Cayman’s reflection in the North Atlantic

In the middle of the ocean, a small British Overseas Territory is grappling with burgeoning debt and a slowing economy. Dire warnings from the private sector have imbued political leaders with a sense of urgency, and the realization that the size and cost of government must be slashed dramatically.

In response, ministerial officials have proposed the privatization of certain arms of the public sector, whose salaries, pensions and benefits have become too ponderous a burden for taxpayers to shoulder any longer.

There are obstacles, the most formidable being the civil service, which has struck a collective stance against the ministry’s plan, arguing instead for gradual, internal reform led from within the ranks of public employees.

The Editorial Board of the local newspaper of record, meanwhile, has staked out a position of its own, opining:

“Government literally cannot afford to continue absorbing such a high percentage of the island’s labour market; we no longer have the financial wherewithal to maintain the size of the current bureaucracy. Our position is becoming increasingly unsustainable because it is creating hugely destabilising fiscal imbalances along with adverse spillover effects into the private sector.

“To prevent private sector growth from slowing further, the Government needs to stabilise the economy by dealing with the underlying forces driving public sector expenditure.

“And the chief drivers are, of course, the administrative and operating costs of an increasingly top-heavy civil service.”

Well put. And though the subject of the column is Bermuda, the same could have been written about the Cayman Islands. (The editorial from the Bermuda Royal Gazette appears in its entirety on the right-hand side of this page.)

The conspicuous similarities between our situations are so frequent in occurrence, and so fundamental in nature, that it would be most unwise for us in Cayman to ignore the warning cries from our North Atlantic compeer. Though we are in different seas, we are navigating similar straits in similarly adverse conditions – and the tack of the HMS Bermuda should be taken into account when executing the course of the HMS Cayman.

Bermuda may be Cayman’s nearest analogue, but across the world – within townships, cities and countries – parallel conflicts are raging between forces agitating for less government, and those pulling for more, more spending or at least more of the same.

The scenario is currently playing out on the grandest of stages, Europe, with austerity-minded Germany lined up in diplomatic battle against other eurozone countries, including France and Italy, who have grown weary of pursuing deficit reduction strategies and impatient with stubborn economic lethargy.

The outcomes of these myriads of struggles will ultimately hinge on the relative quality and fortitude of individual leaders to stick to decisions that are necessary, if not immediately politically popular. In Europe, the spotlight is on German Chancellor Angela Merkel. In Bermuda, Finance Minister Bob Richards. In Cayman, Premier Alden McLaughlin.

The Compass continues to support Premier McLaughlin and Deputy Governor Franz Manderson as they pursue recommendations contained in the Ernst & Young report on reducing the size of Cayman’s public sector. We are encouraged by Premier McLaughlin’s invitation, delivered Thursday during the Chamber of Commerce’s annual Legislative Luncheon, to the business organization to nominate one member to serve on the Steering Committee charged with implementing Cabinet’s decisions on the report.

We concur with Mr. McLaughlin’s call for cross-sector cooperation in this endeavor, and second the sentiment he expressed: “Together, in the true spirit of partnership, I believe we can make it happen.”


  1. While I am in support of government reform what nobody seems to want to talk about in any meaningful way is the fact that the private sector does not have the ability to absorb the many Caymanians that would be unemployed if the government implemented most or all of the recommendations in the EY report. In fact we have a delusional Chamber of Commerce that feels that the private sector, that is also struggling in a declining economy, is somehow able to do just that.

    What is the social impact of a significant increase in unemployment? What is the potential impact on our tourism product when we have a further increase in crime as a result of increased unemployment? What is the potential impact on our social welfare, prison and police budgets when crime increases as a result of increased unemployment? What is the projected impact on our health care budget as a result of increased unemployment?

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