Businesses are starting to see a gradual exodus of employees from the Cayman Islands with some expatriate workers opting to leave before government closes a loophole in the Pensions Law that allows them to cash out their retirement savings as they depart.
The extent of the impact has varied across businesses and industries but so far the “expat exodus” has not been as bad as many business leaders first feared.
The Ritz-Carlton, Grand Cayman resort has lost 50 employees, Foster’s supermarket chain has lost 20, and the Westin resort just five.
There are still six weeks until the de facto deadline for departing employees to hand in their notice, if they intend to leave Cayman by the end of the year.
But in the tourism industry, in particular, there is a sense that businesses have weathered the worst of the storm.
Marc Langevin, general manager of The Ritz-Carlton, said losing 50 staff would have a significant impact. But he said that figure was less than half of what it could have been.
“We will not be as impacted as originally feared, and I would suggest that it is due to our proactive approach in communicating and educating our ladies and gentleman. From our early surveys, we had estimated that more than 100 employees were seriously considering leaving due to the new pension law,” he said.
At the Westin, general manager Morty Valldejuli said the hotel had headed off a feared exodus by organizing a series of presentations for staff on the details of the new law.
He said employees were able to make an informed decision and ultimately only five had opted to go. “When the law first came out, the initial knee-jerk reaction was to pick up and leave,” he said.
“Once the staff understood the impact to them personally, both pros and cons, they were able to make an intelligent decision on what to do next.”
NM Ventures restaurant group, which employs between 65 and 75 people across several restaurants, including Deckers and KARoo, has lost “10 percent” of its staff, according to co-owner Markus Mueri.
The Tortuga Rum Company has lost “5 percent” according to owner Robert Hamaty.
He said, “It is a problem for us because they are experienced employees. I’m sure it has affected many people in Cayman.
“It impacts the lower income workers more because they are the ones that want to take their pension to build a house. They don’t want to draw it out only in time to pay the funeral home.”
Under the previous law, for pension accounts of $5,000 or more, employees were entitled to access those funds once they had been out of Cayman for at least six months and had not been contributing to the pension plan for at least two years. Effective Dec. 31, 2019, payouts will be available only at retirement age, meaning anyone who wants early access to their money will have to leave by the end of this year.
Earlier this year, the Chamber of Commerce cautioned that as many as 2,500 workers could leave the island as a result.
Wil Pineau, CEO of the Chamber, said many businesses had lessened the potential impact of the pensions change through proactive employee education campaigns.
But he cautioned it was still too early to declare victory.
“I think there is still more time before we can tell that for sure,” he said. “Businesses are still seeing people submitting resignations. It is having an impact. Any time you lose someone who has been with an organization for eight or nine years, replacing them is difficult.”
He said the key concern for the Chamber was that the National Workforce Development Agency and the Immigration Department were prepared to help businesses fill a large number of vacancies.
“The most important thing is, are there trained Caymanians available to fill these roles? If there are, then let’s get those people to work. If not, then we have to ensure businesses can get access to the labor they need.”
Mr. Langevin echoed those concerns. He said the hotel has started its seasonal recruitment process much earlier this year, including hosting a local job fair in July, amid concerns that the Immigration Department was not well equipped to handle the additional volume of work permit applications.
He said he was already seeing delays in the process as the hotel staffs up for high season.
“As the hospitality industry is becoming more relevant in the local economy with the addition of new hotels and residences, it will most important to address the effectiveness of the work permit process to avoid slowing down our opportunities for growth,” he added.