With double-digit unemployment in parts of the US and Europe, Cayman, despite the total shut down of its tourism industry, has come through the plague year of 2020 in comparatively good shape. Though there have been significant job losses, the majority of those have impacted the expat population. Economists, industry leaders and politicians are looking to 2021 with a sense of cautious optimism.
When waiter James Elchico boarded an emergency evacuation flight from Cayman to Manila in May, it was with a sense of relief.
He had lost his job weeks earlier as restaurants closed and the country locked down to prevent the spread of COVID-19.
With little savings and minimal financial support on offer, he realised he could not survive in Cayman for long. Nine months later, he is back at home in the Philippines.
The pandemic means that work opportunities are scarce. He has been jobless for almost a year and is trading stocks from home in an effort to make ends meet.
Still, he says, he is glad he decided to return home.
“I didn’t expect that COVID would be this long, “ he said. “This pandemic made me realise what is important and what is not because for the last six years I have been continually working.
“I have no regrets of leaving Cayman because I got the chance to spend some time with my grandmother before she passed away.”
Like Elchico, many of Cayman’s large expatriate workforce returned to countries where the health and economic situations were far worse than in Cayman.
Jobs have been hard to come by and the global conditions that caused them to emigrate in the first place have only been exacerbated by the impacts of the virus.
As the world starts to return to normal in 2021 many of them will look to return.
“Do I want to come back to Cayman? Absolutely,” said Elchico.
“I miss my workplace and my colleagues plus the beautiful beach and sunsets, but of course it will all depend on the government of Cayman. I will completely understand if they prioritised Caymanians. The government really need to prioritise their people but if ever they will need a hand I’ll always be the first one to volunteer.”
Cayman has effectively outsourced some of the unemployment impacts of the coronavirus with thousands of foreign workers departing the islands since the onset of the pandemic.
The number of people on work permits dipped below 25,000 in September, the lowest number since 2016, and almost 6,000 fewer than it was before the virus hit.
Those figures have rebounded slightly on the back of a post-lockdown construction boom and the continued strength of the financial services industry.
However, the data does demonstrate that efforts to insulate Caymanians from the worst employment impacts of COVID-19 have been somewhat successful.
There are almost 3,000 Caymanians currently collecting a $1,000-a-month stipend created for tourism sector workers who lost jobs because of the border closure.
Among them, a subset of small business owners and self-employed tour operators, have been most drastically impacted.
Yet, statistics from the Workforce Opportunities and Residency Cayman department show that there are currently only 965 unemployed people on island, registered as actively seeking work.
Economist Paul Byles said the post-pandemic picture is of a society that is divided between those who have been severely hurt by the virus and the resulting tourism shut down and a greater majority who have not yet been impacted at all.
While sending foreign workers home may have seemed a “crude approach” at the outset, given the length of the crisis, Byles said it had proved to be an effective strategy that had spared Cayman the expense other governments would incur due to job losses on that scale.
Tremors still being felt
Though the roll-out of a vaccine has brought hope that visitors could begin to return from March, Byles cautioned that the situation in the tourism sector could still get worse before it gets better.
With COVID-19 still raging in the US and Europe and an escalating series of lockdowns impacting incomes of Cayman’s target market, he said it could be some time before air arrivals return to post-pandemic levels.
For cruise tourism it could be even longer. Premier Alden McLaughlin all but ruled out the return of cruise ships to Cayman this year and Byles believes it will be 2024 before that sector of tourism fully recovers.
The net effect of that could be more business closures in the early part of this year.
“There are a lot of companies that have been hanging in there,” he said.
“Now they start to realise it is not going to be two months, it is going to be another six months or maybe even another 12 months. The question is, how long can they hold on?”
In April of last year, as the virus began to spread, the borders closed and the country shut down, Byles was commissioned by the Chamber of Commerce to assess the likely economic implications.
His report predicted some 10,000 job losses before the end of 2020, if the lockdown lasted for two months.
The actual numbers have been remarkably close to that forecast. Based on end-of-year work permit statistics and the number of people collecting the tourism stipend, we can estimate that at least 8,000 jobs have gone.
There may also have been some additional employment impacts in sectors not covered by the tourism stipend or among people not included in those two categories, for example permanent resident certificate holders.
Economy heating up in other areas
The flip side of that impact is that other areas of the economy are actually performing better than ever.
“We have seen zero negative impact in financial services. Real estate is doing very well, the civil service, healthcare, construction and education have kept the economy going,” Byles said.
The pension pay out, meanwhile, has helped keep people spending money in the economy to support retail and other areas, he said.
“It is an interesting scenario because you have a situation where despite job losses, some people might argue that the economy is heating up.”
Nick Joseph, a lawyer with HSM specialising in immigration, believes that is definitely the case.
The statistics show an additional 800 people on work permits now compared with September as the country came out of lockdown.
He sees that as a good thing and something that can largely be attributed to foreign workers already on island, shifting to different sectors as the economy adjusted to the border closure.
Limitations on air lift and the time and expense of the quarantine process make bringing in new labour cost-prohibitive and Joseph believes expat workers with transferable skills may have found new roles in construction and development.
In higher-paying sectors, such as financial services, he said there was still a relatively steady inflow of professionals.
He believes the trickle of new permits since the summer should not be seen as a threat to Cayman employment but as a sign that the shoots of recovery are already beginning, to the benefit of everyone on the islands.
“Sectors of the economy are indeed expanding, even with the borders closed. This bodes well for Cayman’s resilience in the many difficult months ahead.”
Stipend may be needed through end of 2021
While there may be valid social and political reasons for restricting work permits – for example to check the impact of a growing population and increased development on the environment – from an economic perspective it is broadly viewed as a good thing.
More people, more businesses, more overall jobs growth, translates to a greater number of workforce opportunities for Caymanians.
Steve McIntosh, of CML Recruitment, said the vast majority of the 5,000 permit holders that had left the island would have been involved in the tourism sector or dependent on it.
He believes the numbers will likely bounce back to pre-pandemic levels once hotels begin to reopen.
Though fewer Caymanian jobs have been impacted (compared with non-Caymanians) he cautions that more of these jobs were associated with cruise tourism and will likely take longer to return.
“You might think that Caymanians could simply take up the hotel jobs but it just doesn’t work that way.
“Being an essentially self-employed taxi or tour-bus driver is very different in nearly every respect to serving food or cleaning rooms in a hotel.
“I’m sure the hotels will do their best to hire locally but a large proportion of work permits and ongoing unemployment among Caymanians is inevitable.”
Against that backdrop, he said it would make sense to continue the stipend for those impacted, potentially for as long as another 12 months.
“In my mind that is the right thing to do. Forcing people to take jobs they don’t want and may be ill-suited to won’t work and will cause enormous frustration among both workers and employers.”
Growth in other sectors can help fund that relief until cruise tourism returns, he said.
“The last two decades have proven that the best, and arguably the only, way to minimise Caymanian unemployment is to maximise economic growth, which has the added benefit of increasing government revenue and thus offsetting the cost of supporting displaced tourism workers.”
Tourism industry hopes for
Marc Langevin, president of the Cayman Islands Tourism Association and the general manager of The Ritz-Carlton resort, said the industry would do everything in its power to train and recruit Caymanians. But he said tourism would always need work permits both to supply the volume of staff and the expertise needed in major hotels.
He said the recovery of tourism was unlikely to be immediate. He believes hotels are unlikely to see much more than 40% occupancy through much of 2021.
The Ritz-Carlton will close for renovation between August and November, and the balance of the year, Langevin expects to be able to cover with his current core staff and whatever new recruits can be trained and hired locally. Come December, however, he believes that situation will change dramatically.
He said the resort was already 70% booked for next Christmas and the hotel would have to ramp up its staff levels quickly, potentially adding another 500 employees.
“It is going to be ‘ready, set, go’. We hope and believe that we will reopen to a full hotel at a time when the level of expectation is going to be huge.”
He said hoteliers had been actively involved in training programmes for front-of-house staff, engineering staff and other areas and there may be a reduced number of permits required because of that. But kitchen and pool staff, and expert chefs and kitchen workers, are hard to find on island.
“If 5,000 people have left, maybe we can reduce some of that, but we still might need to bring in 4,000,” he said.
“Our serious concern is the ability of the government to handle the exponential ramp-up needed for the new season…
“While we will make every effort to recruit and train locally, it is evident that the pool of local employees will not be enough to supply such volume, especially as some of the displaced tourism employees will return to their original career choices once stayover tourism resumes.”
Finance Minister Roy McTaggart, the man likely to lead the Progressives into the next election, said the number of work-permit holders on island was largely driven by market forces. He expects to see those numbers begin to move towards pre-COVID levels this year.
“Our policy is that as the tourism economy opens up as well that Caymanians must be given the opportunity to return to work first so they have got to have the first chances to get themselves employed and we are determined to see that policy implemented. It is only then and after then that you are going to see expat and foreign workers return to Cayman in any significant numbers.”