However, agriculture does exist in Bermuda in a small form and includes mainly bananas, vegetables, citrus, flowers, dairy products and honey.
Know about the Gross Domestic Product (GDP) of Bermuda, the sectors that contributed to the economy, the major economic trends and more: Bermuda GDP
Immigrants to Bermuda
Over the years, many people from different countries have migrated to Bermuda to take advantage of best of both the worlds - great economy and fabulous place to stay. As per the 2000 census, 79% of the population are Bermuda born. Here is the breakup for the rest:
28% U.K. immigrants
20% from US
12% Caribbean, and
15% from various other countries
Bermuda Budget 2011
In February 2011, Premier Paula Cox announced the 2011 financial budget of Bermuda. Here is a snapshot with the salient points: 2011 Bermuda Budget
Annual inflation rate (January 2010): 3.2%.
Natural resource: Limestone, used mainly for building.