A decade’s worth of data from the Immigration Department and the government statistics office examined by the Cayman Compass shows a clear link between the number of foreign workers on the islands and the unemployment rate.
When the number of work permits held in Cayman is higher, unemployment declines, data show. When work permits fall, unemployment tends to increase.
Jobless numbers released by the government this week revealed the lowest unemployment rate the British Overseas Territory has seen since 2008, at 4.2 percent. The unemployment rate for Caymanian workers was estimated at about 6.2 percent by the Economics and Statistics Office.
According to the Immigration Department, at roughly the same time the Labor Force Survey was conducted – fall 2015 – the number of work permits and government contracts for non-Caymanian workers held in the islands was 22,148. The immigration figures date from Sept. 30, 2015. The Labor Force Survey for the fall is typically done in October.
In 2011, when Cayman Islands unemployment was at its peak – around 6.3 percent overall and just under 10 percent for Caymanians – the Immigration Department measured work permits at 19,927 on Sept. 30, 2011.
The immigration numbers for work permits serve as a “snapshot” of what existed at the time, but numbers taken over a period of years can be used to show trends. Over 2012 and 2013, as the employment rate hovered around 6.2 percent to 6.3 percent, work permits fluctuated between approximately 20,700 and 19,500.
Then in fall 2014, unemployment fell to 4.7 percent overall and to 7.9 percent among Caymanian workers. Work permits rose to 21,266 on Sept. 30, 2014. The fall 2015 numbers revealed a further drop in unemployment and a further increase in work permits.
The trend was noticed going the other way a decade ago. The Cayman Islands, experiencing an economic boom during the redevelopment period in the wake of Hurricane Ivan in September 2004, reported a spring 2006 unemployment rate of just 2.6 percent, with more than 22,500 work permits and government contracts active. The Labor Force Survey numbers for 2006 were not taken in the fall of that year, so the numbers are not a strictly “apples to apples” comparison.
The surging economy continued during 2007, with unemployment at 3.7 percent during fall 2007 (Caymanian unemployment at 5.7 percent) and 24,730 work permits and contracts active as of Sept. 30, 2007. Unemployment rose slightly to 4 percent during fall 2008 (Caymanian unemployment at 6.6 percent) and work permits numbered 24,232 in September of that year.
Toward the end of 2008 and into 2009, the global financial crisis struck, and the local economy reacted accordingly. Overall unemployment rose to 6 percent during fall 2009, with local unemployment nearing 10 percent, according to published reports at the time. Work permits fell to 21,130 on Sept. 30, 2009. In fall 2010, the economy was fully in the doldrums, with unemployment reaching 6.2 percent and work permits and government contracts falling to just above 19,000.
The correlation between work permits and economic strength has been noted by top government officials. Premier Alden McLaughlin said in January 2015 that while unemployment had begun to taper off, the number of work permits held by non-Caymanian workers had increased.
The local economy beat Premier McLaughlin’s estimates made in early 2015, when he projected the overall unemployment rate would fall below 5 percent – but not until mid-2018.
“An increase in work permits is a clear indication that the economy is rebounding, that employers are hiring,” Mr. McLaughlin said. “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.”
Chamber of Commerce President Paul Pearson noted this week that although some of the members had complained about the difficulty in receiving work permit grants, Immigration Department figures that showed permits and contracts issued to non-Caymanians at more than 23,000 this month seemed to temper those struggles.
“I see [the work permit increase] as a positive sign as an improvement in economic development and growth,” Mr. Pearson said.
Finance Minister Marco Archer said the improvement in the local economy in the past few years has been steady, with the statistics office showing a 1.6 percent increase in overall economic activity between January and September 2015.
“Since the beginning of 2013, the local economy averaged 1.5 percent real gross domestic product growth,” Minister Archer said. “Ten of the last 11 quarters recorded positive economic growth.
“The re-emergence of the local economy on a continuous growth path was achieved through sustainable fiscal policies, improved efficiency in the public sector, and the facilitation of private sector development.”
Mr. Archer said a number of business sectors contributed to GDP growth, including financial and insurance services, real estate (including rentals) and utilities.