An exodus of unemployed expatriates during the coronavirus crisis has caused a dip in Cayman’s population.
The latest estimate from the Economics and Statistics Office put the number of people residing in Cayman at the end of June at 64,598, more than 5,000 fewer than the December 2019 estimate.
The reliability of those figures is often questioned and many observers, including Premier Alden McLaughlin, have publicly stated that Cayman’s pre-pandemic population was likely in excess of 70,000.
That is double what it was in 1998 and seven times greater than in 1970 when the rapid expansion of the islands began.
During the past two decades alone, Cayman has endured shocks ranging from the impacts of 9/11 to Hurricane Ivan and the global financial crisis of 2008.
On those occasions, temporary dips in growth were absorbed by sharp spikes in new arrivals as the island rebounded.
Over the last 50 years, Cayman’s economic wellbeing has been linked to population growth.
In some ways, it has been a ‘virtuous cycle’. Business success has led to imports of new expatriate workers, who became the customers that fuelled greater business expansion.
Yet, even before COVID-19, people were beginning to question how long that could continue.
Talk of a looming milestone of 100,000 residents within the next decade, while intoxicating for some, presents a frightening, dystopian vision to others.
The prospect of more traffic, competition for beach access, greater strain on creaking infrastructure and threats to the already-tenuous social cohesion between generational Caymanians and new arrivals were among a catalogue of objections to continued growth.
Flattening the curve
The pandemic, says academic and historian Roy Bodden, is an opportunity for Cayman to choose a different path.
The current crisis, he says, has coincided with a time when tensions over the negative consequences of rapid growth were starting to boil over.
Contentious debates over traffic, beach access and the cruise port development served as lightning rods for frustrations that stemmed from the same root cause – too many people in too little space.
During the COVID-19 crisis, the term ‘flattening the curve’ was used to explain strategies geared towards slowing the influx of new patients and preventing hospitals from being overwhelmed.
When it comes to Cayman’s population, Bodden argues, a little curve-flattening could be in order.
“What we have seen is a consequence of a lack of planning,” he told the Cayman Compass.
“We don’t have the infrastructure that could safely and comfortably support a six-figure population. We don’t have the school places, we don’t have the roads, we don’t have a central sewer system.”
In other words, Cayman’s natural and physical resources are becoming overwhelmed.
“How much can the land support?” Bodden wonders. “At some point, you run the risk of a deteriorating standard of living for everyone.”
New ways of thinking
Another legacy of the pandemic is the extent to which it has come to be viewed as a ‘pause’ for breath – a chance for the world to rethink the direction in which it was headed.
Bodden hopes that process will involve a different approach to economic growth in Cayman that is less dependent on immigration.
“We are at an inflection point,” he said, arguing that Cayman should harness technology and work-from-home trends to slow down or even reverse the upward curve of its population.
The former politician and University College of the Cayman Islands president has also proposed a ‘mansion tax’ on luxury properties to help wean government off its dependence on work-permit fees. He rejects the notion that economic and population growth are inevitably intertwined.
Cayman, he says, can have a strong economy with just 50,000 people if it focusses on developing its education and training system to ensure everyone is optimally employed.
“We have been measuring our success on a faulty report card,” he said.
There is an extent to which reality gets in the way of such idealism.
The old economic imperatives are no less true now than they were before the virus.
Supermarkets need customers, condos need owners, landlords need tenants, and government needs permit fees and taxes to pay its largely Caymanian workforce.
If anything, those forces have strengthened amid the ongoing impact of the pandemic.
In the absence of tourism, government has leaned on the construction sector to prop up employment.
Multiple residential and tourism projects, currently under development, need a growing population to ensure their success.
The ‘global citizens’ initiative is predicated entirely on the premise that bringing new residents and, therefore, new consumers to the island is good business.
It is hard to argue with the logic of such initiatives, says Steve McIntosh, of recruitment firm CML and a member of the Chamber of Commerce leadership team.
“I think the population and the economy will get back on its previous track of growth once the pandemic is over because Cayman still has much to offer,” he says.
“As long as we continue to be an attractive place to live, work and do business, we will continue to thrive as a nation.”
Even those who oppose a return to business as usual, believe it is likely inevitable.
Ezzard Miller, the independent legislator for North Side, advocates for a more managed approach to growth.
But he predicts, “The impact of this virus is going to slow down and all the people that left will come back double.”
The upside of growth
Economic growth, which in Cayman has been largely linked to population growth, is not simply an academic curiosity, says McIntosh; it is the driver of improvements in quality of life on the islands.
It leads to better job and career opportunities and more money for government to spend on healthcare, social services and infrastructure.
“It is no coincidence that three things have grown rapidly in the last five years – our population, our economy and our government revenue,” he said. “Those things are inextricably linked.”
McIntosh believes Cayman has a long way to go before it hits any “natural limit”.
“While many fret about Cayman becoming like Hong Kong, our population density is in fact only one-fifth of Bermuda’s and around one-third of the Channel Islands,” he said.
Infrastructure can be a problem, he acknowledges, but he believes the current government has done a good job of ‘catching up’, and that forward planning and healthy government finances can ensure that continues.
“It also needs a little out-of-the-box thinking on things like public transport, green spaces and zoning, which we are starting to see,” he adds.
The flip side
Miller sees things differently.
Born in 1952, when the island had a population of a little over 7,000, he has had a first-hand seat for Cayman’s exponential growth.
“If I live to be as old as my father, the population will have doubled five times within my lifetime,” he said.
Much of Cayman’s recent growth has been driven by immigration.
In 1980, Caymanians made up 77% of the population; by 2019 it was more or less a 50-50 split between locals and expatriates.
Miller sees social tensions increasing as that dynamic continues.
“Caymanians feel marginalised,” he said.
He disputes the suggestion that quality of life has improved over the past decades, highlighting traffic problems, access to natural attractions and a rising gap between rich and poor, among a list of concerns.
“My generation is the last generation of Caymanians for whom the ambition in life was to own property,” he said. “That is becoming beyond the average Caymanian.”
Impacts on infrastructure
The most obvious impact of population growth is on infrastructure.
The economic gain of new consumers has to be offset against the cost to the country in terms of new roads, new schools and new power capacity among other impacts, says Miller.
“What COVID-19 has brought is a reminder that we need to have more planned and managed development of this country,” he says. “We are 10 years behind on infrastructure development. There is no development plan, no economic plan, no social plan.”
He bemoans the fact that successive governments have offered developers concessions from taxes to incentivise construction.
“New development puts pressure on education, pressure on healthcare, pressure on roads,” he says. “The infrastructure fees were designed to pay for that but they are the first thing that gets waived.
“Nobody pays for the development they inspire.”
For Roy Bodden, those who advocate for population growth as an economic strategy need ask only one question: Where does it stop?
“We can’t keep growing like this or we will sink,” he says. “Somebody has to tell you a finite number. How many people can the country support?”
Right now, traffic is the most obvious example of infrastructure lagging behind population growth.
But a list of major projects required to support the current population size also includes new school space, a new court house and prison, a new airport, new telecommunications infrastructure, a new waste-to-energy plant, recycling and landfill infrastructure, an upgraded sewer system, and increased energy production – either through solar farms or traditional diesel generation.
The catch-22 for Cayman is that funding those upgrades requires a robust expat population.
The government forecast that it would pull in more than $86 million alone from work-permit and permanent-residency fees in 2020.
Expatriate workers also contribute proportionately to other areas of government revenue, including through company-partnership fees, import duties and stamp duty on land transfers.
Still, population growth alone cannot be an economic strategy, argues economist Paul Byles.
“The idea that we need a certain number of people in the resident population to make the economy sustainable has some flaws, in my opinion,” he says.
“More residents also means higher traffic congestion, increased demand for public services and other infrastructure. There is a cost to meeting those needs and the only sustainable way to grow the population is when an influx of persons also adds to the value generated throughout the economy.”
The middle ground may lie in flattening the curve of population growth rather than reversing it.
Similar to a tourism strategy of moving away from budget cruise tourism to pursue a smaller number of higher-spending guests, the concept of attracting higher-net-worth residents has been floated.
The ‘global citizen’ initiative is designed to attract people of independent means who won’t compete in the local job market but will spend their dollars on island.
Similarly, Cayman Enterprise City and the newer Tech Cayman aim to attract wealthier residents who earn their money beyond the borders of the territory.
“A strategy to create more knowledge jobs in Cayman would add significantly more to economic growth than the equivalent headcount in tourism,” McIntosh states.
“That’s not to say we should eschew tourism jobs, but we should certainly do more to attract knowledge jobs that contribute more to economic growth with less burden on infrastructure.”
For Byles, population growth, if it is desirable at all, should be a consequence of economic success rather than a catalyst for growth.
He highlights the development of the tech sector and green economy, as well as protecting the twin pillars of financial services and tourism, as the most likely drivers of future economic success for the Cayman Islands.
He points to better management of human capital and investment in education and training as a means to grow the economy without an over-reliance on imported talent.
While some population growth could be a consequence of success in these areas, Byles believes it does have to be balanced with protection of resources.
“External forces drive our resident population growth and we need to better manage this increase to ensure sustainability in terms of traffic, environment, healthcare and social harmony, among other things,” he says.
“There is no magic balance to achieving this. It is an ongoing process where we need to plan, mitigate negative impacts and alter our strategies when it is clear we have got it wrong.”