Pay cuts ‘not pursued’ in current budget

But more reductions ahead

The Cayman
Islands government will not pursue any pay reductions for civil
servants in the current financial year – which means through to 30 June – according
to a memo sent Tuesday from the Deputy Governor’s office.

However, specific budget reductions
that could include job cuts, payments for certain health care costs and even
temporary salary reductions may be needed in the upcoming year’s spending plan.
Cayman’s new financial year starts on 1 July.

“These are extremely difficult
times,” Deputy Governor Donovan Ebanks wrote in the 30 March administrative
circular. “We must continue to strive for effective and sustainable ways to
reduce our costs, bringing them in line with the prescribed targets.”

Mr. Ebanks said government
budget-cutting efforts that started in early March yielded about CI $49 million
in savings; $20 million in savings from operational costs and $29 million savings
in capital (construction) related costs. Those savings were projected to occur
between early March and 30 June.

“Unfortunately, due to the poor
performance in revenue, these may still not be sufficient to prevent cash flow
issues in June 2010,” Mr. Ebanks wrote in the 30 March memo.

Earlier this month, Cabinet members
agreed to set specific budget targets for each major area of government
expenditure in the coming budget year.

Those targets were set at CI $219
million for personnel – an eight per cent drop over the current year’s
projected budget for central government employee costs. A corresponding eight per
cent reduction has been mandated for statutory authorities and government-owned
companies.

“Cabinet has not stated how these
savings should be achieved, but rather has challenged ministries, portfolios
and (statutory authorities) to identify and implement solutions in preparation
for the 2010/11 budget,” the 30 March circular stated.

To cut the currently projected $238
million personnel cost figure to $219 million in central government, a number
of cost-reducing measures are being considered, Mr. Ebanks stated.

Those included:

*Operational efficiencies aimed at
further reducing staffing levels

*Revised human resources policies
to temporarily reduce the cost of allowances

*Appropriate cost sharing for
existing benefits, particularly those related to health care

*Temporary salary reductions unless
adequate savings can be achieved otherwise

However, the circular expressly
stated that government had no intention to change current pension contribution
arrangements. Mr. Ebanks stated that any changes to the current health care
coverage policies would be thoroughly reviewed prior to implementation.

“As proposals to achieve reduction
in areas such as healthcare are developed, there will be consultation with key
stakeholders,” Mr. Ebanks’ circular read.

Civil service association President James Watler said the organisation that represents some 2,000 Cayman Islands government workers was consulted on the budget reduction process and hopes that consultation will continue in the future. 

“We are cognisant of the challenges that lie ahead,” Mr. Watler said. “It is important to note that much can be accomplished when all heads are put
together.” 

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