Department heads were notified by memo on Monday of the increase, which reinstates the 3.2 per cent cost of living allowance deducted from public sector salaries last year.
Civil servants will find their cost of living allowance included in their next pay cheque on Thursday, 15 December.
The government estimated in June last year that the removal of the cost of living allowance would save Cayman $5.4 million in the 2010/11 financial year. That reduction moved civil servants back to the salaries they were receiving in 2007.
Premier McKeeva Bush, who is also Cayman’s Minister of Finance, said in late August that a modest pay raise for government workers was possible since Cayman ended the last budget year with a $25 million operating surplus, meaning government revenues were higher than expenses. In his recent Strategic Policy Statement, Mr. Bush announced that the government was facing a $4.5 million operating deficit for the current financial year of 2011/12.
For more on this story, check the Caymanian Compass newspaper.