Labor changes may impact jobless rate

Local unemployment numbers could stagnate or even rise if proposed changes to the Cayman Islands Labour Law and the civil service retirement age take effect within the next year.  

The government’s own estimates have revealed that some 600 people could lose their jobs if a minimum wage takes effect next year, as proposed by Premier Alden McLaughlin.  

Meanwhile, Finance Minister Marco Archer said Friday during his Legislative Assembly budget address that increasing the mandatory civil service retirement age from 60 to 65 would likely stop the recent drop in Cayman’s unemployment rates.  

The government Economics and Statistics Office recently reported that overall unemployment fell from 6.3 percent in 2013 to 4.7 percent in 2014. Caymanian unemployment fell during the same period from 9.4 percent to 7.9 percent.  

Government projections for the upcoming 2015/16 budget year were that overall unemployment would remain at 4.7 percent during the period that runs through June 30, 2016 “because of an expected increase in the labor force.”  

“If you increase the retirement age from 60 to 65, you increase the working population, so your labor force grows,” Mr. Archer explained during an interview Friday. “The [worker] pool from which you are drawing will get bigger.”  

The change in the government retirement age will not force any civil servants to work beyond age 60, they will merely have the option to stay on until reaching age 65. Currently, government workers are only allowed to stay beyond age 60 if they receive employment contracts of between one to three years.  

The private sector retirement age is more flexible. However, it is often difficult for companies to receive work permits for non-Caymanian employees who are over 60 and most banks won’t allow home mortgage loans to extend beyond age 60 – effectively limiting 15-year home mortgages to those age 45 and under.  

Government projections have the local unemployment rate hovering around 4.5 percent through the 2017/18 fiscal year, which ends in mid-2018.  

Amendments to both the Labour Law and the Public Service Management Law would be required to change the current retirement age. Mr. McLaughlin said Friday that the Labour Law changes would be made in September.  

Minimum wage 

Another major change to be included in the Labour Law revisions, according to the premier, is the introduction of a minimum wage. Mr. McLaughlin said he hoped the new base wage rate could be implemented by March 1, 2016.  

Although he did not specify what minimum wage rate the Progressives-led government will support, the premier indicated that the administration would adopt the recommendations of the Minimum Wage Advisory Committee, including proposals for a minimum wage.  

The committee recommended that the minimum wage in the Cayman Islands be set at $6 per hour.  

The committee report cited the possible loss of 545 to 600 jobs – less than 2 percent of Cayman’s current labor force – if the minimum wage was implemented.  

While those job losses would impact Cayman’s economy, it is possible they would not have a huge impact on unemployment, since only about one-quarter of current workers who earn below minimum wage are Caymanians, according to the committee.  

Non-Caymanian work permit holders who lose their jobs would, in most cases, have to leave the islands unless they were married to a Caymanian or had some other way to gain permanency status in the jurisdiction. They would, therefore, not be counted among the unemployed.  

Mr. McLaughlin has said that any job losses from the implementation of a minimum wage would most likely affect work permit holders and not Caymanians.  

However, if those jobs are eliminated entirely, it could have the effect of shrinking the overall local economy, meaning the remaining workers would be left to compete for fewer jobs. The largest impact from a minimum wage would be among small, Caymanian-owned businesses, according to advisory committee chair Lemuel Hurlston. Those companies, Mr. Hurlston said, would be required to give pay rises to more than 1,200 employees.  


  1. I do not believe the people need to worry about this. This is just Pre-Election gaagaa, googoo.
    Just read between the lines.

  2. Why only the Civil Service to 65? The private sector dont have mortgages too? It gets worst, you work for a company for 30 years and on retirement you have to foot the bill for medical insurance 100%. When on a limited budget, medical, house and car insurance premiums will put you to the grave faster!

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