Gov’t: ‘No basic salary cuts’

Contracts will be allowed to expire

Government’s top money man said last week that there would be no active attempt to remove workers who are currently in a civil service job as a way to balance Cayman’s massive budget deficit.

However, Financial Secretary Ken Jefferson told hundreds of civil servants gathered at George Hicks High School Thursday evening that renewals of government employment contracts would be given much closer scrutiny in the coming months.

‘(Departments and chief officers) need to consider whether it is…necessary to keep that person,’ Mr. Jefferson said, adding that in some instances crucial employees whose contracts have expired would receive renewal. ‘It’s not saying ‘ye shall not fill a vacancy.”

Both Governor Stuart Jack and the Cayman Islands Civil Service Association indicated that the interests of Caymanians would be given priority.

‘Obviously, people for whom the Cayman Islands are their permanent home, we have to consider them first and foremost,’ Mr. Jack said.

A draft report of cost reduction proposals made by the Civil Service Association, which was distributed at Thursday’s meeting, indicated that the association would not support any reduction in government workers.

‘However, if restriction must occur in the size of the civil service, it should done through attrition of overseas contracted officers,’ the report read. ‘The perceived lowering of quality of service that this could create must be seen as an acceptable risk given the overall economic situation.’

The Caymanian Compass has learned that some foreign workers in government departments already received notice that their contract renewals will be reviewed by the chief officer of their ministry. Generally, those contract renewals would be reviewed only by a department head, unless there was some unusual circumstance involved.

The Cayman Islands ended its most recent budget year on 30 June with an operating deficit of nearly CI $76 million.

Mr. Jefferson stated that if no budget cuts were made and a projected 10 per cent decline in government revenues continued in the current fiscal year, the operating gap would jump to a projected $132 million in the 2009/10 budget.

‘We don’t have the cash to cover that gap,’ Mr. Jefferson said Thursday.

However, the government is somewhat hamstrung in its ability to either reduce the pay or hours of civil servants already on contract, since such a move could be legally challenged as a breach of agreement.

Mr. Jefferson said the government’s position was that it would ‘not reduce basic salary, basic wages’ and would not ‘actively attempt to remove persons who are in a job, Caymanian or otherwise.’

The Civil Service Association submitted several pages of ideas at the Thursday evening meeting as to how government revenues could be increased, more efficiencies achieved, or spending cuts made.

Some of the new revenue measures the association suggested in its draft report included: a per transaction charge in all cases where money is transferred outside Cayman; a review of government’s fee structure, charging duty on items that are currently duty-free, increasing work permit fees, and raising licensing fees on older vehicles.

As a way to cut government expenses, the association proposed changing the government’s accrual accounting system (often referred to as the Financial Management Initiative) to a certain extent to relieve administrative costs. This included ideas to centralise government hiring and other human resources functions, as well as ending the process of ‘inter-agency charging,’ where one government agency bills another for services.

‘It must be seen that it really does not matter how expensive it is for departments to purchase services from each other, since we are simply transferring money from one part of government to another,’ the report stated.

It was also proposed that government might reabsorb certain statutory authorities and government companies to keep tighter rein on their spending.

‘Statutory authorities and government companies have been left alone to do whatever they want, including using profits to fund their own salary increases, and perceived unnecessary purchases close to year end,’ the Civil Service Association’s draft report stated.

The association also suggested reducing or eliminating a number of government ‘perks’ such as take-home vehicles, government financed cell phones for employees, and certain employee allowances. The civil servants also asked government to either stop or significantly slow many of its capital works projects, but no specific projects were named.

Although members said they did not support a salary reduction, the association indicated a pay deferral for civil servants might be amenable.

‘This way, when other measures are enacted successfully yielding the desired savings, the deferred amounts can be paid to employees,’ the draft report read.

The association and its individual members made a number of other cost-saving proposals that were submitted for consideration to the government. However, Governor Jack indicated that Cabinet was likely to have the final say on what gets cut.

‘The reality is that the elected government controls the money,’ Mr. Jack said. ‘They are the ones that have to take hard decisions.’

No elected members of the Legislative Assembly were seen at Thursday’s meeting.

Civil Service Association President James Watler said he was assured by the governor that all civil servants would be treated fairly. He said the association would approach government as a united front, and did not want to be divided amongst Caymanians and non-Caymanians.

‘We’re not going to differentiate between the sheep and the goats,’ Mr. Watler said.