URP, CEPEP job cuts may harm economy, communities-Economists

The ax­ing of 400 Un­em­ploy­ment Re­lief Pro­gramme (URP) work­ers has raised fears of a wider eco­nom­ic and so­cial fall­out, with econ­o­mists warn­ing that the move could re­ver­ber­ate far be­yond the pay pack­ets of those who lost their jobs.

Fol­low­ing cuts to the Com­mu­ni­ty-Based En­vi­ron­men­tal Pro­tec­tion and En­hance­ment Pro­gramme (CEPEP) and re­for­esta­tion jobs that have sup­port­ed thou­sands of low-in­come house­holds, econ­o­mists warn the lay­offs could weak­en con­sumer de­mand, dri­ve in­for­mal hus­tling, and deep­en so­cial and eco­nom­ic fragili­ty in a coun­try still strug­gling to re­duce its de­pen­dence on oil and gas.

The con­se­quences, ex­perts said, will not be con­fined to the bread­line: con­sumer de­mand will shrink, hus­tling will mul­ti­ply on the na­tion's streets, and the coun­try's chron­ic de­pen­dence on oil and gas will be ex­posed once more as a dan­ger­ous Achilles' heel.

Last month, the Sun­day Guardian re­vealed that $5.6 bil­lion was spent on URP be­tween 2010 and 2024.

Econ­o­mist Prof Karl Theodore was blunt. "When­ev­er you in­ter­fere with the in­comes of low-in­come peo­ple, you are in­ter­fer­ing with the very lifeblood of the econ­o­my," he told the Sun­day Guardian.

Theodore point­ed to the well-worn but sel­dom mea­sured prin­ci­ple of "mar­gin­al propen­si­ty to con­sume", the idea that those who earn the least spend the most pro­por­tion­al­ly on lo­cal goods and ser­vices.

"Poor peo­ple don't sit on mon­ey. They spend it on food, trans­port, small shops, and books for their chil­dren. That keeps the econ­o­my tick­ing," he said.

He not­ed that while the Gov­ern­ment has fo­cused on trim­ming state pro­grammes on the grounds of in­ef­fi­cien­cy or cor­rup­tion, it may not have cal­cu­lat­ed the ag­gre­gate shock.

"It's not just 400 peo­ple in URP. Add the 10,000 from CEPEP, the re­for­esta­tion cuts, and oth­ers. You are re­fer­ring to house­holds that no longer have a re­li­able in­come. That is cat­a­stroph­ic for de­mand."

Theodore pre­dict­ed a fall in growth in 2025, re­vers­ing the mod­est uptick reg­is­tered this year. "The mon­ey these work­ers earned had a low­er im­port con­tent com­pared to the high­er class­es. They weren't fly­ing to Mi­a­mi with it; they were buy­ing dou­bles, school uni­forms, and pay­ing maxi fares. When that in­come dis­ap­pears, it's the par­lour own­ers, the food ven­dors, and the taxi dri­vers who will feel it first."

For Theodore, the is­sue is more than fis­cal arith­metic. "The In­ter­na­tion­al Mon­e­tary Fund (IMF) pub­lish­es ta­bles show­ing that most coun­tries run deficits. The re­al is­sue isn't whether you're in deficit but whether you are mak­ing de­ci­sions that sus­tain growth. If this Gov­ern­ment did not weigh the im­pact on mar­gin­al propen­si­ty to con­sume, then you could book it: the growth rate will fall."

Dr Ralph Hen­ry, an­oth­er econ­o­mist with decades of Caribbean ex­pe­ri­ence, de­scribed the dis­missal of the URP work­ers as a so­cial earth­quake that will shift labour in­to the mar­gins.

"Some will en­ter the in­for­mal econ­o­my. You will see them on the high­way sell­ing nuts, wa­ter, and wip­ing wind­screens. That is un­der­em­ploy­ment: long hours for scraps. Oth­ers will drift in­to the un­der­ground econ­o­my, which we know is al­ready large and vi­o­lent."

Hen­ry warned of the sec­ondary ef­fect on in­vest­ment. "When you have this lev­el of in­se­cu­ri­ty, in­vestors-lo­cal and for­eign-draw back. They be­come dis­trust­ful of the en­vi­ron­ment, not on­ly be­cause of crime but be­cause of the in­sta­bil­i­ty of the labour mar­ket."

He iden­ti­fied the cur­rent cri­sis as stem­ming from the deep­er struc­tur­al re­liance on oil and gas rev­enues.

"Since in­de­pen­dence, our gov­ern­ments have nev­er ad­e­quate­ly built up agri­cul­ture, man­u­fac­tur­ing, or ex­port ser­vices. We are still at the mer­cy of en­er­gy mar­kets. So when oil fal­ters, the Gov­ern­ment bor­rows to keep pub­lic-sec­tor wages and state en­ter­pris­es afloat. But that is not sus­tain­able."

Ac­cord­ing to Hen­ry, the re­al so­lu­tion must be a piv­ot to pro­duc­tive sec­tors that cre­ate jobs and for­eign ex­change. "Pro­mote agri­cul­ture to re­duce our im­port bill. Ex­pand down­stream pro­cess­ing to keep val­ue added here. Di­ver­si­fy. Oth­er­wise, these cuts in URP and CEPEP are just stop-gap mea­sures that push peo­ple in­to hus­tling and push the coun­try deep­er in­to de­pen­den­cy."

Econ­o­mist Dr In­dera Sage­wan struck a more cau­tious tone, not­ing the Gov­ern­ment's promise that dis­placed work­ers would not be left des­ti­tute.

"The prime min­is­ter has in­di­cat­ed that a stipend will be pro­vid­ed. We don't yet know the val­ue of that stipend or how it com­pares to what work­ers were earn­ing. But the fact that they will not be at ze­ro re­duces the worst-case im­pact," Sage­wan out­lined.

She high­light­ed an­oth­er gov­ern­ment as­sur­ance that cor­rup­tion sav­ings from the re­struc­tured pro­gramme would be suf­fi­cient to sup­port the af­fect­ed work­ers. "We must wait and see whether that claim stands up to scruti­ny. But it does mean that an­a­lysts can­not de­fin­i­tive­ly mea­sure the im­pact un­til the new pro­gramme is re­vealed."

Still, Sage­wan did not mince words about the wider eco­nom­ic pic­ture. "Out of the last ten years, nine have been deficit bud­gets. This is a sick econ­o­my. Any­one ex­pect­ing the new gov­ern­ment to de­liv­er a sur­plus is be­ing naïve. The prime min­is­ter does not have a mon­ey tree. What mat­ters now is whether the up­com­ing bud­get sig­nals re­al di­ver­si­fi­ca­tion ef­forts, mea­sures to grow rev­enue out­side of en­er­gy, cre­ate em­ploy­ment, and widen the tax base."

For econ­o­mist Tahar­qa Obi­ka, the ter­mi­na­tion of URP work­ers can­not be sep­a­rat­ed from ques­tions of so­cial eq­ui­ty and race.

"In an econ­o­my where peo­ple be­lieve their eth­nic­i­ty is a bar­ri­er, you al­ready have a frac­ture. When the State re­moves low-in­come em­ploy­ment op­por­tu­ni­ties dis­pro­por­tion­ate­ly af­fect­ing cer­tain com­mu­ni­ties, you deep­en the wound," Obi­ka ar­gued.

He re­ject­ed the no­tion that URP and CEPEP jobs were "un­pro­duc­tive". "These work­ers cut drains, clear wa­ter­cours­es, and as­sist in re­cov­ery af­ter floods. They beau­ti­fy our com­mu­ni­ties. They are front­line labour in our fight against dengue. The eco­nom­ic val­ue of that work may be hard to mea­sure in dol­lars, but it is very re­al."

Obi­ka warned that many of the dis­missed will fall prey to loan sharks and preda­to­ry fi­nan­cial schemes. "It's not just a mat­ter of whether the econ­o­my los­es spend­ing pow­er. It's whether house­holds get trapped in cy­cles of debt and des­per­a­tion."

He added, "The de­bate over 400 jobs is not on­ly about eco­nom­ics. It is about how the State val­ues its cit­i­zens at the bot­tom of the lad­der. If the pol­i­cy ap­proach treats them as ex­pend­able, the so­cial costs of eth­nic di­vi­sion, crime, and com­mu­ni­ty break­down will dwarf the fis­cal sav­ings."

The Cen­tral Bank, in its Fi­nan­cial Sta­bil­i­ty Re­port 2024 last Fri­day, said the un­em­ploy­ment rate rose to 5.0 per cent from 4.0 per cent in 2023.

The un­em­ploy­ment rate stood at 4.9 per cent in the first quar­ter of 2025.