Gov’t ‘people costs’ up 50 per cent

The number of civil servants in Cayman and the cost of salaries and benefits for those employees have both increased by more than 50 per cent within the past five years.

According to an analysis of the government’s annual economic reports from 2004 to 2008, personnel costs rose by about 50 per cent in that time, while government staff increased some 58 per cent.

In calendar year 2005, there were 2,404 civil servants with a personnel budget of $163.8 million. By 2008, the last full year for which figures are available, the number of civil servants had jumped to 3,801 and central government’s personnel budget went to $245.2 million.

Civil servants have been warned at least twice within the past two weeks that budget cuts, possibly in the form of lost jobs or reduced salaries, could be on the way in the spending plan government will propose next month. The latest such warning came from their employees association.

Cayman Islands Civil Service Association President James Watler said Monday that ‘exploratory ideas’ of up to a 20 per cent reduction in pay, a reduced work week, or even job cuts had been discussed with government officials. He said the association was doing whatever it could to prevent people from losing their positions.

Mr. Watler said increasing government personnel costs doesn’t necessarily equate to more civil servants being hired. For instance, between 2007 and 2008, there was a small reduction in the total number of civil service jobs partly due to attrition from a ‘soft’ hiring freeze put in place by the government.

However, personnel costs still went up by nearly 15 per cent between 2007 and 2008.

From the association’s point of view, there are three problems: a ‘top heavy’ public service, government policies that have increased operating costs and other policies that amount to unfunded mandates placed on civil servants.

‘From two years ago we raised the concern that the service was getting top heavy,’ Mr. Watler said, referring to the number of employees in middle or upper management positions. ‘We have done this on a number of occasions.’

He also pointed out that an effort to decentralise the hiring process within government that took effect in January 2007 led to the hiring of many highly-paid human resources professionals in separate departments. Hiring decisions were previously made by the Civil Service Commission with government department heads acting more as administrators rather than personnel managers.

Mr. Watler also said government’s change to an output-based budgeting system increased certain administrative costs. Under the system, a government manager is given a certain amount of funds to achieve certain outputs. If those are not shown to have been achieved, government ministers have to option to withhold payment to departments under their remits.

Civil service managers are required to document the services that they have ‘billed’ government for, a process that some managers have complained is both costly and time-consuming.

Finally, Mr. Watler said certain government mandates have increased the work load on civil servants without providing additional funds or resources. He pointed to the newly-enacted Freedom of Information Law as an example.

‘Most departments did not hire an FOI manager,’ Mr. Watler said. ‘Those responsibilities were merely shifted to a person who already had a full time job.’

Government ministers have not been specific about areas that may face cuts, although Leader of Government Business McKeeva Bush has floated the idea of selling off certain high-dollar assets, including the Cayman Turtle Farm to help balance the books.

However, with more than half of government’s annual costs in salaries, Mr. Watler said there are only so many places to go before cutting the personnel budget.

‘The picture is grim, we will all be affected,’ he said.