While the Cayman Islands’ overall unemployment rate stayed about the same, the number of unemployed Caymanians grew by 197 people between October 2015 and October 2016, according to a Labor Force Survey government released Wednesday.
The Caymanian unemployment rate went from 6.2 percent in October 2015 to 7.1 percent in October 2016. More than 1,400 Caymanians were unemployed and looking for work as of last fall, according to estimates from the Economics and Statistics Office.
The jobless rate increase was mostly due to a larger number of Caymanians entering the workforce, according to government statements.
The news of a marginal increase in local unemployment is not positive for the ruling Progressives-led government heading into next month’s general election. However, the potential for an increase in unemployment numbers was forecast by Finance Minister Marco Archer nearly two years ago, based on the policies of his government.
“The age of pension entitlement was increased to age 65 in May 2016 and this could have inspired persons 60 and older to re-enter the labor force,” Mr. Archer said Wednesday. “A minimum wage was also established in March 2016, which could also have encouraged greater efforts towards getting a job by persons across all age groups.”
Nearly one-fifth of all unemployed Caymanians listed last fall had been working in the construction sector.
“The increase in unemployed Caymanians by 197 persons may be due to the completion of major construction projects,” Mr. Archer said. “As new projects are foreseen to start in 2017, it is expected that these persons could be re-absorbed by new job opportunities.”
The Caymanian unemployment rate once stood as high as 10.5 percent as of April 2010, dropping to a low of 5.6 last spring, before rising to 7.1 percent in October 2016. Typically, unemployment rates are higher in the fall, when Cayman’s tourism-based economy slows.
The overall unemployment figures of 4.2 percent for fall 2016 are the lowest among those published in the Caribbean region, Mr. Archer said. Unemployment rates varied from Jamaica’s 12.9 percent in October 2016 to Trinidad and Tobago’s 4.4 percent in July 2016.
Looking at Cayman’s entire labor force, the number of Caymanians in the labor force grew to nearly 20,000 people. The number of permanent resident non-Caymanians stood at 4,577, and the non-Caymanian work permit holders and spouses of Caymanians stood at 17,687. Based on those numbers, Caymanians made up 47 percent of the local labor force, while non-Caymanians made up 53 percent of the labor force.
Of the 1,785 people who were unemployed in October 2016, 1,406 were Caymanian and 379 were non-Caymanian. It is unusual for non-Caymanian work permit holders to remain in the islands if they are unemployed because they are generally not allowed to remain without having secured employment.
Unemployment increase foreseen
Estimates included as part of economic forecasts for government’s current 2016/17 budget put overall unemployment forecasts for 2016 at 4.7 percent, although it has not yet increased to that level.
“[The unemployment estimates] assume a moderate average increase in the labor force of 1.3 percent,” government’s forecasts noted. “It is also assumed that the recent minimum wage increase will have a slight adverse impact on employment growth in 2016.”
Minister Archer warned in 2015 that certain government labor policies, including setting the minimum wage at $6 per hour and boosting the civil service retirement age to 65, could lead to higher unemployment. A government report on the establishment of minimum wage estimated that up to 600 people could lose their jobs following the implementation of the base wage rate. The 2015 Minimum Wage Advisory 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.
Premier Alden McLaughlin advanced another theory at the time: that job losses due to the establishment of a minimum wage, while affecting the local economy, would not have a huge impact on unemployment because most of the workers losing their jobs would be non-Caymanians who are required to leave the islands if they are not legally employed.
According to the advisory committee report, about three-quarters of the minimum wage workers in Cayman were non-Caymanians.
Minister Archer also said that increasing the mandatory civil service retirement age from 60 to 65 would likely halt the recent drop in Cayman’s unemployment rates. “If you increase the retirement age from 60 to 65, you increase the working population, so your labor force grows,” Mr. Archer said. “The [worker] pool from which you are drawing will get bigger.”
According to budget estimates, the overall labor force in Cayman was expected to grow from slightly more than 39,000 people to more than 41,000 by 2019. Meanwhile, the unemployment rate – after the increase in 2016 – was expected to drop again to 4.2 percent by 2019.