Cayman Finance chief Steve McIntosh has urged caution on immigration reform, warning that the island’s core industry relies on imported labour because of near full employment among qualified Caymanians.
Fees from the financial services sector account for around half of government’s annual revenue — close to $500 million. That’s equivalent to the entire public sector payroll.
McIntosh said the strength of the sector had helped the country survive the economic impact of COVID-19 and its aftermath.
But he insisted that, as a direct result of failed immigration policies, employment in the sector had remained stagnant for more than a decade and a renewed focus on growth is needed to avoid a downward spiral.
“The financial industry is often described as booming. The industry is not booming,” he said, “government revenue is booming.”
He said the number of people employed in the financial sector — around 6,000 — is the same today as it was in 2009 while rival jurisdictions, particularly Dublin and Halifax, Nova Scotia, had grown significantly.
“The places that we compete directly with for creating jobs have been booming and yet, in the Cayman Islands, although our business volumes continue to climb and the government revenue continues to climb, the headcount has stayed the same,” he said.
By comparison, according to data from the Economics and Statistics Office, other local industries such as construction and tourism have seen dramatic increases in headcount over the period since 2009, primarily fuelled by increases in expatriate workers.
As Cayman further diversifies into fintech and reinsurance and keeps pace with global compliance regulations, he said the islands must allow financial firms to bring in talent that cannot be found or developed locally, or face a growing threat from offshoring and outsourcing to other jurisdictions.
While he supports some tweaks to the permanent residency system, McIntosh believes any reform to immigration rules and regulations must be balanced with the need for economic growth.
And he made a plea for greater efficiency in the work permit system, especially in important areas of the economy.
“The reality is that human capital is the life blood of our industry. We have no other raw materials. We’re not importing steel, we’re not using oil. We need people,” he said.
‘This is the biggest risk we face’
He said Cayman Finance was working hard alongside government on training, education and scholarships and was doing its part to ensure as many Caymanians as possible were working in the industry.
But, he said, immigration policies designed to guarantee certain jobs to Caymanians had the effect of disincentivising the creation of jobs in the first place, leading counterintuitively to a lack of entry-level job opportunities for Caymanians in the industry.
“When there are no Caymanians available, the next best thing is to grant a work permit,” he said.
“If you do not do that, or you make it very difficult to do that, or very expensive to do that, or very slow to do that … that job will be gone almost immediately and no one will ever see it happen. … The job simply moves somewhere else overnight. That is a disaster for our economy, because once the job has gone, it is never coming back.”
He said “the bones” of the current immigration system and the principle that Caymanians get first refusal of jobs that they are qualified for is “absolutely correct”.
But he made a plea for improved speed of processing of applications to be a goal of any review of the current structure.
“The problem is not that work permits are being declined — 99% of permits are approved. The problem is that they are being approved too slowly,” he said.
“It doesn’t need to be instantaneous, but it needs to not take months. That’s really the main thing that is driving jobs elsewhere.”
In an industry in which “time is money”, he said a delay of months imposes an “intolerable cost” on international financial companies.
“We need to fix this, or the danger is that, as an industry, the inability to create jobs here in the Cayman Islands begins to erode our global position,” he said.
“As decision-makers begin to move overseas, and those decision-makers begin to have more loyalty to other jurisdictions and begin to channel resources to those other jurisdictions … I think that’s the biggest risk that we face as an industry,” he said.
While some may be okay with a reduction that only affected work-permit holders, he said losing employees from the financial services sector would harm the economy, harm government revenue and take opportunities away from future generations of Caymanians.
“I think there are ways that [the government] could enhance protection for Caymanians, but those do not need to slow the system down,” he said.
“The system needs to do both. It needs to protect Caymanians, but it needs to move quickly enough that it doesn’t harm our economy.”