Public sector employs 25 per cent of Caymanians

Cayman-Islands-Government-Administration-Building-main

The Cayman Islands government and associated agencies still employ nearly 15 per cent of the overall local workforce, three years after a consultant’s report recommended that the number be 
significantly decreased.  

Moreover, an analysis of available jobs data in Cayman shows that the government service was responsible for roughly 25 per cent of the jobs now held by 
Caymanian workers.  

According to data provided to the Caymanian Compass, there are 5,700 people working in central government, statutory authorities and government-owned companies for the 2012/2013 fiscal year. The majority of those workers, exactly 3,606, are employed in the civil service, according to the figures.  

With an estimated total workforce of nearly 39,000 people, that means government agencies comprise just less than 15 per cent of that number.  

When the Miller-Shaw consultant report reviewed the situation in 2010, it found that about the same percentage, 15.5 per cent of the total workforce, had 
jobs in government.  

The report compared Cayman to other international jurisdictions and found the ratio of public sector workers to be quite high.  

“The data show that despite not having many of the responsibilities held by larger nations, such as assessing and collecting direct taxes, extensive welfare systems and national defence, the level of government employment is on a par with or exceeds that of many of [the other countries],” the Miller-Shaw analysis stated.  

The report states that one implication from the data is that “government might be carrying out more functions than are necessary or a similar number of functions, but less efficiently.” 

The Miller-Shaw commission recommended a number of specific actions to reduce the number of civil servants, including: 

That there be an immediate cut of 8 to 10 per cent in the civil service wage bill, implemented on a scale system with higher grades taking a higher cut, and that there be a reduction in the number of civil servants back to the level government maintained in July 2003, to be achieved at a rate of 5 per cent each year; 

The total number of public sector employees – stated as 6,037 at the time the Miller-Shaw report was released – had dropped to 5,700 by the 2012/2013 budget year; about a 5 per cent reduction overall in the space of three years.  

The total workforce numbers contracted between 2009 and 2013 as well, making the percentage of the Cayman Islands’ employed population within the public sector appear to be about the same as it was at the time of the Miller-Shaw evaluation.  

 

Caymanian employment 

Recent human resources reports from the Cayman Islands government have generally shown that Caymanians make up between 72 and 75 per cent of the public sector workforce. The latest report, for the government’s 2011/12 budget year, has not been released.  

Assuming a 72 per cent Caymanian participation in the public sector workforce would mean that about 4,100 of the 5,700 people employed by government agencies during 2012/13 were Caymanians.  

According to the 2012 Labour Force Survey compiled by the government’s Economics and Statistics Office, 16,493 Caymanians were employed at the time the survey was taken. 

That equates to just under 25 per cent of the Caymanians employed in the Cayman Islands being employed in either the civil service, or by public authorities and government-owned companies. 

Cayman-Islands-Government-Administration-Building.jpg

The government administration building on Elgin Avenue is the civil service headquarters. – Photo: File
0
0

21 COMMENTS

  1. Ever wondered why the economy is so sluggish? Because excessive public spending is a constant drag on growth. Has no one read the Miller-Shaw Commission Report? A jurisdiction with a revenue base as narrow as Cayman’s is unable to support a public sector of its current size. There is a fiscal huricane approaching the Islands. Not today, not tomorrow, but in a few years’ time, someone will have to heed the bill. That means me, you and everbody! Does anyone want to introduce taxes? No! So what to do? My suggestions are:

    1. Sack the top-paid civil service executives. They do not only draw the highest salaries, but they are also entitled to the highest pensions that no one knows how to pay when they retire. So letting them go would yield the biggest savings for the public purse. Plus, they are the ones who most easily find new jobs in the private sector.

    2. Introduce a voluntary termination scheme with increased severance pay. Every civil servant who leaves would be entitled to, say, a month’s salary for every year she or he has been working for the government. True, this would cost in the short run, but save a lot in the long run.

    3. Make public sector employees pay for their medical insurance like everybody else. First, this is no more than fair. Second, it saves the government money. Third, it makes the public sector less attractive as an employer so that more people would seek jobs in the private sector.

    A lean government would boost the economy, create new productive jobs and increase the welfare of all Caymanians.

    0

    0
  2. To the comment below, the private sector is not the country’s saving grace. I currently work for a bank and every day senior management are singing out if profits are not good they are going to sack us. So were are all the redundant people going to go? I suspect we are going to have a Big SOCIAL PROBLEM coming soon!

    0

    0
  3. The one obvious outcome to all of this is that direct taxes are in Cayman’s future. With the bulk on the voting poll working for the CIG cutting jobs in the civil service isn’t something any politician is going to support unless they are not interested in getting reelected and we all know that is what they are all primarily concerned about. Even the new premier has clearly stated that he is not willing to cut the civil service not to mention he is looking to borrow more money which will have to be paid back. Free medical benefits for CS employees and their families as well as Pensions have to be killing the public purse I can’t believe this still hasn’t changed at this point. This house of cards will eventually come tumbling down and people who think times are hard now will suffer even more in the long run..

    0

    0
  4. want2come2Cayman – I am in support of streamlining govt. but while I have heard of excessive public spending providing stimulus to the economy (certainly that is what the Obama administration in the U.S. believes) I have never heard it theorised that it is a ‘constant drug on growth’. Where did you get that idea?

    0

    0
  5. According to the 2012 Labour Force Survey compiled by the government’s Economics and Statistics Office, 16,493 Caymanians were employed at the time the survey was taken.

    That equates to just under 25 per cent of the Caymanians employed in the Cayman Islands being employed in either the civil service, or by public authorities and government-owned companies.

    The true statistical figure, based on the over-all number of Caymanians employed, 16,500 (rounded-off) is 34 %.

    The CI Govt. employs 34% of all employed Caymanians.

    That number is high just based on the figure and dollar amount alone, as the Miller-Shaw Report points out but does not tell the entire story.

    The other factors are…

    This 34% of government employed Caymanians is the political base of the politicians who contend for LA seats…and salaries under the current system.

    These figures also do not take into account the government unemployment benefits system in place and the numbers of unemployed Caymanians who depend on that support…

    Another block of political support for the politicians that comes out of the government’s coffers.

    These figures are indicative that the Cayman Islands is fast following Britian’s Labour Party policies and model…

    Turn a work-age, active, healthy voting population into dependents on government support…

    And you have a assured block of political support for life…

    And in turn, a lazy, benefits-dependent, under utilised and under or unemployed, unmotivated work-age population.

    We are grappling with exactly this problem on a daily basis in britain now, where the innocent are being made to suffer for the guilty…

    Some people are intentionally being denied work just so the government’s unemployment figures justify the funding for the unemployment benefits system and keep the politicians and their civil service sweet…

    Jobs for the boys and girls, providing benefits services for those who don’t have jobs…

    And pocketing any budget surplusses and unused-up benefits money for themselves.

    Please, take Britain as an example and DO NOT allow the Cayman Islands to slip further down this road for surely…

    Income tax is just around the corner if things continue along this path.

    0

    0
  6. Two easy steps to bring down the CS pay bill.

    1. Stop double dipping of salaries and pensions

    2. Enforce the retirement age (this might also free up some jobs at the bottom for unemployed caymanians as others progress through the ranks)

    0

    0
  7. Yes, the CS is too large but, the Miller-Shaw report was just copy/paste, right wing talking points, with no basis in economic reality.

    Also, the usual cut medical benefits comments are ridiculous. Why go to the lowest common denominator instead of bringing it up for everyone? Why not have universal comprehensive coverage, instead of trying to copy the expensive and failed US system?

    0

    0
  8. Speaker: It is obvious that states with high levels of public debt have to cut back on spending (lowering demand) and/or raise taxes (reducing purchasing power). The economy will suffer in both cases. For example, if the CI Government wasn’t wasting so much money (mainly on the Civil Service), it could lower import duties. Lower prices would lead to more consumption, store owners would hire additional staff, expand their showrooms etc. Also, if we want to raise the number of stayover tourists that spend some real money on the Islands, government could and should do away with the 10% hotel tax that fits a self-proclaimed tax neutral jurisdiction like chalk and cheese.

    0

    0
  9. If the CS employes 25% then other 65% work in the private sector with 10% unemployed. So CS is still the minority employer here in Cayman and yet the private sector majority is been increasing taxed to provide for the CS. Or let me make it simple 65% of the voters are private sector workers and politicians should remember this; So that government policies should be set to give opportunities to the private sector and not mummy the CS.

    If you want to reduce the cost of CS then when contacts are renewed the condition are change to come in line with private sector i.e co pay on pension and medical, new employees start on 2 weeks paid leave not four.

    Next anyone you operates a private business then you have 12 weeks to decide to either work for CS or your firm but not both. You can remain as a director/ shareholder but no physical work is allowed.

    Next there is a performance pay scheme anyone who fails to meet the standard on two reviews is out. Not redundant but termination for failing to meet conditions of employment, same goes for excessive sick days without medical explanation.

    If you are repetitively late for work or taking longer lunch breaks then the labour law should be followed and after verbal then written warning the termination.

    Then look at non essential services provide, cut these and reassign public workers to understaffed departments. Continue cutting these services or introduce a fee to users for providing them.

    Any money saved should be used 50% to pay of existing debts and 50% roll back fees so the cost of living reduces.

    0

    0
  10. Slowpoke – Ignore the thumbs down; you are right on both counts. The Miller-Shaw Report was far too broad brush and simplistic. So much for the folk who shout ‘implement the Miller-Shaw Report’.

    And yes, we need to proceed to have a national health insurance system which covers everyone for treatment at the Government hospitals and referrals from the Government hospitals, and at the same through economies of scale lowers the cost per insured. Those who opt for private medical care would of course need to have private health insurance.

    0

    0
  11. A factor in the economic attraction for Caymanians to enter the civil service instead of the private sector is the lack of minimum wage.
    For unskilled or semi skilled labor and even trades people many employers seek out cheap foreign labor that they can easily control on work permit and often skip the insurance and pensions.
    Until these areas are dealt with along with corruption nothing will change.

    0

    0
  12. Its a question of perspective

    No MLA is willing to grasp the nettle and make reduction in civil service numbers – it’s like turkeys voting for an extra chrismas dinner.

    But it becomes dramatically more tangible when looked at as a way to reduce the cost of living for ALL.

    Everyone pays a quarter extra on import duty and if you can streamline the government for example by 100M – duty could be dropped for daily items and halved for much of the rest – imagine how that would impact the cost of living for the non government 75 percent of voters…

    There is also a worring arguement that those trimmed from the civil service would not find employment in the private sector – I disagree with that analysis though I have encountered a few who would certainly find the adjustment difficult, the reverse of the question is that if their skills and competencies are really that poor, then they should not have been working for the government in the first place?

    0

    0
  13. want2come2Cayman – I was responding to your post that high govt. spending causes economic stagnation. You still haven’t established that. Instead, you have now actually said the opposite: that cutting back on spending would harm the economy. For the sake of argument, if the govt. makes large numbers of civil servants unemployed they will not be absorbed by the private sector and this will reduce spending thereby harming the economy. And what happens to these unemployed persons? I would suggest that increasing numbers of unemployed will lead to greater social problems as well as increased demands on govt. for financial assistance.

    Sonic – Please be realistic. Cayman is no different from most countries in that govt. is the employer of last resort where persons obtain employment when no employment is available for them in the private sector.

    0

    0
  14. Something has got to give. Government can’t continue to employee this many people and keep the high benefits package as well. Since the Premier is unwilling to cut the civil service, the responsible thing to do would be to cut the benefits package to private sector standards, doing 50/50 for both pension and health care.
    Additionally, they could trim the fat and eliminate some of the unnecessary agencies. An example would be Radio Cayman. Back in the 70’s and 80’s, government needed a radio station for public service announcements, hurricane warnings and so forth. Now, there are plenty of private companies that can do the same job, and Radio Cayman continues to loose money.
    Our leaders need to be willing to make the tough, unpopular decisions to move this country forward, the question is… will they?

    0

    0
  15. While I understand and respect everyone’s point of view and opinion’s. The truth of the matter is that if The Cayman Island Government it not willing and does not make the hard decisions required in order to make the economy sustainable someone else will come in and do it for them.

    0

    0
  16. Hey, here is a novel idea to save some money..!

    Switch off your lights when you go home for the night!

    I drive past the Gov Adm building each night and it seems everyone leaves their lights on. Come on– I run a profitable company and I switch off my over head fan, lights and equipment each night. If I can do it then surely Govt workers can do it too.

    This is just an example of waste in the govt. You have to start somewhere and that is a good start.

    0

    0
  17. Currently the CS is running an annual average deficit of 80m (anyone telling you differently has not thoroughly reviewed the finances and/or not disclosed all relevant info).

    There is also the dirty little secret that few speak- future health care liabilities for all these people according to Shaw Miller is around 665m none of which has been recognized or budgeted for.

    Why? Because CS still owes its own pension plan 175m which it can not make good so why concern oneselve with tomorrows 665m????

    To make matters worse the 665m is based on a 8 yr old acturial report and the numbers certainly have not gotten smaller since then!

    The civil service gets 12% for pension and health while the private sector gets 10%. And the best part??? Private sector is matched between employer and employee whereas the civil service employees PAY NOTHING!!!! Its free for them. Govt fits the entire bill!

    Bottom line: path is not sustainable, the country is losing its competitive edge, and there is a realistic possibility that the UK Govt will become more actively involved in national affairs as more borrowing is required.

    But clearly we can not handle our own finances so we may as well let someone else give it try.

    0

    0
  18. Deficit spending does not work

    Speaker: According to your logic, the economy should be booming since Cayman has a debt of 700 mln (plus probably another 700 mln in unsecured future pension liabilities plus medical liabilities for civil servants). However, what we see is an economy that is not getting off the ground. So getting caught in the debt spiral is not the solution. It is the problem. In 2011, the government paid 33 mln in interest alone without even repaying any of the principal. Up to you to imagine how much import duties could be lowered and life improved for all Caymanians if there was no debt.

    The new government seems unable or unwilling to cut back on spending. Rather it wants to borrow even more! I could not believe my ears when I heard about that. You, me and everyone else will have to pay for the government’s profligacy one day. Work permit fees cannot be raised any more, or the expats will leave and the financial sector collapse. Import duties cannot be raised, either, as the cost of living is already the highest in the Caribbean. The silly Payroll Tax plan has failed (luckily). A VAT is awfully complicated and will lead local businesses, shop keepers and restaurant owners to avoid invoices. So what can the goverment do? Either it will introduce a property tax, ending Cayman’s long and happy history of being tax free, driving real estate prices down (including the value of your home) and redirecting investors elsewhere. Or it will default like Greece and Cyprus and prompt Britain to intervene.

    Has anyone read Carl H. Rahn’s editorial in the October 2012 Cayman Financial Review (http://www.compasscayman.com/cfr/2012/10/12/Is-Cayman-committing-economic-suicide-/)? He says, among other things: The single most important policy is to cut back government spending to the level of current tax revenue without more tax increases. Tax revenues have been growing faster than the economy, so cutting back to the level of revenue is neither unrealistic nor draconian.

    0

    0
  19. want2come2Cayman, you really should not be surprised. From what I see the current leader has a reputation and history of aggressive spending and borrowing to show that he is getting things done. That’s all fine and well but in the end it hurts when you have a lot of toys but no way to pay for them. I was not surprised at all that one of the first things he is setting out to do is borrow more money. And his reaction to the outstanding debt not being an issue because it could just be refinanced gives you a clear picture of what his intentions are. It looks like all of the promises made by them during the election campaign are for the most part reliant on the ability to borrow more money in order to deliver them. I have no doubt that once the UK folks force him to face reality he will come back to Cayman with a different attitude and I am curious to see how he handles things without the ability borrow and push Cayman further into dept. Some peoples worst nightmare is to be forced to live within their means.

    0

    0
  20. want2come2Cayman – I think the point is that the economy would have been in worse shape had there been no capital expenditure. At the time the Govt. Admin Bldg. and Schools were being constructed there were no other major construction works in progress. Without them unemployment would have been higher and there would have been less spending in the private sector leading to an even greater contraction in the economy.

    That being said I agree that now that the economy has more or less stabilised there should be restricted borrowing and greater emphasis on reducing waste and inefficiencies and eliminating extravagances. We have seen an indication that the new govt. is inclined to eliminate extravagances (e.g. travelling premium economy vs. business class, premier and deputy premier not being chauffered in a govt. vehicle) and while this is important to set the tone from the top down we need to see much more.

    0

    0
  21. want2come2Cayman – On a point of fact, our current core govt. debt is less than 600m.

    One financial responsibility principle is that debt servicing cost for the year should be no more than 10% of core government revenue. (Debt servicing = interest other debt servicing expenses principal repayments for core government debt and self-financing loans). At 9.1% we fall within that guideline.

    0

    0

Comments are closed.