Letters to the Editor

How and what drives new jobs?

  • The 'economy' issue: today  this is mostly about addressing the national debt and creating jobs

Dear Sir,

I note in your Royal Gazette website poll that the economy is the most important issue for the country. The “economy” issue today is mostly about addressing the national debt and creating jobs.

Let’s discuss creating jobs. Capitalism and our free enterprise system requires opportunities and growth. To grow requires capital and then hiring people talent or automated technology. In general, everyone that invests in a business takes a risk that their money and effort will earn a return. This is the “risk/reward” consideration that all free enterprise job creators must consider.

If the return on capital is adequate for the enterprise risk, and there are tangible opportunities to grow the business, suitable talent is then hired and new jobs are created. Generally, businesses invest and hire when:

• There is confidence that there will be economic, political and social stability after money is invested

• There is a perceived local or international market opportunity to earn a profit

• There is confidence that new hires will produce incremental value gains for the additional salary and benefits expense

• Businesses and individuals believe that there will be more people buying more of their goods and services going forward

• Entrepreneurs, companies and individuals see a market dislocation that will result in an opportunity that will require the hiring of talent to pursue

• Innovation produces either a new, unique, needed or hip product or service that will grow sales

• There is available and cost-effective capital to support a business risk investment

• Government regulation does not choke free enterprise investing

Businesses invest and hire less when:

• There is economic, political or social uncertainty

• Sales are consistently falling

• Costs are too high to produce an adequate return on capital

• Profit margins are inadequate

• The cost to borrow becomes prohibitive

• There is a lack of affordable talent

• Overregulation chokes innovation and investment

The question, therefore, for us Bermudians is: how do we make sure that we deliver an environment that encourages businesses and individuals to want to take the risk to invest, thereby creating jobs?

I ask your readers: what are you doing to help the new job creation cause?