Letters to the Editor: Cayman Islands in paralysis

On 15 October, 2009, I wrote an
article called “Liberate the Private Sector”.

The point of the article was that,
since it is the private sector that creates the wealth from which government
revenues are derived, the private sector should be freed in order to generate
that wealth. That call for action has fallen on deaf ears and, if anything,
Cayman’s economic situation has become much worse; we have a nation in
paralysis.

 

Facts and numbers

Despite a lot of discussion about having
public servants pay one-half of health insurance premiums and pension
contributions, nothing has happened.

Government revenues have plunged
substantially, leading to a situation where, unless the $155 million loan is
obtained soon, Government will not only be unable to meet civil service and
public authority payrolls but will stretch out payments to suppliers to such
levels that suppliers will insist on payment in full up front. Since October of
2008, we have lost over 5,100 work permit holders, resulting in an annual loss
to the economy of over $200 million and an annual loss of revenue to the
Government estimated at about $40 million. It is interesting to note that $48
million of the new $155 million loan is earmarked for government operational
expenses and public authorities. The Appropriation (July 2010 to June 2011)
Law, 2010 contains an appropriation of $32.8 million for interest on the public
debt. If we estimate the annual interest on the new $155 million loan at $8
million, the interest payable on the public debt in the next fiscal year will
be approximately $40 million; that is money that could be better spent
elsewhere. Where is next year’s borrowing going to be coming from?

 

The fundamental question

It seems clear that not only do we
need to get at least 5,100 work permit holders back (which would at least cover
the annual interest on the public debt) but also to have public servants pay
their fair share. The latter is an issue not only in Cayman but in all
industrialized countries; the ship has been given away and it’s not going to be
easy to get it back. Above all, we need to deal with the elephant in the room,
Caymanian protection, and ask the fundamental question: “in the long term, how
do you best protect your nationals; is it by shielding them from or exposing
them to competition?” The prosperity to which Cayman has become accustomed
depends on the answer to that question. In my opinion, as long as we continue
to have government boards micromanaging private sector employment decisions,
Cayman will not be able to maintain its prosperity; the numbers speak for themselves.

 

Suggestions for action

The private sector will be able to
provide the jobs and the revenue needed to keep Caymanians employed and the
government functioning only if bureaucracy gets out of the way; our Premier
understands this but I am not sure that many others do. In my opinion, we need
to do at least the following: (1) abolish the Work Permit Board and the
Business Staffing Planning Board; (2) have employers advertise all jobs in the
normal way; (3) make potential employees who are not Caymanians or those having
the right to work, (“expats”), still get police and medical clearances; (4) for
expats new to the Islands, establish a system for employers to notify immigration
of the hire and obtain an entry permit for the expat (which would be granted as
a matter of course unless there was a problem with the police or medical
clearances); (5) for each year of continued employment for the expat,
advertising and police and medical clearances would apply along with notification
to immigration of the continued employment; (6) establish exchange procedures
for Government, the Chamber of Commerce and other private employers to share
information about current and future employment needs and shortages and
training programs, which would enable Caymanians to fill those needs and
shortages; (7) establish a mechanism for Caymanians and those having the right
to work here who have applied for a job, have not been hired and feel that they
did not receive a fair shake to be able to complain about it and, if proven
right, to be able to receive redress; (8) abolish the rollover and the concept
of “key” employees (every employee is key, otherwise why would the person get a
paycheque?); (9) establish a system in which every expat who has been a legal
and ordinary resident for at least eight years has the right to apply for
permanent residence; and (10) otherwise, let employers, who know their business
best, make employment decisions. In summary, leave border control to
immigration but, otherwise, liberate the private sector.

 

Conclusion

There is a tendency, when things
are bad, to get rid of and blame outsiders; in other words, to do exactly the
opposite of what should be done. I fear that we have accomplished this very
well. However, the idea that Caymanians will be able to find jobs in an ever
shrinking private sector or in a public sector mired in debt, and maintain the
highest standard of living in the Caribbean, in my opinion, is an exercise in
self-delusion which must be put aside as quickly as possible.

 

Paul Simon

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