Premier Alden McLaughlin has said Cayman is not considering following the moves of Bermudian legislators who are set to take a 12.5% salary cut and slash civil servants’ pay by 10% to help address the economic fallout of the COVID-19 pandemic.

Bermuda is the first British Overseas Territory to look at taking pay cuts due to the economic hardship caused by the coronavirus crisis.

In response to queries on the issue, McLaughlin told the Cayman Compass that such a move is not needed in Cayman.

“It’s not necessary at this point, given government’s reserves,” McLaughlin said.

According to government’s first-quarter fiscal results, released last week, the entire public sector, including core government, statutory authorities and government companies, recorded a $177.3 million surplus in the first three months of this year. This figure is $25.3 million higher than anticipated by the 2020 budget.

Bermuda, however, is not in the same economic position as Cayman.

According to reports from the Royal Gazette newspaper, Bermuda Premier David Burt announced the proposed cuts last week as a one-time emergency item which represented “significant savings” that would assist the country in its effort to meet budget deficit targets.

When the COVID-19 crisis began, Bermuda implemented emergency measures to help thousands of unemployed individuals and local businesses severely impacted by the closure of the borders.

Bermuda Minister of Finance Curtis Dickinson reported last week that more than 9,000 individuals received benefits from the government at a cost of US$23 million. The country is now facing an economic challenge to steady its finances as the pandemic stretches on.

The country also made legislative changes, similar to Cayman, allowing workers to access their pension funds to be able to sustain themselves.

However, the proposed civil service cuts in Bermuda are not sitting well with impacted workers nor their representative unions/associations.

The Cayman context

McLaughlin, in explaining why salary cuts for civil servants are not needed nor will they be successful in Cayman, said, “that was done in 2009/2010 during the Great Recession with disastrous consequences”.

Back then, a 2% cut was proposed for civil servants making more than $3,000 a month by then Leader of Government Business McKeeva Bush to save government finances at a time when the economy, as was the case for many countries, was facing challenges.

But now, McLaughlin said, Cayman’s finances are in an enviable position even as its tourism industry has collapsed due to the border closures.

“And in any event, making the public service poorer is unlikely to improve the morale of the service or the economy of these Islands,” the premier told the Compass.

McLaughlin dismissed critics who may challenge his position when it comes to taking pay cuts. “I’ve already explained my rationale.  If I operated on the basis of criticism, I’d never do anything,” he said.

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