In a move unprecedented among offshore financial jurisdictions, the Bermuda Government has notified companies throughout the hospitality industry that some of their lowest-paid workers must stop working in a matter of days and return home.

According to Royal Gazette, many cleaners, porters and dishwashers who had been employed under Bermudian work permits had been suspended following the implementation of a moratorium last year.

Cayman’s Approach to Bermuda

Labour market watchers, recruiters, and job seekers in the Cayman Islands will pay close attention to the Bermuda market. How does this affect the Cayman Islands? Well, we have taken a totally different approach to the situation. Bermuda’s actions raised a proposal in the Cayman Islands by George Town MLA Ellio Solomon to designate specific jobs as “Caymanian only”.

With the terms of the moratorium, it is no doubt that employers should have seen this coming and planned accordingly. The result of employee scarcity couldn’t have hit the hospitality industry at a worse time. Furthermore, the move is bound to attract the attention of employers in international business as it signals an apparent willingness on the part of the Bermuda government to intervene directly in the employment market when it considers it to be in the public’s interest.

A skim of the comments have flooded the Gazette piece, demonstrating how controversial the move is among Bermudians and residents. There is no doubt that Caymanians also have a thing to say. With strong views entrenched on both sides, it remains to be seen how this will pan out socially, economically and politically.

How Bad Will the Impact Be?

What seems certain is that employers will be forced to increase their salary rates so qualified Bermudians remain attracted to the open positions. That cost will either be passed on to the consumer in the form of higher prices or absorbed by lower profits in the business. Given the well-known decline in business, the former seems more likely.

We know this is all a bit abstract. To gain a better understanding of the impact, think of this scenario:

3 employees, working 8 hours on average at a 50-seater restaurant, have been affected by the rules. The restaurant needs to increase pay by $5 per hour to find replacement staff. That equates to an increase in costs of $120 a day (around $3,600 per month). A 50-seater restaurant may average 40 covers per night (equivalent to 100 on Fridays and Saturdays and 25 every other night). Hence the cost of each meal would need to increase by $3, likely around 5-20% of the total price of a cover, depending on the restaurant’s standard.

Whilst those numbers are arbitrary (replace them with whatever numbers you like!), they help give a sense of perspective. The real impact on the price of a meal/profit of the business will be between $1 and $5 per cover.

There is a possibility that the price increase can take a toll on many hospitality businesses and push them out of business. While we hope this will not be the case, we may find that restaurants at the higher end, whose prices will increase less and whose diners are less concerned about cost, in any case, will likely be okay.

The Impact on Bermuda’s Locals

With new rules in place, what does this mean for Bermuda’s local community? Regarding the Bermudian local labour pool, it would be interesting to discover how many people will benefit from the increased pay rate and how many jobs will now be available. Great news; from our experience, locals benefit more when governments place barriers on work permits. Why? This forces employees to search within the local pool for qualified talent.

Make the Move

Are you looking to work in the Cayman Islands, Bermuda or BVI? Avoid complications and make the relocation process easy by working with a recruiter! Contact CML Offshore Recruitment’s team at info@cml.ky for more information.