Above the minimum: Unemployment's cultural component

The Minimum Wage Advisory Committee report, recently released to Cabinet and to the public, sheds light and insight into employment issues in Cayman that go far beyond the primary purpose of the committee, that is to recommend a minimum wage for the country.

When Cabinet approved the committee’s final terms of reference last fall, it included the following policy objective: At what point should the Cayman Islands’ minimum wage be set, in order to improve employment opportunities for Caymanians by decreasing the demand for foreign workers?

To address that question, the committee embarked upon an exploration of the prevailing economic and attitudinal conditions in Cayman that might impact local employment.

In doing so, the committee tackled the presumption that foreigners “steal” jobs from Caymanians by accepting lower wages, finding, in an analysis that underlies the report, that “The increase of unemployment since the global crisis did not disproportionally affect Caymanians.

“In fact, as the data presented substantiate, unemployment went up and remained high for Caymanians and Non-Caymanians in a quite proportionate way.” And, “These data strongly suggest that inadequate employment creation has been the root cause of the unemployment challenge in the Cayman Islands, and not a lack of competiveness of the Caymanian labor force.”

Consider that myth debunked (again).

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More interesting, the committee tackled the sensitive issue of what are called “reservation wages,” namely the lowest wage at which Caymanians and non-Caymanians would be willing to work. The committee concluded:
“[R]aising the minimum wage to the level of the reservation wages of Caymanians could destroy certain industries … As is the case in many affluent societies, unemployed Caymanians are expected to be unlikely to aspire to and/or be less successful competing for low wage jobs since their reservation wage tends to be higher than migrant workers.”

In other words, not only are most unemployed Caymanians unwilling to perform low-level jobs at the level of wages currently accepted by foreigners, but many Caymanians would not be willing to do those jobs at any level of wages those companies could possibly afford to pay.

Given the social safety net currently in place in Cayman, this makes perfectly logical sense.

Why would any Caymanian take a job at $5 or $6 an hour (or even $8 or $9) when the government will provide welfare benefits the equivalent of $9.62 an hour? That’s more than 50 percent above the committee’s suggested minimum wage, with no actual work involved other than filling out paperwork.

With such a generous cushion of benefits in place, the phenomenon of Caymanian unemployment becomes one not primarily of money, but of culture – a culture in which it is more socially acceptable not to have a job at all than to have “certain” jobs.

The report goes on to substantiate this. In a section dealing with a focus group held with Passport2Success participants (comprising 17- to 20-year-old Caymanians), the question was asked:
“Are young people open to working in all industries?” There was a resounding “no” stated by the entire group.

When asked why, the participants said they would not work in some industries because of pride. “[Y]oung people don’t want the shame of being seen by their peers while working in certain industries or holding certain jobs that they consider below them,” according to the report.

We would urge our most prominent members of society, beginning with Premier Alden McLaughlin and including our most successful business leaders, to speak out publicly against this ethos of indulgence and indolence by championing the inherent dignity of work – all work.

As we know all too well, when individuals aren’t willing to do certain jobs, businesses will necessarily find somebody else who will.

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  1. Now this explains why there is no incentive to take lower paid, not prestigious jobs.

    Why would anyone be so foolish when they can be paid more for doing nothing and get a welfare check paid out of the Work Permit Fees of foreigners?

    Sadly the political reality is that welfare benefits will not be reduced for voters.

    Michael Davis has made a good point that able-bodied adults should be given work to do like clean up beaches. But again, realistically this will not happen.

    But this problem is not unique to our islands. In London England you will not find any UK citizens working in fast food. Why should they when benefits pays better.