BIA: 36 financial services job losses a 'wake up call'

Thu, Aug 20th 2015, 11:56 AM

Bahamas Insurance Association (BIA) Chairman Emmanuel Komolafe yesterday called on the government to renew its focus on protecting both the country’s insurance industry and wider domestic financial services industry following a painful 36 percent increase in sectoral unemployment, calling the job loses a “wake up call” to industry stakeholders.

Speaking with Guardian Business, Komolafe said that while The Bahamas’ insurance sector’s employment figures remained comparatively stable within the “finance, insurance, real estate and other business service” sector, the implications of the job cuts on the wider sector boded ill for the country’s gross domestic product (GDP) forecasts and economic recovery.

“We hope that the recent significant fall in employment figures for the financial services industry, albeit disappointing, will encourage the government to place more focus on the concerns of the insurance sector. This is bearing in mind that this is a sector that has been arguably the most stable within the financial services industry for decades and a consistent contributor to the nation’s GDP,” Komolafe stated.

On Friday, the Department of Statistics released its Labour Force Survey for the period ending May 2015, which revealed that “finance, insurance, real estate and other business service” sector unemployment swelled 36 percent – by far the greatest job losses for any sector. National unemployment, however, dropped 3.7 percent to 12 percent in large part due to temporary positions created by Bahamas Junkanoo Carnival and Baha Mar.

Despite the overall reduction, many private sector and opposition figures have expressed concern with the overall quality of the positions created as opposed to those lost in the financial services sector. Although the insurance sector remains relatively stable, the BIA has recently expressed fear of the “headwinds” facing the industry due to several of the Christie Administration’s policy decisions, such as the implementation of value-added tax (VAT) and the government’s proposed National Health Insurance (NHI) scheme.

“This is of significance when we consider the fact that wages within the industry are typically higher than the average wage in other sectors. Workers within this industry constitute a major part of The Bahamas’ middle class – a group that is vital to the economic fortunes of any nation,” Komolafe said.

In an earlier interview with Guardian Business, Minister of Financial Services Hope Strachan outlined the initial steps of the Ministry of Financial Services’ recovery plan. That plan focused heavily on exploring new markets and promoting new products for the industry, including the Smart Fund and the ICON.

Komolafe noted that the sectorial shrinking was hardly unique to The Bahamas.

“It is apparent that the business decisions of international and multi-jurisdictional financial institutions are driving this trend due to strategic changes, consolidations, de-risking, cost cutting measures, tax information exchange initiatives and a more onerous regulatory environment,” he said.

Komolafe commended Strachan for her stated intention to work with industry stakeholders, stating: “It was good to hear that the ministry will continue to work with the insurance industry to revive captive insurance.” However, he stressed that the domestic insurance sector was equally as important, if not more important, and deserved receive the same level of support.

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