The key to Cayman’s future is the liberation of the private sector to generate wealth sufficient to sustain the public sector.
Two observations must be made, the relevance of each of which will be explained later. First, Cayman’s economy is like a mushroom. The cap at the top is the public sector; the stem is the private sector. Second, almost every government in the world is wary of and tries to control the private sector; governments are unable to believe that, if largely left to its own devices, the private sector will get along just fine and generate the wealth which is necessary to keep the ever growing public sector in the style to which it has become accustomed.
The size of the cap of Cayman’s mushroom economy has been growing every year. Currently, over one half of the registered voters have public service jobs. The size of the stem, the private sector has been narrowing every year and now we are in a situation where the narrow stem will no longer be able to support the cap, with disastrous results. What’s the solution? In my opinion, the solution is not to hunker down and get rid of expats with the idea that Caymanians will then take those jobs. The solution is counter-intuitive; in other words, we have to do exactly the opposite of what the natural reflex wants us to do. We must grow the size of the stem which is the private sector, with the goal that all Caymanians should have jobs.
Growing the Private Sector
Every businessperson knows the cost of the inputs into the business and the possible revenues which can be generated and must constantly balance these in order to stay in business. The key point is that the businessperson who has, and is constantly risking his capital, must be decision maker. Decisions as to whether to pay for a work permit, regardless of the cost (within reason), and which employees are key to the business must be made by the owner of the business and not by a government board, the members of which, through no fault of their own, are not familiar with the business and, more likely, not familiar with running any business. Yet, currently, this is the situation in Cayman today.
The government has proposed a whole range of increased fees which businesspersons must swallow; however, there is no trade-off for this from the government. In other words, not only is the government dictating the size of the fees but, through various boards, is also dictating the decision as to who the businessperson should hire or choose to have designated as a key employee.
In my opinion, the private sector businessperson should be left free to decide how to run the business. The costs of a work permit, or the key employee fee, is just another cost which has to be factored in with the rest of the costs of the business.
Currently, the private sector in Cayman has the worst of all possible worlds. Proceeding on this course will lead to disaster for the Islands as the private sector stem will become so narrow that the public sector cap will topple, especially since there seems to be a refusal to shrink the size of the cap or even to consider measures such as civil servants having to pay health insurance premiums.
Suspension of Operations
In my opinion, there should be a suspension in the operations of the Work Permit Board and the Business Staffing Plan Board for a period of five years. Jobs would still have to be advertised and, if an expat is the successful applicant, the usual police clearance and health checks undertaken; but let the businessperson decide, after having considered all relevant factors, how to run the business.
Let’s see if we can grow the private sector with the goal that all Caymanians on the Islands will have jobs. The new revenue measures, including the increased work permit and key employee fees, can be factored in as another cost of doing business if the private sector is liberated to run its business and be able to make business decisions.