Recruitment crisis amid cost-of-living challenge

Cayman’s sky-high cost of living is causing recruitment challenges amid labour shortages in key industries, business leaders believe.

Every sector, from construction and tourism to accounting and retail, is impacted.

For lower-wage workers, Cayman’s minimum wage of $6 per hour – always a marginal proposition – is no longer tenable.

Even in skilled professions, rising costs, particularly school fees and housing, are making it harder for Cayman-based businesses to compete in the global war for talent.

That has had some benefit for locals with the right skill sets and qualifications, according to businesses. But it has also led, in some cases, to a culture of talent poaching, with coveted employees bouncing between firms.

At the same time, businesses – many of them struggling to bounce back from lean economic times and facing higher costs themselves – have limited capacity to increase wages.

‘Perfect storm’

It’s a confounding situation with no obvious solution, says Wil Pineau, CEO of the Chamber of Commerce.

“It is really challenging to get international labour at this point,” he said.

“Between the pandemic, travel challenges, the price increases and the housing shortage, it is almost a perfect storm.”

He said businesses were hiring Caymanians wherever possible, but the fundamental dynamics of the economy have not changed and there is still a core requirement in multiple sectors for certain jobs to be sourced from overseas.

While the cost of living is a challenge everywhere, two areas are a particular problem for Cayman – housing costs and school fees. Rents have risen out of proportion with global norms, and the requirement for expatriate workers to send their children to private schools comes at an escalating cost that now runs to $25,000 a year in some cases.

For mid-career professionals with families, those costs are an antidote to the enticement of sunny shores and tax-free salaries that has always made Cayman an attractive proposition.

Pineau said some businesses were in a position to offer housing incentives and bump wages up, but others simply can’t do it.

“Many are trying to recover from the pandemic and if they put wages up, then that would have to be paid for by further increases in prices. It is a difficult situation and there is no easy solution,” he said.

A day’s work for a tank of gas

At the lower end of the wage scale, the upward pressure on fuel costs, food and other necessities is taking its toll.

When filling a car with a tank of gas costs $70, the prospect of driving to work and back for any less than $10-an-hour becomes almost unmanageable. Add to that the massive inflation in rental prices and the reduction in availability of housing, with more holiday homes going back into the tourism pool, and it is hard to see how low-income workers can manage daily expenses.

Ritz-Carlton boss Marc Langevin, also the head of the Cayman Islands Tourism Association, said some overseas staff, laid off during the pandemic, had returned to take up their previous posts, but had quit almost immediately – unable to manage the post-COVID expenses on the same wages.

As a business that was shut for almost two years – paying its workers for much of that time – and even now is only running at 50% occupancy, he said it was difficult for the hotel to consider significant wage increases at this time.

Exacerbating the impact for tourism workers, is the fact that tips – the great consolation for the lowest hourly-wage employees on the islands – are much reduced.

“The biggest challenge for our employees is the rental accommodation,” Langevin said, adding that some workers had seen their housing costs rise by as much as 50%.

Combined with gas, grocery and CUC price rises and a lack of big-spending tourists on the island, he described it as a “crisis”.

Competition for labour

There is high competition between industries and within industries for Caymanian workers, he added.

“Everyone is trying to remobilise at the same time,” he said.

Adrien Briggs, who co-owns Sunset House and Red Sail Sports, said finding affordable housing for tourism staff was likely to be the biggest recruitment issue facing the industry ahead of the next high season.

Other sectors face labour challenges too.

Woody Foster, a former president of the Chamber of Commerce and the owner of the Foster’s supermarket chain, just brought in cost-of-living wage increases for his staff, but is still finding it difficult to recruit and maintain workers.

“This is further compounded by the tourist industry taking our staff because they also are struggling to get labour,” he said.

“Local companies are resorting to stealing each other’s staff while not solving the core problem – there is not enough labour to go around as the country reopens.”

Dave Johnston, of Corporate Electric, said the same dynamic was playing out within the construction sector, which was one of the first industries to come back in a big way after the COVID lockdown.

“Everyone was pinching staff from each other,” he said.

There is still enough work around, for now, that overtime can compensate for the lower spending power of the Cayman dollar, he believes. And Caymanian tradespeople are especially sought after.

“Those employees that have the skills and the qualifications are in high demand,” he said, suggesting some had left to start their own business or negotiate higher salaries at other firms. Sourcing talent from overseas has become more difficult, he added, with school fees and housing shortages causing unique challenges for Cayman firms.

Dan DeFinis, engineering manager of Davenport Development and the head of the Cayman Contractors Association, said the volatility in the price of raw materials added a degree of instability and uncertainty.

Shipping, steel and lumber have increased massively in price since the pandemic, and delays in sourcing parts for construction jobs can derail even the best-planned project. That means developers are reluctant to take on high-cost new projects – a scenario that has a knock-on impact on their ability to increase salaries.

Corporate war for talent

Even in the corporate world, where housing perks and high tax-free salaries are steady currency in the global ‘war for talent’, there are recruitment challenges.

“There is a local and international talent shortage of accountants and, even with increases to competitive salaries and benefits, recruitment is still a challenge,” a spokesperson for Grant Thornton told the Cayman Compass.

The company has introduced a four-day work week for the summer months, which it hopes will help it gain an edge.

Steve McIntosh, a Cayman-based recruitment specialist and CEO of CareerPoint, believes the long-term impact may not be as bad as some fear.

He acknowledges school fees and housing, in particular, make executive hires from off-island increasingly difficult. And while he believes some workers will leave the island as a result of rising costs, he is confident that there is a supply line of others willing to give Cayman a try.

He said the exchange rate advantage and the “immense tax savings” for anyone coming from the UK or Canada could override any cost-of-living concerns.

“While it may dampen supply of foreign labour,” he said, “there is no shortage of people who want to work in Cayman, so it’s unlikely to cause a dearth”.