Bermuda could learn a thing or two from our fellow British Overseas Territory, the Cayman Islands. There are many similarities between the two of us, but it is clear that Cayman has been outperforming us economically since the global financial crisis rocked the offshore financial world.
Unlike Bermuda, Cayman has to clear it with the Foreign Office when it wants to borrow money. In 2009, the Caribbean offshore financial centre was in such a fiscal mess that Britain blocked further borrowing until Cayman’s government came up with a plan to address a mounting deficit.
With the UK’s gun to its head, it did so, and it involved tough decisions — such as the meaningful trimming of public-sector expenses — through measures that included pay cuts and the scaling-down of benefits, and tax increases. Cayman has been bearing the fruit of those efforts and is these days recording budget surpluses and paying off debt. In the budget delivered last May, the Cayman Government was able to project a surplus of KYD$121 million (about $148 million) while still managing to give civil servants a 4 per cent pay rise.
Also Cayman has brought its debt-servicing costs under ten cents of every dollar of revenue, compared with Bermuda’s significantly heavier burden of 18 cents on the dollar.
Like Bermuda, Cayman’s economy was battered by the shock waves from the financial crisis, and it plunged into recession back in 2009. Its gross domestic product shrank 6.3 per cent in inflation-adjusted terms that year and another 2.7 per cent in 2010. In 2011, Cayman returned to growth and has been growing, if at a modest pace, ever since. Bermuda only returned to real GDP growth last year after a six-year recession.
Economic expansion has been accompanied by employment growth in Cayman. Between 2010 and 2014, the number of jobs grew by 7.8 per cent, from 34,983 to 37,723. There were 700 more jobs held by Caymanians and 718 more held by non-Caymanians.
Bermuda’s fortunes could hardly have contrasted more sharply over the same period. The number of jobs on the island fell 12 per cent, from 38,097 in 2010 to 33,4675 in 2014. There were 2,442 fewer jobs filled by Bermudians, their non-Bermudian spouses and permanent residents, while 2,180 fewer jobs were filled by non-Bermudians.
So what is Cayman doing to get such markedly better results than Bermuda?
While a meaningful answer to this question would require much more research than this writer has time to conduct, there are a number of things evident from a glance at Cayman’s statistics that may be linked to the territory’s success.
The labour statistics have one notable similarity: rising employment in Cayman has featured jobs held by locals and foreigners going up in roughly equal numbers, while in Bermuda a very similar number of Bermudian and non-Bermudian jobs have gone amid falling employment. It supports the idea that the presence of foreign workers supports employment of local people, rather than taking jobs away from them.
Also Cayman has a younger population than Bermuda — and it is growing. Unlike Bermudians, Caymanians are being born at a much faster rate than they are dying, meaning that the local population is on the increase. In 2011, for example, there were 800 births in Cayman and 176 deaths. There were 58,238 residents of Cayman at the end of 2014, up dramatically from 40,800 in 2000. The increase over that period comprised nearly 12,000 more Caymanians and about 5,600 extra non-Caymanians.
Bermuda’s most recent census in 2010 found the island had 64,237 residents, up nearly 2,200 from ten years earlier.
Although the gap between the two territories’ populations is closing, Cayman has a significantly larger proportion of foreign-born residents — 42 per cent — than does Bermuda. That is nothing new. In fact, in 2000, the population was 47 per cent foreign-born.
There are, of course, significant differences between Cayman and Bermuda that may make immigration more achievable and necessary for our Caribbean cousin.
The Cayman Islands cover 102 square miles, giving them roughly five times the land area of Bermuda. The labour-intensive tourism sector is much larger than Bermuda’s. For example, Cayman had more than 1.7 million cruise ship visitors last year, compared with Bermuda’s 370,756.
However, there are enough similarities between the two territories to make comparisons worthwhile, particularly when our economic and employment fortunes have been so different.
Assimilation of foreigners into the community does not come without its challenges in any country and Cayman is no different. However, racial tension seems to play less of a part in its immigration debate, as noted by an editorial this month in the Cayman Compass.
“The rhetoric of race and racism, specifically the construct of ‘black versus white’, plays an outsize and overt role in Bermuda politics, compared to Cayman, where, thank goodness, such toxic formulations tend to be filtered, diluted and diffused among our society’s variegated shades of brown,” the newspaper opined.
Cayman’s experience shows how immigration policies can help a small-island community to climb out of an economic hole.
It’s food for thought as we in Bermuda face our own immigration conundrum of how to reconcile our strong protectionist instincts with the urgent need to address the stark reality of our demographic and economic situation.
As the chronicler of a marked change of fortune in a not-so-dissimilar place, another comment from theCayman Compass provides an apt final word: “For Cayman, Bermuda and other small, insular countries, immigration policy is economic policy.”