Professor warns of major flaws in local economy
(CNS): An academic and former civil servant who is an expert in business and economics has warned of the deep-seated flaws and problems with the Cayman Islands economy that government needs to address in the long term. Professor Robert Weishan, Chair of Business Studies at UCCI, pointed out that the government had become the almost exclusive employer of the middle class in Cayman. He said that the country’s enormous dependence on tourism and financial services meant there were very few jobs for regular middle class locals and this was why government was plugging the employment gap that should be filled by the private sector.
“Even if we meet the immediate problems we still need to address the flaws in the economy which is far too concentrated on financial services and tourism as well as construction, which depends almost entirely on the other two. Cayman is not able to generate real middle class jobs in the private sector so it is in public service where the middle classes are finding jobs,” said Dr Weishan about Cayman’s so-called ‘big government’.
Speaking as a member of the Generation Now panel on Thursday night at the Harquail Theatre, the professor said that while the current budget crisis might be temporarily resolved, it was the long-term fundamental problem with the economy that government had to fix. The local economy is not creating diverse jobs for local people, he said.
The professor was not advocating that all government employment was bad or that having a significant public sector was necessarily wrong, as he pointed to very successful models in northern Europe that had big government which accounted for a greater percentage of GDP than Cayman. However, Weishan pointed to the need for the diversification in the private sector and then government’s need to plan for it. He has seen little if any evidence, he said.
Pointing to the proposed development of the 2,000-bed hospital by Dr Devi Shetty and partners, he said this was an exciting move with enormous potential but no long term plans about training Caymanians to work within this new sector had emerged at the UCCI where he worked, which, he said, was astonishing.
Weishan spoke about the need to plan for human capital development. The country needs the private sector to create jobs for Caymanians and the government needs to educate and help train them for the job market. The government probably could be reduced and be made far more efficient, the professor believed, but he warned against the broad stroke cuts recommended in the Miller-Shaw report, pointing to the need to ensure the public sector was giving value for money and delivering services efficiently.
A proper assessment would likely show that it was bloated and bureaucratic in some areas and underfunded in others, so any cuts would have to be based on research and properly targeted, Weishan said. However, it would be difficult to realise where cuts or increases were required until the system changed. The professor pointed out that civil servants were being paid based on the hours they spent on government seats and not on what they did, which encourage bureaucracy.
“We need a plan to switch from the current system that doesn't work,” he said. “If we are to reduce the civil service without hurting services it must made to be more efficient.”
The professor said he was surprised to discover that there were no consequences in Cayman over the failure of the public sector management to produce timely, transparent accounts on government spending and that there appeared to be very little accountability in the service.
“I worked in the civil service in Cayman for the first three years I was here and what bothered me was that I had goals to achieve but no one asked me if I had achieved them or if I had spent government money wisely,” he added.
The business expert also warned that privatization of services was not always the answer. He agreed that government companies and statutory authorities should be run autonomously like private sector businesses, with the goal of paying government a dividend, but privatizing was not necessarily the solution to government’s mounting spending crisis.
He said businesses don’t buy government assets to help the people; they do it to make a profit and they will drive hard bargains. “If shareholders of private companies doing government work are to get rich, which is the goal, the price of those services will increase,” he said as a warning about selling off public assets such as the Water Authority.
Dr Weishan pointed out that if private was always better than we would not have seen governments the world over bailing out the private sector banking system in the wake of the global economic crash.
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