Steve McIntosh, the CEO of Cayman Finance, has warned an international conference that Caymanian complacency was a serious threat to the health of its financial services industry.
He said that despite an increased burden of international regulations, the biggest threat to the sector came from within.
“To retain our position as a leading financial centre, we urgently need to upgrade our operating system, invest in new technology and allow key government departments, on which the industry depends, to hire more people,” he said.
McIntosh added, “The financial industry employs more than 4,000 Caymanians and contributes more than 50% of government revenue, amounting to more than $500 million per year.”
He was speaking on Wednesday at the International Accreditation Council for Business Education conference, held at the University College of the Cayman Islands.
McIntosh said that – in contrast to major tourism and construction projects – jobs in financial services were “created or destroyed one job at a time”, warning of the risk of “death by a thousand cuts”.
He added it was also crucial to have workforce planning and support for Caymanians who want to forge careers in financial services, but that recruitment from overseas was still needed.
“We need to ensure that every Caymanian who is willing and able to work in the industry has the opportunity to do so, but we must also be realistic about the natural limitations of those efforts and allow companies to hire the people they need from overseas when no Caymanians are available.”
He highlighted government statistics which showed that unemployment among Caymanian graduates was just 2% and that the percentage of people with college-level education was only slightly lower than the UK and US.
Government spends more on tourism
McIntosh also pointed out that the government spent 14 times the amount of money to promote tourism than it did on pushing the financial industry, although tourism employed fewer Caymanians and brought less revenue.
The government spends about $1.4 million a year to promote the financial services sector and $20 million to boost tourism.
“By comparison, Jersey Finance, our counterpart in the Channel Islands, receives $7 million in funding from their government,” he said, adding that complacency about the industry meant “the hard work of industry pioneers” was at risk of being undone.
McIntosh highlighted that almost 60% of the Caymanian public had a “negative or ambivalent” view of the financial services sector according to a survey carried out in January last year, in the wake of the havoc wreaked by COVID-19.
He said the industry had propped up the entire economy and contributed significantly to revenues which enabled the government to provide financial assistance to more than 3,000 displaced Caymanian tourism workers.
“Cayman Finance is committed to enhancing the success of our members, our clients, and most importantly, our community,” McIntosh added.
The organisation also had a responsibility to promote the industry, he said, but could not “do it alone”.
He added real gross domestic product per head was a major indicator of economic health and that Cayman’s had fallen from $68,000 in 2017 to $59,000 last year.
McIntosh said that, although the sector’s contribution to government coffers and GDP had doubled since 2009, employment in the area had “barely grown in absolute terms” and shrunk as a percentage, from 11% to about 7%.
He added research suggested that “significant growth” among suppliers of professional services had been largely offset by a fall in in employment in once-strong sectors such as banking and fund administration.
Variety of issues
McIntosh said the problems affecting financial services employment could be put down to a variety of factors, including the cost and difficulty of obtaining work permits, the increased cost of living and the “relative ease with which international companies could hire people in competing locations”.
He said jobs had been lost not only to low-cost centres, but also to expensive locations such as Hong Kong, Toronto and Dublin.
McIntosh emphasised that his views were not a criticism of the government and highlighted the “tremendous efforts and accomplishments” of André Ebanks, the former minister of financial services, who earlier this month quit the ruling United People’s Movement administration, along with two other Cabinet ministers and the parliamentary secretary.
He told the gathering that the Cayman financial services sector could have been twice the size it is at present and contributed an extra $150 million to government revenues from work permits alone, if the government had allowed it.
But he said complacency about financial services was “practically a matter of national consensus” and that government would not throw its entire weight behind the sector “unless the Caymanian people did”.
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