Creating a class of “economic citizens”
Being limited in natural resources, the Cayman economy must find ways to continuously expand.
Unlike other economies that can rely on cross-subsidisation from revenues derived from minerals, manufacturing, agriculture or other resources, the Cayman Islands can only rely on its people.
The recent population census placed unemployed Caymanians at 1,676.
This is an opportunity for the government to create more economic citizens.
Economic citizens are net contributors to the national treasury. Other citizens are net consumers of resources.
For now, government must examine new ways in which it can give the unemployed a chance to be trained, or re-trained that would allow them to be employable.
The issue of education and training has been a well-beaten path and we are not going to cover the same ground in this discourse.
Government must not stop at employment; it must start creating a class of entrepreneurs, among those who are currently employed as well as those who are not.
Cayman must expand its slate of export services and goods and must seek to ensure that this cannot be replicated anywhere in the world. This might involve retaining more professionals who work in the local economy because after they are rolled over, they go to create competition elsewhere, with the knowledge gained locally. The economy, instead of being an exporter of services, could well suffer from brain drain in the near future.
The census report noted that the majority of the country’s population belongs to the working age group (15+ years old), with a count of 44,084 or 81.9 per cent of the population.
Total employment was registered at 34,214; Caymanians accounted for 15,453 (45.2 per cent of total employment) while non-Caymanians had 18,761 (or 54.8 per cent of the total). The median age of the working population is 35, which suggests that the country continues to attract young people worldwide who pay lots of taxes and who provide a demographic advantage.
Looking at these numbers, one could see a powerhouse in the making, noting that even developed economies are having issues with a high median age because of the aging of most populations.
However, there are no new industries that are being created in the Cayman Islands and should this continue, one could see a future in which the media age moves up significantly. This could create a deficit of workers and a surplus of retirees who are net consumers.
The current economic challenges are exacerbated by factors such as high energy costs, which drives up the overall cost of living and indeed the cost of doing business. This means that local are robbed off their savings. The country must start have big numbers of net savers whose situation would be alleviated, if the cost of living, or the cost of doing business could be reduced.
Another problem is the level of debt that people are having to live with.
Local consumers borrow to consume and they do not acquire sufficient income-producing assets at a personal level. It is that evident a lot of luxury items are imported from Miami and elsewhere. A high percentage of workers here have credit cards, which enable them to make purchases that they would otherwise have to defer. One could argue that this helps businesses to earn profits and provide jobs that boost the economy.
Another pitfall of the Cayman Islands is the notion of home equity and stock market appreciation.
It is true that home equity is an asset to the individual home owner; however its existence does not add to society’s stock of savings. This is because home equity does not require the home owner to free up any resources. The only way a home owner can tap his or her equity is by tapping the savings of someone else, through refinancing.
We would like to see a greater national emphasis on creating a culture of savings and efforts should be made to provide people with incentives to save. A good place to start would be ensuring that some of the service charges from banks are reduced or removed. Such charges contribute to being a ‘’disincentive” towards saving, if people feel that their money is being consumed by an “unknown entity”.