Bad call 
on LIME deal?

On Monday, news broke that telecom provider LIME is outsourcing its installation, maintenance and repair operations to global firm Ericsson, which has set up a local company. The transaction impacts 39 LIME employees, including 37 Caymanians, who won’t be working for LIME anymore but would be logical candidates to fill the new Ericsson company roster.

LIME has already engaged in similar outsourcing agreements with Ericsson in other countries, and such arrangements are common in the industry.

While it is unfortunate the transition may affect people’s livelihoods, Cayman has robust immigration and work permit laws predicated on the assumption that properly qualified Caymanians get first consideration on job opportunities. Surely the 37 Caymanians now working for LIME would have a competitive edge on other applicants for Ericsson or, for that matter, for any positions requiring experience and skills they have obtained and can readily demonstrate.

On the heels of LIME’s announcement, a news release from the Office of the Premier followed swiftly, threatening to revoke Ericsson’s business license if it doesn’t hire “our people,” in the words of Infrastructure Minister Kurt Tibbetts, who was joined in the proclamation by Employment Minister Tara Rivers and Premier Alden McLaughlin.

The implications of the Government response go to the fundamentals of doing business on these islands. For decades, there has been an uneasy peace between government and private industry over giving priority and preference to “qualified Caymanians,” and ancillary issues such as training and retention.

Over the years, immigration policy (and particularly the issuance of work permits) has been influenced, if not driven, by the need to place Caymanians in the private sector. The disastrous and divisive “rollover policy” is an indirect expression of this broader objective.

However, many companies, including LIME, née Cable & Wireless, have exemplary records of hiring, training, and promoting Caymanians into senior positions. In fact, the workforce at LIME is 90 percent Caymanian.

One of the consequences of hiring nearly all Caymanians, of course, is that when a company downsizes for whatever reason — advances in technology, economic pressures, rising costs, or workplace efficiencies, for example — it will be Caymanians who will be affected.

It is one thing to give preference to Caymanians when hiring; it is quite another to treat Caymanians as a protected class, with, de facto, the expectation of a job for life.
In large measure, that’s what government does with its civil service, authorities and companies. There is never any reduction in the size of the workforce, regardless of cost, performance, productivity or need.

The private sector cannot operate that way.

It is unclear from the government press release how it would react to the following scenario:

Ericsson, in its arrangement with LIME, determines that it does not need 39 employees to provide its services. It requires only 20. The math is straightforward, if unpleasant: 19 employees, nearly all of them Caymanians, are going to lose their jobs.

In anything other than a state-run economy (think Cuba), no government can force private industry to maintain artificially inflated payrolls.

Perhaps Minister Marco Archer, a well-credentialed and well-respected economist, can explain to his colleagues in government what happens when government burdens a business with unsustainable costs.

The company goes out of business — and ALL of the employees lose their jobs.

6 COMMENTS

  1. If Ericsson has to hire people that LIME fired they might as well leave now. Seriously, one of the worst run companies known to mankind fires 37 employees and the government demands they be hired by a new firm…. who in their right mind would do that?

  2. I’d go so far as to say the job for life and protected class attitude has become so pervasive and is the main reason companies like LIME and the government provide such poor service. Once you have a job with no real accountability for performance and from which it’s extremely hard to get fired, there’s too much temptation to take it easy. It doesn’t just happen to Caymanians and is a natural reaction to job security, but it must be recognized as detrimental to a company’s and the overall economy’s survival.

  3. Curious how the work permit and immigration laws work. If the previous Lime employees were known to not be preforming their duties up to par causing some of the complaints I’ve heard about the customer service from Lime, would Ericson still be required to hire these employees ? I would imagine that they would have an advantage over other candidates being that they have the experience but I have heard some horror stories about the service provided by Lime and Ericson may have higher standards. The announcement from the premiers office threatening to revoke Ericsson’s business license if it doesn’t hire our people may send ripples throughout the business community and also give a lot of people that since of entitlement that I hear so much about making a lot of folks feel that they do not have to perform at their best in order to keep their jobs. On the other hand it would benefit Ericson to train motivated people for these positions because there wouldn’t be that much competition for the these types of position so there wouldn’t be a huge concern about them leaving after getting training.

    Is seems that Lime as a company has a history of hiring Caymanians who move up through the ranks, so it is likely that Ericson will be influenced by this style but I think a lot of people will find themselves working in a different environment where they will be expected to perform and sometime go above and beyond the call of duty.

  4. There was a quote – often attributed to Thomas Jefferson;-

    They Govern Best who Govern Least…

    It must be remembered where every penny the government spends comes from, namely private enterprise! A light touch (if any) is far better than heavy handed interference.

    Every questionable decision, policy malfunction and extravagant expenditure still has to be paid for somehow.
    Sound bites making direct threats to companies will make Cayman seem less attractive for inward investment – a catastrophic mistake in the long term.

    Of course, every time a private company takes a strategic decision to become more efficient, it sets an uncomfortable example for the CIG, desperately trying to reconcile their pension obligations vs. the number of staff – a ticking time bomb left for future governments and generations.

  5. Recently I upgraded to fibre with lime, at one point I had 5 people in my house, watch the 1 guy who was splicing the cable. no wonder why they need to make things more efficient.

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