Work permits have no negative impact on Caymanian employment

The expat experience is a common one in Cayman. The government Economics and Statistics Office, in a list of fun facts about the Cayman economy, declares there are people from 135 countries living in Cayman.  

In fact, looking at the past 15 years of available employment data, the number of work permit holders has always been higher than the number of Caymanians in the workforce.  

Unemployment for Caymanians jumped in 2009, following global recession trends, but it has never recovered. Based on available data from government, Caymanian unemployment hit 9.5 percent in 2009 and has remained at more than 9 percent since then. A common refrain has been to blame the number of work permits as a way of explaining why Caymanian unemployment has remained so high.  

The number of work permits in Cayman has no impact on Caymanian unemployment rates, according to an analysis of data from the Economic and Statistics Office and the Immigration Department. 

Looking at the number of work permits and unemployed Caymanians over the past 15 years shows that the Caymanian unemployment rate is actually lower when there are more people in the country on work permits. Conversely, when work permit numbers drop, Caymanian unemployment increases, according to the data. 

 

Politics  

North Side MLA Ezzard Miller recently argued during an appearance on Cayman 27 for a cap on work permits. He said, “What we need is for Caymanians to get some of the jobs that are available. The only way that will happen is if government tightens up on work permit process.” But that doesn’t line up with the data about unemployment and the experience of recruiters and human resource managers in Cayman. 

Premier Alden McLaughlin made that point in his State of the Nation address in February: “All data indicate that unemployment is falling and is projected to continue to fall over the next few years as projects come onstream and as we get more and more people into jobs. 

“An increase in work permits is a clear indication that the economy is rebounding; that employers are hiring.” 

He continued: “There is a view in some quarters, however, that every time you grant a work permit, it means a Caymanian did not get that job. But this is not necessarily the case. In many cases the grant of a work permit for a managerial or professional position means a business is growing and actually creates additional jobs for administrative, secretarial or support staff.” 

Politics aside, the data show that Mr. McLaughlin’s argument is much closer to the reality on the ground. 

Caymanian unemployment 

The labor force in Cayman, meaning the number of people working or looking for work, has stayed stable in recent years, with an average of about 38,000 workers since 2007, according to ESO data through 2013. The number of Caymanians in the workforce, however, has not been as stable.  

In 2007 there were about 17,500 Caymanians in the workforce. That number remained stable until 2012, when it rose by 1,000, and again in 2013, when it hit an all-time high of more than 19,300. 

The number of work permits was more than 26,000 in 2007 and 2008, Caymanian unemployment hovered around 6 percent. Work permit numbers began to drop in 2009, and unemployment increased significantly to more than 9 percent. In 2012, Caymanian unemployment hit a high of 10.5 percent, according to the ESO. The following year, work permit numbers hit the lowest point in a decade, with about 19,300 issued in 2013. 

Unemployment data for 2014 has yet to be released, but work permits are climbing again and reached more than 21,000 last year, according to the Immigration Department.  

In recent years, the biggest sectors employing Caymanians are financial services, public administration and the wholesale and retail industries. These sectors accounted for more than a third of employment for Caymanians in 2013, the most recent year with available data. At that time, each of these sectors employed more than 2,000 Caymanians. 

Stefan Cohen, with the recruiting firm Baraud, said the labor market has “changed quite a bit over the years.”  

He said employers used to go to recruiting firms to fill such positions as administrative and support staff. Now, he said, “There are people available on the market for those low-level roles.”  

If a company can’t find someone locally by advertising in the newspaper or through other listings, they will open the position to someone who would need a work permit. But “If possible, they want to avoid the cost and headache..,” Cohen said. The fees and time spent with immigration paperwork can add up. Most of the time, in Mr. Cohen’s experience, those jobs are easily filled locally. 

For professional positions such as accountants and lawyers, Mr. Cohen said, employers “predominately ask first for Caymanian candidates.” 

If there is a qualified Caymanian accountant, “we know we will place that candidate,” he said. 

Recently, Cohen said, three Caymanian lawyers came to his firm looking for jobs and he quickly placed them all with a local law firm. There is high demand, he said, for Caymanian lawyers, legal secretaries and accountants. Caymanians with human resources experience will have the pick of the jobs, he said. 

However, just because employers are looking for Caymanians with accounting or HR skills doesn’t mean there are enough candidates to fill all those spots, said Steve McIntosh with CML Offshore Recruitment. “Accounting isn’t for everyone,” he said. “You might get to drive a fancy car, but is that what you really want to do?”  

He said his clients struggle to meet their quotas of Caymanian employees because there are only so many accountants among a small population.  

It’s the economy…  

McIntosh said he has seen the labor market change significantly over the 14 years he has been on island. “It’s gone from booming growth to recession conditions in the last five years,” he said. 

He said there are two types of companies he deals with in Cayman: the ones that have to be here, such as law firms and accountants, and companies that don’t have to be here, like fund administrators. 

Several fund administrators, as an example, have moved to Canada, Mr. McIntosh said, noting that fund administration required a lot of lower level jobs. The funds, such as CITCO, which moved most of its staff to Toronto, said they were moving to cut costs. But Mr. McIntosh said the cost of living is still expensive in Toronto, and in Canada the company would have to pay some serious taxes. The problem, he said, is the “cost and inconvenience of applying for work permits.” Combine that with new communications technology and the ease of doing business online around the globe, and the fund administrators realize they don’t have to keep their operations in Cayman.  

Baraud’s Cohen said the economic problems go beyond companies moving overseas. “People are not hiring aggressively” as they were before the recession, he said. Many of the positions his firm recruits for have been replacement hires, which affects even the most desirable Caymanians candidates, he said. 

Work permits change with the market  

The expat community has changed significantly over the years. The Cayman Compass examined data going back 15 years to examine how industries and the labor demand have changed. The raw number of work permits, as documented by the Immigration Department, has gone from just under 14,000 in 2001, when expats made up half of the labor force, to more than 26,000 five years later, when people with work permits made up 70 percent of the workforce. 

That spike in work permits was first fueled by an almost 250 percent jump in construction-related permits following Hurricane Ivan in 2004. The labor force in Cayman added more than 6,000 people between 2004 and 2005.  

Industries that employ significantly more work permit holders than Caymanians include construction, hotels and restaurants, administrative and support services and household employers, who hire nannies and housekeepers.  

Expats in the construction industry increased to more than 6,000 for the first time in 2004. The industry stayed above that mark through 2008 before leveling out in the 4,000 range for work permits since then. Over the past five years, expats made up almost two-thirds of the workers in the construction industry. 

The tourism industry, led by hotels, restaurants and bars, began to climb in 2005. Almost 3,500 people worked for hotels and restaurants in 2013, and about 20 percent were Caymanian. The trend of expats making up the vast number of restaurant and hotel employees has held for years, with low-wage cooking, cleaning and server jobs going to work permit holders.  

The single biggest expat employer in recent years has been in household employment. Historically, 85 percent to 90 percent of the jobs in the household industry have gone to non-Caymanians. 

 

Changing face of expats  

The most common countries for Cayman immigration are, in order, Jamaica, the Philippines, the United Kingdom, the United States, Canada, India and Honduras, according to historical data from the Department of Immigration. The top seven countries represent about 80 percent of the expats here. 

Since the recession in 2008, the overall number of work permits has dropped from its 2008 high of about 26,500 to less than 20,000 in 2013. Recent data from the Immigration Department shows work permit numbers grew 8 percent last year to about 21,400. 

Cohen, who also helps employers with immigration issues, said work permits have been harder to get in recent years as requirements get tighter.  

Far fewer Jamaican nationals are in Cayman on work permits than before the recession. In 2008, Jamaicans held about 11,500 work permits. Last year, that number was about 8,500. 

There has also been a marked drop in Honduran citizens on work permits. In 2008 there were more than 1,100. In 2014 there were about 780 Hondurans on work permits. 

Still, the pace of hiring Caymanians lags. 

“When I first came [seven years ago],” Cohen said, “Caymanians could move quite freely through the market, but not so much anymore. It’s a challenging market. It hasn’t really picked up from the recession.” 

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People lining up outside the Immigration Department.

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