Deputy governor: No uneven salary cuts

Civil service weighs in, advisers say cut jobs

Cayman’s two top civil servants, as well as a key government advisory group, said last week that cutting salaries within the government service as a way to fix the territory’s budget crisis would likely be unsustainable.  

Cayman Islands Premier McKeeva Bush has said that his government would not agree to cut people’s jobs within the civil service.  

“I do not accept that a ‘credible and sustainable’ budget is achievable if the reductions in expenditure fall disproportionately on personal emoluments,” Deputy Governor Franz Manderson said in a memo to all civil servants sent out Thursday. “I am confident that the government shares this view.”  

However, the chairman of Cayman Finance – the association that represents the local financial services industry – said he believes job cuts within the Cayman Islands public service are inevitable.  

Richard Coles, who is also the chairman of the Cayman Islands Human Rights Commission, spoke Thursday night during a panel discussion hosted by the nonprofit group Generation Now.  

“The right way to go about [reducing the budget] is to cut the numbers,” Mr. Coles said. “I’m not talking about immediate cuts in the civil service, but it has grown too much and the country cannot sustain those numbers.”  

Mr. Coles said he did not support across the board salary reductions as a way to save government money and that he believed the civil service, which now stands at around 3,600 employees in central government, could be reduced to 3,000 eventually.  

University College of the Cayman Islands business professor Bob Weishan, who also participated in the Generation Now panel Thursday night at the Harquail Theatre in Grand Cayman, said he didn’t support across-the-board cuts in either salaries or jobs.  

Professor Weishan noted the 2010 Miller-Shaw consultant report commissioned by Premier Bush’s government proposed a public-sector wide salary reduction of 8 per cent. “[That] does not go to the heart of the matter,” Mr. Weishan said.  

“We need to manage our business better,” he said. “If you’re in the auto industry, it’s easy to save money by laying off people and closing plants, but sometimes you find you can’t make money because there’s no one to sell your car and no one to make them.”  

Another member of Thursday’s panel, former Deputy Governor Donovan Ebanks, said he could see the central government service being reduced to about 3,300 people but said there was “no evidence” a salary reduction of 8 per cent across the board was needed.  

Revenues must increase 

While none supported the imposition of a payroll tax in the Cayman Islands, the Generation Now debate panel agreed Thursday that some form of fee increases or taxes is inevitable to keep the territory afloat in the short term.  

The panel included Opposition Leader Alden McLaughlin, North Side Member of the Legislative Assembly Ezzard Miller, Mr. Ebanks, Mr. Coles and Mr. Weishan. Representatives from the ruling United Democratic Party government were invited to attend the conference, but said they couldn’t make it.  

Four of the five members, including Messrs. McLaughlin and Miller, agreed there should be some increase in government revenue measures. However, they did not agree on the form those charges should take.  

Mr. McLaughlin said he agreed with statements made recently that a 10 per cent payroll tax for work permit holders would have been “fiscal suicide”. However, Mr. McLaughlin said some new fees are needed.  

“There is no question that now we will have to resort to new revenue measures to be able to meet what the [United Kingdom] is insisting we meet,” he said.  

Mr. Ebanks said the additional fees were largely a “by-product” of not having government’s annual budget in place in a timely manner. The current budget year started on 1 July and Cayman was forced to enact a two-month temporary spending plan so the territory could keep operating until lawmakers approved a full year budget.  

Mr. Miller said the UK’s requirement that Cayman have three months – or 90 days – cash reserves within the budget basically forced new fees to be added.  

“I don’t see how we can cut as much expenditure to generate that much cash in this current year,” he said. “But we still have to cut back expenditure to a more reasonable level.”  

Mr. Miller said government’s first proposed budget for the 2012/13 year came in at $498 million in expenditures, while the most recent draft sent to the UK totalled $592 million.  

The government needed to have “open and frank discussions” about why it required this level of expenditure, he said. 

Mr. Coles said it was “too late in the day” to make serious expenditure cuts in the 2102/13 budget.  

“In the end, that additional revenue is unavoidable,” he said. “We recognise that … and it is our industry that is going to bear the brunt of that [referring to the financial services industry].  

“We’ve got to be very careful though, if you squeeze to hard, you might actually kill it.” 

Franz Manderson

Mr. Manderson

Weishan and Coles V

UCCI Professor Bob Weishan (left) and Cayman Finance Chairman Richard Coles attend Thursday night’s Generation Now forum on the country’s budget. Photo: Brent Fuller

1 COMMENT

  1. Simply said when you operate on a user based tax whoops I mean fee system, the idea is to grow revenue through increased users not fees!

    However when faced with a Government trying hard to reduce the number of expats and increase the number of dependants employees and management in the bureaucracy plus increase wages benefits and long term pensions for themselves, well, hello!

    The existing bloated archetype is unsustainable and the only resolution is to urgently reduce spending and to maintain or increase revenue through growth of users and new revenue streams, not increasing the cost of services.

  2. Ideas for additional revenue:
    A) Lottery
    B) Floating bridge between somewhere to somewhere in the North Sound. What people save in fuel will be passed on to the bridge fee. Drivers will save time. Hurricane, no problem, you sink the bridge for a day or two.

  3. Take the long view, Staff MUST be cut;-

    There is no way to support the pensions liability for the current level of staffing in the civil service even if you use smoke and mirrors to protect the jobs now.

    1. Early Retirement – will yield savings without forcing job losses.

    2. Target individuals who abuse the system – Half a million dollars of gas went missing – Someone should lose their job over that. How many jobs would have been saved by the stolen 0.5M?

    3. Target the inefficient departments – Mr B complained that he only had 2 months to formulate a budget – He would have found it easier had there been complete accounts for all departments (ON TIME).

    4. Privatise some functions – in the UK many Government departments have outsourced provision of some basic services (e.g. Cleaning, Catering) – the bizarre thing is that the people who used to do the job for government, often formed a cooperative and got awarded the tender to do the same – inevitably the job got done much cheaper, with less staff but with a higher per capita wage.

    There is talk that the unemployed civil servants will be unable to find work – they should feel a little insulted! – Skilled people are always in demand and while they might not find exactly the same job, the private sector has much to offer. By taking a step back and looking at their skill set – they are likely to find there are better and more rewarding employment options open to them.