The Cayman Islands find themselves at a crossroads in 2023, marked by economic prosperity, population growth, and a return to a vibrant tourism industry. Adversely, inflation affects the cost of living, over-development looms large on both the natural environment and the Islands’ infrastructure needed to support it, and employment dynamics are shifting in the local workforce which threaten, as always, to leave Caymanians behind.
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Juliana O'Connor-Connolly has assumed leadership in the Cayman Islands, for the second time, the last being in 2012. She has succeeded Premier Wayne Panton, who stepped down amid widespread condemnation in a parliamentary vote of no confidence in mid November 2023. Whilst the vote to oust the governement was unsuccesful, it did lead to the replacement of the premier. The former deputy premier was sworn in at the Governor's office, after a day of negotiations to establish a new United People's Movement emerging from the remnants of the PACT coalition.
Financial Sector Overview
The Cayman Islands has successfully been removed from the Financial Action Task Force's (FATF) money laundering 'grey list' after over two years of dedicated efforts. This achievement, announced on October 27th 2023, follows a meeting of the FATF Plenary in Paris. The 'grey list' designates nations actively addressing deficiencies in anti-money laundering, terrorist financing, and proliferation financing measures. To meet global standards, the Cayman Islands established a new police unit, enacted legislative changes, and implemented new standards for realtors and precious metal dealers. This removal is significant for the islands' financial services industry and affirms their commitment to combating financial crimes and ultimately should pave the way for further foreign investment. Whether there'll be a knock on effect that benefits the Islands' local economy remains to be seen, though this certainly bodes well for the future growth of the finance sector in the Islands.
Below is a retrospective look at the diverse facets of the Cayman Islands economic landscape including finance, population, workforce and salaries, based on information provided by the Economics and Statistics Office and the recently published Cayman Islands Government Strategic Policy Document 2023-2026. We also look at what lies ahead for the education sector, climate sustainability, tourism, real estate, healthcare, transport and more.
Population & Permits
The Cayman Islands has a large expatriate workforce, with over 36,500 work permits issued to foreign workers as of September 2023. This represents a significant increase from the middle of June 2023, when there were over 450 fewer work permits issued.
The influx of expatriate workers is having a significant impact on the Cayman Islands population. While the official population is estimated to be 84,000, a more realistic figure is at least 90,000. This is because the official population figure does not include people on temporary work permits, overseas property owners who arrive and leave throughout the year, and the thousands of tourists here every day. Such high population numbers are putting the Islands' infrastructure under great strain in areas such as transport architecture and public healthcare.
In 2022, the breakdown of the population was assessed as follows, 40,957 living in George Town, 16,957 in Bodden Town, 2,274 in East End, 2,110 in North Side and 16,943 in West Bay. 2,304 reside in in the Sister Islands. Of note, two thirds of the population in George Town was estimated to be non-caymanian, and for the first time, Caymanians made up less than 50% of the total population. Of this population, 23,609 people were registered to vote.
It is important to note that population growth is not inherently negative. It can lead to economic growth and increased diversity. However, some Caymanians are concerned, quite rightly, that the rapid population growth is diluting Caymanian culture and identity as well as straining resources and infrastructure beyond their limits.
That being said, the Government faces pressure from the private sector to continue to allow high levels of immigration in order to maintain the Islands' competitive advantage in the global economy, in addition to the considerable fees that the Government collects on permits and other similar applications. Any future government will need to balance the needs of the economy with the concerns of Caymanians and permanent residents, about the impact of population growth on their quality of life.
Current State of the Local Economy
The local economy's current state, and how consumers are being affected are indicated in the Consumer Price Index (CPI) report for 2022 and 2023. There have been sharp increases in housing, utility and food costs since last year.
Year-on-Year Analysis 2022/2023:
In the second quarter of 2023, the CPI was 130.4, representing a 4.1% increase compared to the same quarter in 2022.
Notable changes in specific categories:
- Housing and Utilities increased by 6.0%.
- Transport decreased by 0.1%.
- Clothing and Footwear went up by 4.7%.
- Recreation and Culture increased by 2.9%.
- Food & Non-Alcoholic Beverages saw a significant rise of 7.0%.
- Furnishings, Household Equipment, and Routine Household Maintenance increased by 10.7%.
- Restaurants and Hotels experienced a 4.2% increase.
- Communication decreased by 2.6%.
- Miscellaneous Goods and Services increased by 4.3%.
- Alcoholic Beverages and Tobacco went up by 3.9%.
- Health costs increased by 1.7%.
- Education costs saw a 3.1% increase
Salaries, Pay and the Workforce
The workforce in the Cayman Islands has seen an exceptional 8% increase since the spring of 2022, largely driven by a growth in work permit holders. This has led to a corresponding increase in the population, which is conservatively estimated at about 84,000 residents. Of those eligible/able to work, expatriate workers now make up approximately 58% of those employed.
The labour market has also seen a positive shift, with the unemployment rate decreasing from 3% in June 2022 to 2.4% in June 2023. This data is derived from a random sample of 1,999 households in a survey conducted by the Economic and Statistics Office (ESO), which revealed 1,404 potentially employable individuals without jobs. However, with a minimum wage still stuck at an impossible-to-live-on rate of CI$6 an hour, and 50% of the population earning less than CI$35,994 per annum, many Caymanians still can’t afford the necessities. As a result of this, the Minimum Wage Advisory Committee (MWAC) sought public feedback on the issue through an online survey over the summer of 2023. Following months of consultations, the committee submitted its report to the Government at the beginning of November 2023, providing recommendations for potential wage adjustments. The Government will now review this report, signaling progress towards potentially implementing a new minimum wage.
Caymanian unemployment has notably decreased by 26.1% over the past year, resulting in a Caymanian unemployment rate of 3.7%, down from 5.1% in 2022. However, a concerning trend is that over 41% of those without work have been unemployed for more than a year, and nearly 900 Caymanians are underemployed.
The workforce is currently composed of 58,669 people, with expatriate workers on permits making up nearly 58% of the total. Among them, 4,076 are permanent residents, and 22,457 are Caymanian. The largest employment sector is the construction industry, accounting for almost 15% of the entire workforce.
Despite the significant expansion of the workforce, wages have not kept pace with inflation. Surprisingly, over 18,000 workers, roughly one-third of the labour force, still earn less than CI$2,400 per month, as indicated by the Spring LFS. In the second quarter of 2023, inflation moderated to 4.1%, a decrease from the 6.6% seen in the first quarter. Nevertheless, the anticipated inflation rate for the entire year remains at approximately 5.2%, significantly outpacing any projected salary increases.
Financial Outlook for the Government
In the latest unaudited financial report on public finances for the third quarter of 2023, published in November, the surplus for the entire Public Sector reached $116.6 million—exceeding predictions by $69.6 million. This notable surplus is attributed to the government's collection of $49.5 million in revenue, beyond initial expectations.
Real Estate fees remain a significant revenue generator for the government, surpassing expectations by $3.6 million in stamp duty. Land transfers yielded $6.3 million more than anticipated, driven by higher-value transactions.
In the tourism sector, accommodation fees experienced a boost of CI$15 million as Cayman attracted more visitors, a knock-on effect being an additional $14.5 million collected in work permit fees as a result of the staff needed industry-wide to deal with them.
The government surpassed budgeted projections in coercive revenue by $26.7 million, stemming from various sources, including an impressive $7.8 million increase in vehicle charges. Fees from Mutual Fund Administrators saw a rise of $3.5 million, correlating with an increase in registered funds.
Compared to the same period last year, the entire public sector surplus for this period was $34.8 million higher, with statutory authorities and government companies contributing $20.6 million more than they did over the corresponding nine months in 2022.
This strong financial footing has enabled the government to invest in critical public services like education and healthcare, as well as infrastructure projects such as roads and schools. That being said, with such high spending, the new governement will need to carefully monitor the financial situation in the last quarter of 2023 to ensure meeting budget objectives. The figures indicated that there has been a $50 million drop in surplus since the last quarterly resutls. Whilst the Governement holds a savings reserve of $582 million and net assets of $2.2 billion, there are clear indications that future spending will need to be be reigned in and managed, so that a budget surplus can continue to be maintained in 2024.
In the context of the Cayman Islands' educational landscape, in 2022, 4,515 children were enrolled in primary education and 4,527 in secondary education, with approximately 770 teachers serving in these institutions. There were slightly more students enrolled in government schools, as opposed to private ones. The government of the Cayman Islands allocated a budget of roughly $110 million for education during that year. High school graduation rates in the Cayman Islands stood at approximately 85%.
As part of the government's Strategic Policy for 2024-2026, there is a focus on equipping students for a digital future and fostering future leaders through nation-building activities. Key initiatives in this policy include strengthening early education programmes, reintroducing 'A levels' education in public high schools, and offering free tertiary education at local universities, all aimed at improving the education landscape and preparing students for the evolving demands of the modern world.
Broadly speaking, there are several ongoing projects at the moment in the Education sector, at various stages of execution:
- The John Gray High School reconstruction including expansion of the Cayman Islands Further Education Centre campus and the construction of new sports fields
- Plans for a new high school in Cayman Brac
- Increased capacity of Clifton Hunter High School with a fourth academy
- Lighthouse School expansion to provide both education and therapy for children with special needs
- Edna Moyle Primary School project aims to construct a new facility in North Side to better accommodate its educational needs
- Sunrise facility project seeks to establish a new facility offering improved services specifically designed for adults with disabilities
In the private sector, CF School is a new private high school that is expected to open in September 2025. It will be located in Buttonwood Park, George Town. CF School will offer a curriculum that is tailored to the needs of each individual student. The school will also offer a variety of extracurricular activities, including sports, arts, and music.
A new Montessori preschool, located on Captain Reginald Parsons Drive is planned for construction in West Bay, Grand Cayman, on a 5.25-acre plot. The $1.1 million project will be built in two stages, with the first stage featuring four classrooms, a drop-off lane, and a petting area, while the second stage will add four more classrooms, a playground, and a sports field. The preschool will cater to children aged 18 months to 6 years, employing the Montessori method for hands-on learning at their own pace, with a focus on environmental education and sustainability. The anticipated opening date is September 2024.
Climate Sustainability, Green Goals & Beach Erosion
The Cayman Islands Government has established ambitious national energy goals, aiming for 70% renewable energy by 2037, a 30% improvement in energy efficiency by 2030, and transitioning to 100% sales of electric vehicles by 2037. To realize these targets, the government is actively engaged in several initiatives. This includes investing in renewable energy projects such as solar and wind farms, promoting energy efficiency through public awareness campaigns and incentive programmes, and facilitating the shift to electric vehicles by offering incentives for purchases and establishing a comprehensive charging infrastructure across the Cayman Islands. These efforts collectively reflect the government's commitment to a sustainable and energy-efficient future.
Cayman's Landfill SitesIn 2022, the waste collected from commercial and residential locations reached a record high of 83,590 tonnes. At Cayman's three landfill sites, only 407 out of 154,590 tonnes of total waste were incinerated. This amount reflected an increase of 17,512 tonnes of created waste from the previous year, but more worryingly a four-fold increase compared to 2012. The Department of Environmental Health also shipped out 11,300 gallons of hazardous waste in 2022. Given these numbers, it becomes clear why ReGen, the project which is integral to the waste-to-energy plant and recycling infrastructure essential for establishing a eco-friendly solid waste management system in the Cayman Islands, must move forward with all urgency.
Beach ErosionThe problem of erosion along Seven Mile Beach is nothing new and each storm serves to further erode the beaches around properties built too close to the sea. The Cayman Islands Government has embarked on a proposed $21 million sand replenishment scheme as rising sea levels and over-development and too many hard structures on the beach fuel erosion. Following Hurricane Ian in September 2022, at the Grand Cayman Marriott Resort, the problem of the near-permanent absence of the hotel’s beach was made even worse by a new headache: flooding across the bar and restaurant areas. Significantly, the Marriott have since changed their name removing the word ‘beach’.
The Cayman Islands' tourism sector is making a strong comeback, nearly reaching pre-pandemic visitor levels this year. This resurgence is boosting government revenue, driven in part by rising hotel room rates due to inflation. Tourism taxes have already exceeded annual budget projections in just six months, with expectations to surpass 2019's record figures by year-end.
In the first half of 2023, tourism taxes brought in CI$28.8 million, surpassing the mid-year budget projection by CI$12.4 million. During this time, 235,370 stayover guests visited the islands. The majority, around 83.6%, came from the United States, while 7.5% were from Canada, and 4.4% from Europe.
Cruise passenger arrivals for the first half of the year reached 738,462 passengers, indicating a promising recovery in the tourism industry, but while cruise ship visitor numbers are far from pre-pandemic levels, the upsurge in stayover guests aligns with the government's long-term policy.
With the newly-scheduled, direct flights to Barbados already underway, Cayman Airways also flies non-stop to the following international destinations:
Miami, New York, Tampa, Denver and Los Angeles
Cuba, Jamaica, Honduras, Panama and Barbados
Looking back to 2022 in general terms, there was a decline in visits to government health facilities and district clinics, yet a significant rise (over 20%) in ambulance calls. Encouragingly, there was notable expansion in healthcare staffing at key hospitals. Immunisation coverage for children aged 0-24 months reached its highest level on record. The leading causes of death in the Cayman Islands were cardiovascular disease, malignant tumours and accidental injuries.
In 2023, the healthcare landscape of the Cayman Islands experienced significant transformations in both the public and private sectors. Publicly, the Health Services Authority (HSA) expanded its healthcare services substantially. The Smith Road Medical Centre saw extensive growth, accommodating various new clinics, including Cardiology, Pharmacy, General Practice, and Public Health facilities. The HSA introduced specialised services and extended clinic hours, and significantly opened a new Urgent Care walk-in clinic improving response times with six additional ambulances.
The HSA also expanded services to West Bay with a dialysis unit, improving access for patients. Furthermore, the Cayman Islands Molecular Biology Laboratory (CIMBL) was established, offering local diagnostic genome sequencing, reducing the need to send samples overseas. A telemedicine robot was introduced at the Little Cayman Clinic, enhancing remote consultations. HSA also initiated a significant green initiative, investing in energy-efficient upgrades to reduce their carbon footprint.
Mental health services expanded with Alex's Place, a hub for children and adolescents, and the Poinciana Residential Mental Health Facility in East End.
Health City Cayman Islands is currently building a new $100 million facility in Camana Bay. This new centralised healthcare hub will feature a specialised cancer care centre, neonatal intensive care unit, emergency pavilion, critical care unit, and an expanded range of services. The hospital's new Radiation Oncology Centre began treating patients in May 2023. The facility will be the first in the region to offer unique services such as bone marrow transplantation and CAR-T cell therapy. A full opening is expected in 2024.
Nearby, Dart has submitted plans to establish a new centre of health and wellness near the Health City Cayman Islands medical campus. The purpose-built three-story structure, scheduled to open in 2026, aims to create a convenient environment for health and wellness services by bringing various experts under one roof. The goal is to meet local healthcare needs, aiming to enhance accessibility for residents and tourists. The Centre, positioned near George Town and Seven Mile Beach, will include amenities like a cafe and wellness offerings, forming a healthcare hub alongside the new Health City facility.
Click here for information, news and listings from the Healthcare industry in Cayman
The Cayman Islands real estate market is currently experiencing a slowdown due to global factors like inflation and rising interest rates. However, it remains strong if not a little stagnant, with property values holding steady. In September of 2023 the Stamp Duty tariffs were favourably amended for first and second time Caymanian buyers, details of which can be found below, to try and kickstart the market a little. New developments that are imminent are contributing to the market's resilience and building costs are becoming more reasonable, however, challenges still exist and there is growing concern that the Cayman Islands Government have no clear long-term development plan. The future of Cayman real estate still looks very promising as it adjusts to current conditions and anticipates future growth.
The Government is also poised in 2024 to announce a 10-year strategic plan on how it intends to create affordable housing for lower income Caymanians. With, according to the Economics and Statistics Office, more than half of the homes on-Island in 2022 being rented accommodation (17,691 properties out of 34,133), this will be welcome news for many. Incidentally, of the remaining households, 8,267 were owned without a mortgage and out of all the households Islands-wide, only just over 50% had property insurance.
Click here for more on Cayman's Real Estate Market
Click here for more on Stamp Duty Concessions for Caymanian Buyers
As of August 2023, the Cayman Islands are actively addressing traffic issues due to the rapid growth in the number of vehicles on the roads. The government is working on many road projects, including expanding the Linford Pierson Highway, realigning Crewe Road, and enhancing the King's Sports Centre roundabout. Additionally, a study on the Grand Harbour roundabout is in progress as this location is commonly acknowledged to be the bottleneck that is causing the two-hour commute for those living out East. Projects for 2024 include the Godfrey Nixon Way extension, an Airport Connector Road, and the East-West Arterial widening.
The number of vehicles on Cayman's roads has been increasing rapidly, with thousands of cars imported annually and a significant rise in active licenses and vehicles by the end of 2022. The Government has pledged to improve public transportation and continues to address the Island’s infrastructure.
Public Bus System
In April 2023, Deloitte released a comprehensive report evaluating the Cayman Islands' public bus system, noting its current state as "fragmented, inefficient, and unsustainable," and failing to meet the community's needs. The report, commissioned by the Ministry of Tourism and Transport, proposes several key recommendations. These include replacing the private bus service with a Government-operated network to enhance operational efficiency, investing in new buses and infrastructure to improve reliability and comfort, creating designated bus lanes and stops with amenities like WiFi, and ensuring accessibility for disabled individuals. The estimated cost for these improvements ranges between $25 million and $30 million, with projected benefits outweighing the expenses. The report highlights potential positive impacts like reduced traffic congestion, improved access to education and jobs, increased tourism revenue, and greater social inclusion. However, as of November 2023, the government's plans for implementing these recommendations remain unclear.
Click here for more on 2022's Transport & Traffic Statistics
Other Key Infrastructure Projects
Other key development projects are underway, at least in the conception phase.
- Expansion or potential relocation of the Island's cargo port, driven by the anticipation of reaching its capacity within the next decade. The estimated cost for on-site expansion is projected to be around $73 million.
- Upgrading the submarine cable infrastructure.
- Modernisation of the Islands' prison system with the construction of a new 250-inmate capacity facility, that consolidates all inmate groups onto one premises. The slated completion date for this development is set for 2027.
Sources for this page:
ESO - Consumer Price Index Report
SPS – 2023-2026 Ci Government
CNS - Cayman News Service