Rollover impacting productivity, costs

The Cayman people are worried about the high cost of living here, and rightly so. Cayman is being priced out of the market by the high cost of Government and Government regulation.

The Rollover law is decreasing private sector productivity and substantially increasing the cost of living. Management needs to be able to hire the right person for the job. Willingness to work and learn may be enough for some entry positions but is never enough for design, planning, and management positions. Some positions require knowledge and experience that fits the job. All require an aptitude for the job if management is to maximize efficiency.

Aptitude is not easily defined or measured, but it can make the difference between a business that is profitable and one that is losing money. Aptitude is more important in senior level jobs than lower level ones. Complete information is never available when senior management makes decisions that can make or break the company. A unique combination of knowledge, experience, and aptitude is necessary.

Any profitable business is a finely tuned organization where management has to know the capabilities of each of its employees. Employees all have different levels of knowledge and aptitudes, and management must know these intimately.

This is the only way management can effectively assign its employees to the tasks of the business so that the productivity of each employee can be maximized. It’s the only way management can place an employee into a position of trust. The productivity of any employee depends on the willingness of the employee to work and to take an interest in the business.

The Rollover law works directly against all this. Management may not be able to build and sustain a viable working team. This has the potential to cripple business in the Cayman Islands.

Not only that, but management must spend time convincing the government to renew work permits. Recruitment costs will go through the roof. Employees who know Cayman will be replaced by those who don’t.

Training the replacements will further cripple productivity. Most work permit holders will not stay for the full seven years either, because of career concerns. As word gets around, it may be impossible to recruit replacements as good as the ones who are forced to leave.

The new recruits cannot be expected to take the same interest in Cayman, so activities like charities, music, drama and sports will suffer.

Businesses which are unable to remain profitable will cease operations in Cayman, laying off Caymanians and everyone else. The Rollover law and all Government control of labour is detrimental to Cayman.

It so happens that the Cayman Islands are endowed with a large, expensive and inefficient government. Most of the huge cost of our Government is collected directly from the private sector through various fees.

The remainder is borrowed, which simply becomes a future liability on the private sector.

Costs increase when Government makes planning mistakes. Direct costs are added when it operates money losing enterprises such as Cayman Airways and the HSA.

Costs increased recently when it gave itself a seven per cent raise. Costs will further increase when it hires enforcement personnel for the Rollover law. It’s ironic that private enterprise has to pay for both sides.

So what are the solutions?

First, persuade government to scrap the Rollover law and control immigration some other way. Government must remove itself from involvement in the management of private enterprises. This is a negative sum game in which unnecessary costs are imposed both on the enterprise and on the Government. Losses all around.

Because it’s the private sector which pays for government, one would think Government’s priority would be to optimize private sector productivity That it is not borders on insanity.

Adam Smith said it all in his Wealth of Nations – laissez-faire. Government’s place is to levy enough taxes and fees to sustain itself and provide infrastructure such as roads.

Second, persuade Government to privatize its money-losing businesses. Most governments in the world have given up trying to run businesses and so should ours.

Third, Government should appoint an independent commission to look at its efficiency. This committee should examine organization, procedures, performance goals the productivity of each government employee and root out waste.

Solutions like these are necessary to ensure the continued prosperity of Cayman We must act quickly, before more damage is done.

Gerry Miller

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