in tourism and related industries, the Bank of Bermuda said last night.

Bank president Mr. Donald Lines said the disputes, which have flared into strikes and strike threats, have undermined the Island's ability to recover from recession.

"We have already destroyed over 1,500 jobs in tourism and related industries as a result of industrial disputes during the past five years,'' he said in his quarterly letter to shareholders.

"It is these disruptions in service which make successful promotion of Bermuda extremely difficult -- particularly in an environment such as that (of) today where visitors will not forgive us for making their vacations an expensive and unhappy experience.'' He commended Government for enacting legislation to refer intractable disputes for resolution.

"But we also urge Government to address the other issues which result in the strikes which have done long lasting damage to our reputation and economy,'' he said.

"We believe an overwhelming majority of Bermudians are conscious of the need for modern legislation to address these problems and they will support laws to enforce management and labour to work together in a more cooperative way for the common good.'' Mr. Lines said Bermuda's ability to emerge from economic doldrums was also hampered by delusions about the Island's ability to perform.

"Most Bermudians do not accept that our competitive position has been eroded over the years by a sense of complacency based on past success, high expectations, Government policies which over-protect Bermudians and unrealistic wage demands in the past which have been met because employees are largely insulated from external forces which affect our economy,'' he said.

"Bermuda is now facing a much more difficult time, for businesses no longer have the ability to pay continuous increases in cost.

"Unfortunately, however, the aspirations of many Bermudians still remain at unrealistic levels given the Island's ability to generate business and jobs in the current economic environment.'' The bank's assessment was drawn from statistics showing the Island experiencing the lowest tourism income since 1989, the lowest growth in local and international company registrations since 1988, the lowest growth in credit since 1988 and the lowest growth in retail sales since 1985.

The past five years, he said, has seen the tourist trade decline through lack of competitiveness and US recession which has reduced disposable income and made visitors far more price conscious.

"Recognition of our fundamental problem will take honesty, a new work ethic, a devotion to quality and a renewal of the Island's commitment to provide first class services at reasonable prices,'' he said.

"We must also face the fact that we can no longer afford confrontations between labour and management in this environment -- for our customers and visitors will go elsewhere rather than accept any disruption of service.'' Mr. Lines said recovery in the tourism industry will take exceptional effort.

Hotels require refurbishing -- which cash-strapped operations are "incapable or raising or unwilling to commit''.

"There have been inadequate profits to justify the investment they already have in their properties,'' he said.

Mr. Lines said there were no easy answers to improving the tourism industry's earning capacity. But he urged all of its members to get together to look for ways to improve its competitive position "for the common good of the Island''.

The bank said it saw no sign of dramatic change in the US economic outlook.

"Their economic recovery is sluggish and threatened by the unwillingness of debt-laden consumers to spend in an uncertain job environment and at a time when it appears the US government is in a gridlock on ways to address the budget deficits and fiscal policy,'' Mr. Lines said.

That, compounded by lower air fares for travel within the US led Mr. Lines to predict little real improvement in tourism this year.

"We hope in the coming year the uncertainty will be eliminated and confidence and growth in US consumer spending and economic activity will lead to improvement in our tourist trade -- provided we address the fundamental problems which affect this industry in Bermuda,'' he said.