Cayman Islands Premier Alden McLaughlin said last week that while overall unemployment appears to be tapering off, particularly among the Caymanian labor force, the number of work permits held by non-Caymanians has begun to grow again.
According to Mr. McLaughlin, total unemployment in Cayman is expected to fall from 6.3 percent in mid-2013 to 5.9 percent in mid-2015 and eventually shrink to 4.9 percent in mid-2018.
Meanwhile, the total number of work permits held in Cayman on Jan. 22, including government contracts and workers awaiting word on permanent residence applications, was 21,403. That’s up 8 percent from January 2014 and up 5 percent from the last time the Cayman Compass measured the statistics in July 2014.
“All data indicate that unemployment is falling and is projected to continue to fall over the next few years as projects come on stream and as we get more and more people into jobs,” Mr. McLaughlin said Thursday at his annual State of the Nation address. “An increase in work permits is a clear indication that the economy is rebounding; that employers are hiring.
“There is a view in some quarters, however, that every time you grant a work permit, it means a Caymanian did not get that job. But this is not necessarily the case. In many cases the grant of a work permit for a managerial or professional position means a business is growing and actually creates additional jobs for administrative, secretarial or support staff.”
Caymanian unemployment, when separated from overall unemployment, has declined in recent years, from 10.5 percent at its height to 9.4 percent during the government’s 2013/14 budget year. The drop in overall unemployment is forecast to occur at the same time as work permit numbers rose to more than 21,000 during 2014/15.
There is a bevy of evidence from the government Economics and Statistics Office to show that population growth and higher work permit numbers are related to unemployment.
For instance, toward the end of 2008, when work permit numbers were at their highest – around 26,500 based on Immigration Department data at the time – overall unemployment was at around 4 percent. By 2010, total unemployment dipped to 6.6 percent and work permit numbers plunged below 20,000.
Also, according to the Economics and Statistics Office data, the population of the Cayman Islands grew from about 44,000 (pre-Hurricane Ivan) in late 2003 to about 57,000 at the end of 2008. Official population figures dropped below 53,000 at the end of 2009.
A 2009 government economic report showed unemployment among Caymanians reached nearly 10 percent toward the end of 2009 and stayed around that level in 2010 and 2011.
Still, Mr. McLaughlin noted during his State of the Nation address at the Fidelity Economic Outlook conference last week that more needs to be done to reduce unemployment. “We are working hard to diversify the economy further and help create new jobs,” he said.
There are other, more troubling signs within the local economy that Cayman Islands Finance Minister Marco Archer has pointed out in the past year. Put simply, while more people might be in jobs of late, the kinds of work they are finding may be different than what was seen in the past.
During his presentation of government’s current 2014/15 budget in the Legislative Assembly, Mr. Archer also noted that overall unemployment had increased from 4 percent in 2008 to 6.3 percent in 2013. Mr. Archer pointed out that the higher-paying jobs tended to be the ones vanishing during the five-year period between 2008 and 2013.
The proportion of individual workers earning in what government considers the “middle income” range, between $28,800 and $86,388 per year, went from 44.3 percent of the labor force in 2008 to 40.2 percent in 2013. Meanwhile, the number of those earning less than $28,800 per year increased from 44.6 percent of the labor force in 2008 to 47.3 percent of the workforce in 2013.
Mr. Archer’s figures, compiled from survey data by the government’s Economics and Statistics Office, show Cayman went from having roughly the same number of middle-income earners and lower-wage earners in the local economy just five years ago, to a significant disparity where low wage earners made up nearly half the workforce.
“The middle class has shrunk, dampening the growth of domestic demand and curtailing the ability of the economy to expand at a more robust pace,” Mr. Archer said.
Still, the typically cautious finance minister expects that steady, if unspectacular growth will be the order of the day in the medium term for Cayman.
Gross domestic product, or GDP – the monetary value of all goods and services provided within a country during the course of a year – rose 1.6 percent during the government’s 2013/14 fiscal year. Mr. Archer said the growth forecast for the 2014/15 budget year is 2.1 percent.
Future estimates put the growth of Cayman’s GDP at an average of 2.6 percent per year between mid-2015 and mid-2018.
“There is a general consensus that presently an average annual growth rate between 2.5 [percent] and 3.5 percent in gross domestic product is considered respectable,” Mr. Archer said.