Premier: Work permit drop hurts economy

Cayman’s population plummets

A
drop in Cayman’s overall population plus an apparent lag in the processing of
work permits is hurting Cayman’s economy, Premier McKeeva Bush told the
Legislative Assembly on Tuesday.

According
to population estimates and projections from the Cayman Islands government for
2007 through 2013, the Islands’ total population was expected to have peaked in
2008 at roughly 57,000 people. The labour force on the Islands also was expected
to have topped out at 39,000 in 2008.

“A
return to the labour market size recorded in 2008 is…not expected to occur
within the medium-term,” stated a three-year budget forecast given to the UK by
the Cayman Islands government in March.

The
report noted that downsizing among government agencies and statutory
authorities could also be driving down labour force numbers. Cayman’s
government service makes up about 15 per cent of all the jobs in the three Islands.
The government employs 70 per cent of the population in Cayman Brac, according
to recent estimates.

Demand
for foreign workers – shown by the number of work permit holders in Cayman –
shrunk 11.3 per cent in 2009. About 50 per cent of the workers on the Islands
are expatriates, and a drop of more than 3,000 work permits within the past 18
months has driven the population from 57,009 in 2008 to 52,830 in 2009.

Premier
Bush told the house that the decline in population would have an effect on
Cayman’s gross domestic product through a reduction in local demand for goods
and services.

“The
deficit reduction policy stance for the fiscal year 2010/11 (which starts on 1
July) along with the shrinking population size all combine in pointing to a
continuing recession in the 2010 calendar year,” the three-year budget plan
stated.

The
economy for calendar year 2010 was expected to shrink, with a contraction of
3.1 percent in gross domestic product, following a 5.1 percent GDP drop last
year. After that, the Cayman Islands government has projected a gradual
recovery.

“(This)
is premised on a strong rebound for tourism-related services, the start of a
number of new construction projects and a modest recovery of the financial
services sector,” the three-year plan stated.

One
short-term measure to boost local economic growth that was suggested in the
report included more efficient processing of outstanding work permits.

According
to the three-year budget plan, there was a backlog of 1,500 work permits for
foreign employees as of 10 March, 2010 in Cayman. Those applications were for
“full” work permits – those lasting 12 months or more.

A
large number of those permits awaiting approval involve workers who have
already been brought to Cayman on temporary (six-month) work permits and are
simply awaiting the go-ahead on their longer-term working arrangements.

But
not all the work permits fall into that category.

“There
are likely several hundred new workers which could be brought into the labour
force if this backlog in processing was addressed,” the report stated. “This
would give a boost to the local consumer market and aggregate demand.”

Overall
unemployment was anticipated to have peaked in 2009 at 5.5 percent in the
Cayman Islands. Government projections estimate unemployment dropping to 2.9
per cent by 2011.

Work permits in the
Cayman Islands are now being processed partly by the Work Permit Board – an
appointed body of volunteers who review applications from various companies in
need of foreign workers. The Immigration Department also employs three to four
staffers to review work permit applications that are considered
noncontroversial, such as yearly renewals.

5 COMMENTS

  1. I am not sure that the quicker processing of work permits – although this would be nice – will help the situation.
    I have become aware this week of two more companies who are downsizing or thinking of closing doors. One a financial services organisation is looking at rationalising the number of employees in their Cayman office because of the increased cost of work permits which will probably result in more then half of the employees – caymanians and expats alike – loosing their jobs as the company diverts business to other juridications providing more competitive operational costs. Some of the expats will get job offers in the other jurisdications, which is good for them, but not the Caymanians. The other company, a local retail company, is considering shutting its doors after years of trading, because of the decrease in retail custom which, if it closed, would leave its 70% caymianian workforce without a job.
    So the government projects a gradual recovery – which will be great when after the economy approves the population has been severely diminshed and businesses are already closed or left the jurisdiction.
    So what is the government going to do to stop the tidal flow?

  2. If i recall correctly, along with an increase in permit cost the processing time was to be dropped significantly. This is not the case. A friend of mine has applied for a permit and after 3 months it has finally been processed and approved.

    People are leaving cayman faster than the approval rate for permits WITH the additional increased permit costs. This does not add up as being beneficial to either the government, employers or future employees.

  3. The number of work permits will fluctuate up and down. The Government has to concentrate on stabalizing the economy and reducing the deficit. The outflow of people leaving the island is representative of the state of the economy. One point to note is that the people who remain should be the most efficient and valuable to each business. If these people begin to leave, then CIG should get worried.

  4. The writing was on the wall when the government decided to punish the expat companies because of the over spending of the government.

    When backed into a corner by the UK about instituting taxes to make up for the huge short fall in gov’t money, our leader decides to bite the hand that feeds him and charge the expats more to work here.

    A fifth grader would have told you the outcome of that scenario…. the expats would leave and would settle in other cheaper jurisdictions and never come back.

    Fastward 6 months and expats are leaving in droves. Rental is low, housing prices are crashing, car prices are depleting all because there is no turnover in workers that are leaving… and the poor old gov’t is wondering why. Go ask the 14 year old that told you so.

  5. This was a bubble waiting to burst.

    70 out of 100 in Cayman Brac employed by the government.
    Population growth on Grand Cayman went hand in hand with work permits.

    Time to think outside the box.New industries and small business promotions are needed.

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