N a free-market economy, supply and demand are kings. But in Bermuda the formula is no longer delivering a positive result for too many Bermudians in a growing "economically challenged" portion of the population.

That's the view of Eddie Saints, the chief executive officer of Cable & Wireless and a past president of the Bermuda Employers Council, who reckons it's time to adopt a different approach.

"I think we've all got to realise that Bermuda has become an awfully expensive place to live," Mr. Saints said. "I know there are a lot of families who live from pay cheque to pay cheque.

"We have a very fragile economy and that is masked somewhat by a very successful international business community. There's a lot of wealth here, but it's not evenly distributed throughout the community. So we get this false pretence that all is well. It's not.

"The housing crisis is here and it's going to be around for a long time. It's good to see that the Government has put aside some money and is trying to address it. There's no quick and easy solution.

"It's something that's going to need us changing the way we think and the way we've been doing things and to gain more appreciation for our limited resources."

But how can Bermuda help those "living pay cheque to pay cheque"?

Mr. Saints said: "I believe there is a place for price control in our society. Every time I suggest it, people say you can't do that because it's against the free market.

"The free market means that supply and demand dictate the price. Bermuda has limited supply and great demand. That creates economic and social issues. There has to be some containment. We have to manage the balance.

"We can't afford to extend the gap between those that are economically challenged and the rest. The economically challenged is quite a big section of our community. We're not talking about five or ten per cent. We're talking about people who might seem to be well off, but actually they're over-extended."

Price controls have been widely used around the world to fight inflation, especially in the 1960s and '70s. The US used the policy during the Second World War when the Roosevelt administration created the Office of Price Administration (OPA) in an attempt to control wartime inflation.

The OPA was unpopular with business people and it was disbanded after the war. But the US reintroduced price controls when the Korean War sparked more inflationary pressure.

Price controls vary from voluntary wage and price guidelines, to Government fees imposed on those who raise prices or wages to higher than allowed levels, and even to mandatory freezes.

"Of course, I know there are issues with controlling anything," Mr. Saints conceded. "Some people argue it would stifle the economy. And it can, because if it's overly rigid, then investors won't get a return. But if you go to New Zealand, price controls are prevalent and it's not doing them any harm.

"You have to find a balance in the economy. Look at the housing market. There's no way that most young Bermudians can afford a plot of land now, like many could before. Supply and demand has kicked in."

Only this week, in a speech to Hamilton Rotarians, Argus Group chief executive officer Gerald Simons spelled out how home ownership can either stretch Bermudians to the limit, or be out of their reach.

"Prices for single-family homes have risen by over 220 per cent since 2000," Mr. Simons said. "The standard price for real estate in Bermuda is now around $1.6 million an acre, for undeveloped or re-developed land, without a house or utilities.

"Housing in Bermuda costs, on average, at least 400 per cent more than in the US, Canada, UK and elsewhere.

"In Bermuda, 30-year mortgages are now available to qualified persons from the local banks at interest rates ranging from seven to nine per cent per annum. This means that the required monthly payment of a 30-year mortgage of an average $975,000 Bermuda property is $5,620.

"Although the median monthly Bermuda household income is $7,029, the banks generally require that no more than 50 per cent of your income is used on your mortgage.

"In addition banks will not normally lend more than 85 per cent of the appraised value of a property. This means that many Bermudians cannot get a foot on the bottom rung of the real estate ladder and are denied the opportunity of home ownership."

But the real estate market is not the only area where inflation is causing financial headaches for Bermudians, according to Mr. Saints.

overheads for companies, including higher wages, a tax burden that has climbed steadily in recent years, as well as rocketing health insurance costs, are putting jobs at risk, he argued.

"Salaries and wages continue to climb and that's disadvantaging businesses," Mr. Saints said. "It's an inflationary price push cycle. It's only going to get worse and the by-product of that is that we've become less and less competitive.

"Businesses who operate globally have to be competitive on price and Bermuda is now probably one of the most expensive places in the world to do business in my experience.

"So businesses are looking to do things differently to keep their costs down. In a highly competitive market, we can no longer afford the expensive infrastructure, so we've changed the business model.

"At Cable & Wireless, for example, we outsource a lot of work now and we try to keep our head count low ? we're now at about 64 and we'll be down into the 50s in the next few months. That's not a good thing and that's not investment in people.

"People are also looking at moving aspects of their business back on shore and just keeping intellectual capital, contracts and financial transactions here.

"Cost is beginning to bite and will continue to bite unless we can stem the escalating cost of doing business. So I'm glad that the Budget didn't add to the tax burden on people."

United Bermuda Party Senate Leader and housing spokesman Kim Swan recently expressed his concern about the growing number of Bermudians struggling to make ends meet. And he said their struggle was often not immediately apparent.

"The 2000 census showed that 12 per cent of people in Bermuda were poor and 18 per cent near poor," Sen. Swan said.

"Poverty in Bermuda is not as visible as in many other countries. But just because someone can dress well and has a reasonable appearance, we have to look deeper than that to appreciate what that person is experiencing."

The lack of diversity in an economy that had become increasingly reliant on international business had left many hovering just above the bread line, Sen. Swan added.

"Bermuda has become far less affordable for the average working Bermudian," he said. "Because of the lack of diversification, many of our people are one pay cheque away from poverty.

"The cornerstone of any country is a good home foundation, but being able to have that happy home is becoming less of a reality for many Bermudians these days."

Mr. Saints said it was time for Bermuda to face the problem and do something about it.

"We have some big issues that we are only now starting to grapple with and talk about," Mr. Saints said. "The sustainable development committee has been addressing the fact that we have limited open spaces with a population that's increasing and large numbers of cars on the road.

"People are starting to realise that we may not always have the comforts and the freedoms we once had. There's got be some change of mind-set.

"Sir John Swan spoke about that when he built his new apartments. We may not all like that type of development, because historically we've been used to having a house on our own plot of land.

"When condos came in about 30 years ago, people thought they were somewhere for those who couldn't afford housing. Now you're getting more condensed and higher buildings to house a greater number of people.

"We're going to have to accept changes in the way we live if we're going to be able to maintain a high standard of living."

Whether or not price controls could help, it is clear is that if Bermuda is to make a serious attempt to reverse the trend of a growing number of struggling people, it will have to be a team effort, involving Government, businesses and individuals making some decisions that will be unpopular.

But with unprecedented amounts of money in the bank accounts of the more fortunate island residents, now would be a good time to get serious.

As Opposition MP Max Burgess said in the House of Assembly this week: "You build an underclass if you're not careful. We have got to be careful who we leave behind. We have got to care for the least of us."