Throughout September the Compass is taking a deep dive into the issues surrounding plans to raise the island’s $6-an-hour minimum wage. Delving into data primarily from the 2022 Labor Force Survey, conducted by the Economics and Statistics Office, we look at what the numbers tell us about low-wage salaries in Cayman.
One in 12 people earn minimum wage
A significant 7% of the Cayman Islands’ population, equivalent to 3,969 individuals, earn the minimum wage, according to ESO data. By comparison, the UK has only 5% of its population making the minimum wage.
The data from the ESO is not especially clear, however. It is derived from monthly income declarations with no mention of total hours worked, so potentially includes people who earn a higher rate but work less. For those that rely on that income to pay the bills, however, the problem is the same – they are earning less than they need to get by each month.
Where it gets complex is that those figures would also likely include students with weekend jobs or adults with second jobs that work fewer hours but are paid at a higher rate, so potentially the number could be on the high side as a quantifier of the amount of people living off extremely low salaries.
The Minimum Wage Advisory Committee was unable to provide more precise data, however, pointing to the ESO figure as the most accurate estimate.
The monthly salary is about $960 for the average worker in Cayman employed 40 hours per week at the minimum wage, around a third of the median salary of the entire population.
One-third of minimum wage workers Caymanian
Some might think that minimum wage only affects expatriates on the island. In fact, the demographic breakdown reveals that one in every three minimum-wage workers is Caymanian. However, the majority, a substantial 66%, are non-Caymanian residents, while 5% are permanent residents.
One in three workers earns less than $10
According to the Labour Force Survey for 2022, almost 30% of the working population earns $10 or less per hour.
The 2022 percentage of people making $10 or less is significantly higher than the figure from the Occupational Wage Survey, conducted in 2017.
While that may represent an increase in people earning lower incomes, it also reflects the different methodology of the two studies. The 2017 survey relied on data from employers while the 2022 survey relied on self-declaration from workers.
Either way, the two studies suggest a sizeable chunk of the working population – potentially as many as one-in-three employees – stands to benefit if the minimum wage is pushed beyond $10. Conversely, the bill for businesses will rise much more significantly if government goes past this threshold.
Cayman lags behind its peers
Comparing Cayman’s minimum wage to countries with comparable living costs, such as Bermuda, Switzerland, and Turks and Caicos reveals a significant wage gap. Cayman lags behind its peer jurisdictions by up to 74%.
Cost-of-living remains high
Despite having the lowest minimum wage compared with peer jurisdictions, Cayman has the second highest cost of living when adjusted for income, inflation and other factors.
The below analysis from the World Data website benchmarks the four ‘peer’ countries we selected against the cost-of-living index in the United States. The US would be set at 100 in this example, so all are more expensive, to varying degrees.
Inflation has knocked $2 off minimum wage
Inflation has additionally eroded the purchasing power of people earning minimum wage, which was established more than seven years ago.
Today, the $6 minimum wage is worth just over $4, when we consider how the spending power of the dollar has decreased in inverse proportion to rising prices.
This equates to a 27% decline in real value from 2016 to 2022.
This decline affects the standard of living for minimum-wage earners, who must contend with rising costs.
By some estimates, the minimum wage now covers only 35% of the cost of living for a single person.
Cost of living vs. minimum wage
According to analysis by the Compass based on local and international data, Cayman’s minimum wage falls significantly short of the estimated cost of living.
Numbeo, the world’s largest cost-of-living database, subject to regular updates, pitches the monthly costs for a single person at US$1,750 (CI$1,461) without rent. Cayman Resident approximates the average rent for a single person at CI$1,350.
If we use those two figures as an estimate of the monthly costs, a person would need to earn around CI$17 an hour – similar to Bermuda’s minimum wage – to meet Cayman’s living expenses.
In other words, the minimum wage would need to almost triple to match the current cost of living.
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