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Community Voice: Response to Finance Minister’s Statement

Front Pages 05 Jun, 2020 5 Comments Follow News

J. A. (Roy) Bodden

Roy Bodden

Introduction:

Having read in the Caymanian Times Newspaper of Monday, June 1, 2020, “Turbulent Times Ahead But Cayman Keeps Hope Alive”. The detailed economic challenges facing the Cayman Islands as presented by Minister of Finance, Roy McTaggart, gave me a sense of urgency and trepidation. I am at a loss to see how such a dire report can lead to any hope or optimism. The third paragraph is graphic in its pessimism:

Unemployment is proposed to rise between 11% to as high as 20%, putting up to 10,000 people out of work, about a third of them Caymanians.

The economy is forecast to contract by up to 12%”.

This is not good news coming from a society which pre-COVID 19 was touted as an economic success – “a model built on world beating standards”. To those who were so naïve as to not realize that we were “measuring our progress on a faulty report card” this must come as a huge surprise. We have reached a tipping point and my perennial and still unanswered question “for whom are we developing” is as relevant now as when it was first posed in September 1978.

 

Economic Empowerment of Caymanians:

In this response to the Minister’s article, I propose to take stock of the major issues in the Caymanian political economy as seen through local participation, benefit and agency, the three pre-requisites for the fair distribution of growth. What the Minister of Finance article is saying, is that economic inequality which is already a problem in Caymanian society, will be further exacerbated by the economic downturn.

Economists and social scientists are concerned with inequality in three ways. The first question asked by these pundits is: What determines inequality among individuals within a single nation? Are there certain regularities which make inequality behave in a particular way as societies develop? Does inequality increase as the economy expands? Writing in 1835, the French social scientist and politician Alexis de Tocqueville made this observation:

“If one looks closely at what has happened to the world since the beginning of society, it is easy to see that equality is prevalent only at the historical poles of civilization. Savages are equal because they are equally weak and ignorant. Very civilized men can all become equal because they all have at their disposal similar means of attaining comfort and happiness. Between the two extremes is found in equality of condition, wealth, knowledge – the power of the few, the poverty, ignorance and weakness of all the rest” (Memoir on Pauperism 1835).

Two special themes give centrality to inequality in the Caymanian context: labour competition from outside sources and the volatility of shocks and crises in areas like tourism and international finance.

In a rather oblique reference to the above two factors, the Minister of Finance paints a rather unflattering picture:

“Mr. McTaggart summarized that “as a result of the projected decline, the Caymanian unemployment rate is projected to jump to 19.7% (or 2,981 persons) and a total of 9,582 jobs or (12.3%) would be displaced”.

As with his previous statement, this last reference should also shock us into the realization that the Cayman Islands are indeed in for “a new normal”. As a matter of fact, I would go so far as to say, that the society is engulfed in a whirling vortex over which it has no control. That this is so, has its basis in what is termed here “the commodification of labour”. Labour is the one product that rank and file Caymanians had – but due to competition from economic migrants from countries such Jamaica, India, the Philippines, the Latin American countries, the United Kingdom and literally the rest of the world. The Caymanian worker is literally engaged in a ‘dog eat dog” world of stiff and unrelenting competition.

In recent decades, there has been ‘a seismic shift’ in the structure of the Caymanian economy with construction taking its place alongside tourism and international finance as “the third pillar of the Caymanian economy”. With tourism and banking already monopolized by work permit holders and with Caymanians unable to compete with cheap immigrant labourers, it is doubtful as to the benefits which accrue to Caymanians in construction. In spite of their pristine asseverations about giving preference to Caymanian labour, the stories circulated in the media and on radio talk shows speak of a systemic discrimination of Caymanians in all areas of employment. And when one considers that the “sale” of work permits is more obviously beneficial to the government coffers than the actual employment of the locals – then one is forced to give some credence to the tales of discrimination and put down of locals.

By the Minister’s own recognition, unemployment rates will skyrocket. The current pandemic raises the question of how much more critical the situation will become. In a society in which the lines between the “haves and have nots” are becoming more obvious by the month, one wonders what will happen now that we have reached the tipping point. The number of displaced foreign cheap labours who have had to be repatriated to their original jurisdictions, should serve to inform us that we have entered in to an untenable and unsustainable situation.

Absent a robust government response, desperate Caymanian workers abound and in the coming months, companies already leveraging the crisis to hold on to cheap labour, may well find that it is a buyer’s market, further pressuring the labour force into Caymanian redundancies.

And as if this were not alarming enough, the proposals contained under the rubric “Hope on the Horizon” is a but little more than “a pipe dream’ with the exception of the first proposal. Four emerging trends are of particular concern in promoting a new economic empowerment at this time:

(i) The hospitality industry (both cruise and stay over tourism) has taken a hit at this time as a result of COVID-19 and is dead.

(ii) There is emerging a growing market for more locally produced crops and beef

(iii) Vulnerability of the traditional imports and supplies which are subject to volatility in international trends

(iv) Vulnerability to climate change and geo-political factors which may determine export policy and the availability of certain products in the Caymanian market.

 

Credit on Standby:

The Minister of Finance has intimated that there is available in the short term “a CI$500 million standby line of credit which the government would be able to draw down if needed”. I caution against exercising this option without due care and attention. What the Minister has not calculated is the overall weakened position this draw down would place on the jurisdiction. This is especially so when one adds to this the outstanding service note the jurisdiction is already carrying, including that on the Boeing 737 Maxi aircraft which, even were there tourists to ferry – is unable to do so.

There is an urgent need to come to grips with the current debt situation as well as to set in place infrastructure to economically empower the Caymanian middle and lower classes, especially single mothers. This I posit cannot be done by reliance (as proposed) on a construction industry whose umbilical cord is too closely tied to international finance and capital over which there is little to no local control.

 

What Can Be Done:

The political directorate although fast becoming ‘lame duck’ should use this crisis as an inflection point on which to generate some semblance of an internally driven economy. Such a future, it is posited here lies with empowering the working class through micro-finance industry and cottage capitalism. There are a number of international sources which can be tapped into for funding, technical support and advice. Two which immediately come to mind are the Grameen Bank and Accion International.

 

Additionally, government can provide

(i) access to arable land and capital for development with the proviso that recipients subscribe to an agreed business plan

(ii) government should build infrastructure to address the low levels of literacy, education and skill among the working class and to improve public education generally

(iii) Develop special programmes in female empowerment, especially for female headed households

(iv) Create a proper Development Bank where loans are made on the basis of proper and convincing business plans and on the merits of the applications, rather than to sycophants of the political establishment

(v) Implement a proper support system for borrowers similar that established by the Grameen Bank which has a 98% loan repayment record.

Challenging times call for creative leadership and one thing appears certain as a result of this current pandemic – we are entering a “new normal” and nothing will be the same as it was before the pandemic. If the Cayman Islands are to come out of this crisis with some hope of a stable society then there must be a paradigm shift – a shift which brings hope to those who drive the economy by enabling the wheels of industry and entrepreneurship to continue turning – and a shift which gives encouragement and upliftment to the working class by allowing them a stake in the post COVID-19 economy.

 

The Commodification of Labour and its Consequences:

The Finance Minister has been rather delicate in his expression of the crises facing Caymanian society but anyone reading the opening section of his article should be jolted into the stark reality that is our future. In an earlier section reference was made to “the commodification of labour”, According to Arjun Appadurai, an anthropologist specializing in globalization a commodity is “anything intended for exchange” or, “any object of economic value”. Taken at its face value, then commodification is the transformation of goods, services, ideas and people into objects of trade, including labour. The celebrated Barbadian author, George Lamming has informed us that “it is labour in all its facets which has been the most democratizing force in West Indian societies”. Lamming, was of course referring to the many trade unions, political parties and political leaders born of labour agitation after the Second World War.

I realized the importance of labour in a developing Caymanian society. That is why I took such great pains in formulating a modern and comprehensive Labour Law in 2004. This law was remarkable in its prescience, fair to the employer and employee and made great provision for the protection of workers both Caymanian and expatriate. So modern and comprehensive was this legislation, that the then Complaints Commissioner, Nicola William, prior to her departure in a statement recorded on the front page of the Compass remarked that “it was a pity that the Law was not allowed to come into effect”.

What the Minister of Finance gingerly expressed in his opening section fails to inform his readers that the shrinkage in the economy is going to bring unrest between Caymanians and expatriates (work permit holders) in the labour force. In a sense, stiff competition already exists but the situation brought on by the worldwide pandemic will so aggravate the situation that civil unrest will be the norm by 2022.

A society accustomed to such a high standard among certain sectors cannot easily take depreciation where there are already complaints about inequality, discrimination and unfair hiring practices. The wound is bound to burst into an open sore. The Minister of Finance for obvious reasons stops short of admitting that there will be restiveness. He writes in the cagey language of the establishment, but I write in the sobering tones of a cultural historian, seasoned in the campaign for fairness and equality in Caymanian society as one who calls “a spade, a spade”.

History teaches us with an unmistakable emphasis that the authorities, especially our colonial overlords are also aware of the possibility of disruption and upheaval. Could it be that the drive by Governor, Martyn Roper to establish a Cayman Regiment under the pretext of assistance in time of hurricanes be an anticipation of events as I have suggested? And so, my readers, I leave you with a conundrum; or is it a simple paradox? If George Lamming’s prescient statement on the importance of labour in Caribbean societies democratic development is true... might not the coming crisis present an opportunity for Caymanians to attain greater self-determination? Or, will we choose to remain a complaining people mired in neo-colonialism and left to wonder as to what happened to our once promising economic future?


Comments (5)

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Annonymously

07 Jun, 2020

Thank you Roy.
Now let's see who really understands the serious implications we have to look forward to. Thank you for clearing the grey areas..... Caymanians read and understand become aware.... Serious times ahead......

Bonnie Anglin

07 Jun, 2020

Thank You Roy for a much needed commentary. I too have been preaching for years on the lack of training and re-training afforded to Caymanians. In return I was told I have no reason to be angry because we live in paradise. The paradise that today still have Caymanians with proper sanitary facilities, parents sharing the same bedroom with their children, a majority of our children on donated food lunches, a legislated minimum wage that breeds poverty, etc. the list is too long. The sentiment is we should be "glad" to have a job. Yet I notice how much attention we have devoted on facebook to the unrest in the USA, while waiting on volunteers to bring food. It's disgusting. Its time to invest money in our people.

Annonymously

08 Jun, 2020

Good input bonnie anglin

Leslie Bigelman

10 Jun, 2020

Well said, Roy...this IS the reality. Hopefully eyes open...

Bilika H Simamba

12 Jun, 2020

On the button! I can only repeat the words from the Good Book: He who has ears let him hear!