By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas lost an international shipping company’s investment to a rival Caribbean destination because of a “restrictive” work permit policy, an international consultant recommending this be restructured to drive economic growth. Oxford Economics, in a report commissioned by the Bahamas-based Organisation for Responsible Governance (ORG), called on this nation to tie foreign work permits to increased Bahamian employment, rather than identifying and training a local successor to take over.

The report, which examined three sectors - agriculture and manufacturing, shipping and logistics, and boutique hotels and vacation rentals - for their potential to grow and diversify the Bahamian economy, said the Government’s current work permit policy had “seemingly frustrated” most lost businessmen interviewed by Oxford Economics.

Demonstrating, in practical terms, how the Bahamas may be losing jobs, investment and economic activity as a result, the report said: “A shipping executive described how his company genuinely wanted to consolidate an international planning function in the Bahamas, but was thwarted by the foreign permit restrictions.

“The function was to be staffed by very senior shipping personnel (often with previous experience as ship captains). Reportedly, only short-term work permits were offered, and even then on condition that local Bahamas’ residents be trained in the positions.

“Senior executives were unwilling to relocate families to the Bahamas if their long-term stay was in doubt, and the company was unwilling to replace highly-skilled shipping executives with freshly trained local workers. That project reportedly went to another Caribbean location in nearly the same form as was proposed for the Bahamas.”

The company involved was not named in the report, but Oxford Economics is a highly-respected international consultancy that has worked frequently in the Bahamas, estimating the impact of major foreign direct investment (FDI) projects such as Baha Mar and also working for the Government on issues such as the Hawksbill Creek Agreement reforms.

Its report said that reform to the Government’s work permit policy “might prove effective” in encouraging economic growth, acknowledging that the issue is “always contentious” - and not just in the Bahamas.

Oxford Economics suggested the Bahamas could adopt a visa programme similar to the Canadian Provincial Nominee programme, assigning a specific number of work permits per industry for specialised positions that were hard to fill.

“Moreover, rather than making permit award conditional on specific matching of demand to training, it might prove more effective to link the award of work permits to a commitment by the receiving company to increase the number of Bahamas residents that it employs,” the report for ORG suggested.

“For example, the receiving company would hire a certain number of residents, even if those residents work in positions that differ from those in which the work permits were issued.

“This flexibility might help address concerns about disincentives to investment while also encouraging receiving companies to hire additional local workers.”

The report concluded: “A better balance between the need for businesses to bring in specialised foreign talent, and the concern that foreigners not take jobs away from Bahamas citizens, needs to be reached.

“Linking foreign work permits to increases in local employment at the job site - as opposed to focusing on training residents in highly specialised functions - would seem to offer a much more constructive approach.”

Basing its findings on interviews with more than a dozen Bahamian business executives, Oxford Economics said labour availability was a critical issue when it came to companies being able to expand and attract investment.

“This constraint has been long recognised in the Bahamas with the result that foreign work permits are made available,” the report for ORG said.

“Married to this approach has been a commitment to make the availability of foreign work permits conditional on the requirement that a local resident also be trained in the specific function for which the permit has been issued, with the objective of quickly replacing the foreign worker with a newly-trained Bahamian replacement.

“This approach has seemingly frustrated most parties,” the report added. “One of the most contentious issues brought up during the interviews was the appropriateness of issuing foreign work permits for specific high profile projects.

“Opinions expressed ranged from incredulity that permits were not issued for projects being considered in the Bahamas (including several that reportedly went elsewhere when permits were not issued) to outrage that permits had been issued for projects that seemed not to be making any effort to train replacement Bahamian workers.”

Breaking down the 9.208 work permits issued by the Department of Immigration in 2015, the Oxford Economics report said 42 per cent - some 3,870 - were issued for ‘elementary’ positions, with the largest source of such workers being Haiti.

Haitians were the largest source of workers for four out of the nine work permit categories identified, with agriculture, services and sales and professionals each accounting for a 10 per cent share of permits issued.

Americans produced the largest share of professional and managerial work permits, with Canada the top source country for foreign technicians, and China providing most service workers.

“Both feedback from our interviews and the data suggest that the policy to enforce a specific link between foreign worker permit functions, and training local residents to perform the same function, does not seem to be working particularly effectively,” the report for ORG said.

“For example, approximately 50 per cent of the work permits issued in 2015 would, according to this data, appear to require little specific skills training. Rather, these permits (for less skilled positions) seem to reflect employer difficulties in enticing local residents into accepting lower-paid positions in agriculture and low-end service occupations.”

Given the struggles to obtain sufficient quality high school graduates from the Bahamian education system, the Oxford Economics report added: “Trying to use the foreign work permit programme as a type of apprenticeship ‘on-the-job training’ programme is unlikely to work for high-skill positions in which the employer has highly specialised requirements that cannot be satisfied by the local workforce.

“In other situations, such as technical skills, the foreign work permit programme should not be designed to serve training purposes for which technical schools would be much better suited.”