Cayman Islands Tourism Association members say that placing a hold on pension payments for up to 18 months could help tourism related businesses.
In a survey of CITA members last week, 79.6 per cent of 55 respondents support a pension holiday for six to 18 months while the economy recovers.
Association member companies’ managers took the survey.
‘Our membership represents approximately 6,000 employees in the tourism industry,’ said the association’s Executive Director Trina Christian.
Fifty per cent of the respondents were small businesses employing 15 people or fewer, with another 35 per cent of medium sized businesses, employing fewer than 50 people.
Cayman Islands law requires employees to contribute five per cent of their salaries into a pension or retirement savings plan and employers are required to match that five per cent contribution.
On 2 July Leader of Government Business McKeeva Bush announced plans to introduce a hiatus of payment of mandatory pension contributions for private businesses.
‘The proposed pension contribution holiday is not a general suspension of pension contributions, but is a specific targeted suspension due to the current economic climate. There are many details yet to be ironed out, such as the conditions and length of time it should be in effect,’ said Minister of Employment Rolston Anglin.
The National Pensions Office has reminded employers that the pension’s law is in full operation and employers and employees are still required to make contributions.
Mrs Christian said, ‘It’s just a stimulus plan for right now. CITA doesn’t want to see it go on forever and see employees’ savings plans taken away. But the stimulus plan could help businesses out while they are having a hard time right now.’
The tourism industry is dealing with more than 20 per cent drops in business, so a five per cent cost saving in pension expenses could make the difference between keeping someone employed or having to let them go, she said.
Comments from some 20 per cent of its member respondents opposed to the pension plan said it could take away a valuable benefit from the employee and have a negative effect on retirement funds.
One member company said a pension holiday ‘saves businesses some money in the short term, and puts more cash into employees hands in the short term – both needed initiatives at this time’.
The Cayman Islands may not be experiencing as harsh economic conditions as some countries, but tourism group leaders says there is no room for complacency and the country must proactive about implementing initiatives that can stimulate the economy.
CITA leaders said the hotel sector has been propping up the industry and the tourism economy by offering low rates.
‘The hotels have been carrying the load for the industry, as travellers look to accommodation and flight deals for booking their vacations, so it’s a natural trend. They are doing such a great job and are being so aggressive in their specials that they have kept people coming to the island but it’s also to their detriment because the low rates make it hard for them to make a profit,’ said Mrs Christian.
Restaurants are also offering more discounts and helping the local economy, she said. But she noted that other sectors need to help in maintaining competitiveness for the destination by providing discounts.
She said Government should support cost saving initiatives.
‘It’s only a combination of these efforts that will help the Cayman Islands during these difficult times,’ she said.
Even though arrival numbers have declined, the real damage to the economy is much larger, with the loss of revenue, states the association, especially if this trend continues into 2010.
CITA is trying to help boost the economy with a new promotional initiative.
The tourism association and the Department of Tourism have launched a new international promotion – Cayman Escapes – a 48 hour hot deal that goes out once a week to DoT’s private database by email.
It consists of three offers with 48 hours to book, the type of offer the consumers are demanding now, Mrs Christian explained.
CITA had asked the former government for changes in the Pensions Law in regard to when the contribution period for work permit holders should begin. The current nine months commencement time was requested to be changed and extended to 24 months.
‘Many workers in the tourism industry are seasonal with a large percentage of work permit holders leaving the Island before 24 months, never claiming back their pension contribution,’ a CITA statement read.
Association leaders said changes to the Pensions Law can be made quickly and have an immediate benefit to businesses in the Cayman Islands and in turn help stimulate the economy.