Data analysis: Cayman’s population could hit 100,000 by 2031

An exodus of unemployed expatriates during the coronavirus crisis has caused a dip in Cayman’s population.

History suggests this is likely to be a downward blip on a graph that remains on a relentlessly upward trajectory.

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.

Conflicts over beach access have grown as Cayman has expanded.

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.”

Morning and evening rush-hours are continuing to frustrate commuters in Cayman. – Photo: Taneos Ramsay

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.

Roy Bodden

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.

The Cayman government was projected to pull in $86 million in work permit and permanent residency fees in 2020 – enough to fund a quarter of its annual pay roll.

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.

Economic realities

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.

FIN development is one of the major projects under construction. The industry is fuelling the economy and relies on population growth. Photo: Alvaro Serey

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.

Government has expanded the road network over the past decade.

“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.

Ezzard Miller

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.”

Overcrowding of Cayman’s beaches was cited as an issue pre-COVID.

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?”

Catch-22

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 landfill site is just one major infrastructure project yet to be resolved.

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.

Paul Byles

“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.”

Middle ground

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.”


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4 COMMENTS

  1. “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.”

    Wonderful way to kill the goose that lays the golden egg.

    To increase local prosperity we don’t need thousands more people clogging our roads. As any commuter from Savannah to George Town would agree.
    We need retired people and “global citizens” living here who spend money locally without taking a local job.

    Every person who moves here as a Permanent Resident Without the Right of Employment pays the government a fee of $100,000 KYD. Plus they have to spend over $600,00 on a home, a further $60,000 in stamp duty also on a car.

    • I understand that the numbers I gave above were incorrect and have changed.

      A Permanent Resident without the Right to Work is indeed a fee of $100,000 KYD. But they must also buy a home value $2 million as well. Thus a further $200,000 in stamp duty. Not to mention the import duty on probably two nice cars.

      Of course these people aren’t adding to the rush hour traffic or taking a local job.

      The prime concerns for retired people are stability, safety and access to first class medical care.

  2. The population growth has already flattened. The population growth from 1979 (around 17,000) to 1989 (25,000) was almost 4%. The population growth from 1989 (around 25,000) to 1999 (39,000) was almost 4%. The population growth decreased to 3% from 1999 (39,000) to 2010 (55,000). If we have 65,000 people living here now, then population growth has decreased again to less than 2% (from 55,000 to 65,000) and it is likely to decrease more by the end of the year with more people living. If one follows this trend we might have only a 1% growth in the next decade. We will need a 4% growth rate to get to 100,000 by 2031 and at this point, this seems highly unlikely.

  3. When you look at New Providence or Puerto Rico, Grand Cayman is in a good position to comfortably support several hundred thousand people — and we should strive for that over a longer period across the 3 islands to fuel relevance and dynamism and purpose in our economy and for our Country on the world stage. If the economy is too small it causes good people to leave and seek a life elsewhere in a negative spiral for our children. If it grows too fast, nature and our quality of life suffers. Having observed the growth here against other regions we travel to for the past 20 years, I feel like Cayman has gotten better. It doesn’t feel at all overpopulated and we have a lot of good people here in business and Government who understand that measured growth is good for the Country as a whole. Cayman is a much more vibrant, livable Country than when I arrived in 2001/2. To continue that we should make it easier to welcome newcomers in an orderly fashion and we should favor investors and young entrepreneurs/business people to immigrate and help us grow. Key to our successful future are orderly Port facilities and a streamlined customs process for clearing goods at an increased scale, an Airport expansion including perhaps a second airfield; and Replacement submarine telecommunications infrastructure to create a vibrant future. The best time to start these projects was 10 years ago. The second best time is today. I’m bullish on this place and feel the future favors us.