CASTRIES, St Lucia – Prime Minister Philip J. Pierre, on December 18, 2024, announced that in addition to monthly salary payments, public sector employees will each receive a one-off $500 bonus from the government of Saint Lucia, but did not specify where the money will come from.
Will it be a further burden on the taxpayers? Will the funds come from the largess of the Citizenship by Investment Programme, (CIP)?
“Tax revenue improved across the board on the back of the economic expansion and the Health and Citizen Security Levy. Public debt stood at 74.5 percent of GDP in FY2023. The fiscal outlook remains challenging over the medium term. Capital expenditure is forecasted to fall to 2.5 percent of GDP by 2029, constrained by limited access to financing. Public debt is projected to stabilize at around 74 percent of GDP,” said the staff concluding statement of the 2024 Article IV Mission, November 25, 2024.
Nevertheless, the announcement was met by jubilant public sector employees, the sector most influential and prominent in the election fortunes of any government in Saint Lucia.
The bonus comes amid salary negotiations, increased inflation and a politically charged environment. 2025/26 are election boogie years. Mindbending, political strategy forms part of the election toolbox.
The Saint Lucia Social Development Fund previously commenced the first phase of the Christmas Stimulus Program – the STEP Program. The programme employed over 3,000 Saint Lucians for a 5-day period from 9 -16 December 2024.
Temporary gratification
“The one-off $500 bonus will release over $6 million in the local economy,” says the Office of the Prime Minister (OPM), in the understanding of economics and consumerism, at this time of year, Christmas and New Year celebrations. “ The $500 bonus payments will be deposited into the bank accounts of over 12,300 active public sector workers, (12,381 workers) contracted government workers, and government pensioners by December 20, 2024, and in time for the Christmas holidays.”
A contributor to Caribbean News Global (CNG), explains:
“This is the height of disrespect shown by the GOSL towards the people. It is taking praise for failing to respect the dignity of fair wages for labour and brags as if it is doing the public servants (who it deprived much needed income over years) a huge favour – putting you first they call it!”
A tourism expert offers a compelling narrative:
“This boils down to an understanding of the use of prime dollars. These amounts, as dispersed, will increase consumerism and not add value to the economy. In addition, this is not sustainable and will not generate interest or return on any investment because there may not be any investment. The government could have placed that $6 million in a pool of funds and request that Civil Servant come up with a business proposal where this money could be used. As a result, with the $6 million pool of funds, $24 million could be raised.
There are many challenges facing this small island developing state at this time with food security, high cost of [basic] necessities and energy conservation at the top.
The Civil Service comprise some of the best and trained minds on the island. They are brilliant … can they use that $24 million for food processing projects, energy conservation projects, electrical vehicle research and production, urban air mobility between the North and Central Castries, thereby reducing traffic congestion, air pollution, and reducing traffic stress and other negatives?
“However, these projects must be managed to produce profits to be re-invested in communities on the island. Saint Lucia, definitely has the brain capacity… it is about the will and priorities. Just a thought.”
Growth and inflation
The IMF 2024 Article IV Mission, reads in part:
“Growth is expected to pick up to 3.7 percent in 2024 on tourism expansion and revived construction activity and then moderate to 1.5 percent over the medium term. Both overall unemployment and youth unemployment have dropped to decade lows. A brief boost to growth will taper off, with growth moderating to a modest 1.5 percent toward the end of the medium term. Inflation, after peaking in 2022, is expected to fall to an estimated 1.3 percent in 2024, driven by lower utilities costs and deceleration in food prices. Inflation is expected to gradually rise to around 2 percent over the medium term.”
Exploring a social and economic policy has been hard-pressed to find limited success, except for political psychology. Record homicides, (76 plus) crime and lawlessness, comatose health care, and a worsening infrastructure seem normal in modern times. The cost of goods and services continues to influence an unsettling state of affairs. The general consent of parliament shows that unified control is a myth.
11 percent unemployment rate in third quarter
According to the OPM:
“Saint Lucia’s record-low unemployment streak extended in the third quarter of 2024 (July – September) at 11.8 percent nationally. The country’s unemployment rate in the first quarter (January – March) stood at 11.37 percent. In the second quarter (April – June), it stood at 11.25 percent. This means for the first time in Saint Lucia’s history, the national unemployment rate has remained below 12 percent in three consecutive quarters in a calendar year.” The OPM explained: “The private sector continues to benefit from numerous tax amnesties and holidays. The government is waiving VAT on select building materials, imported gym equipment and select imports of medical equipment. The government is no longer deducting withholding tax on government contracts valued at $10,000 or less. Moreover, up to the financial year 2021, local companies are exempt from paying penalties, interests and fines on outstanding VAT payments until May 1, 2025. These tax breaks strengthen the balance sheets of local businesses and grow confidence in the economy, leading to job creation and increased employment in Saint Lucia.”
Again, the optics of statistics are inter-changeable to the practical struggles in finding decent work for a livable wage (not $6.50/ hr) and statistical formulation to targeted domestic economic policies in a largely informal society for work and commerce.
Current and previous government projects outlined, including the provision of incentives to attract foreign investment projects seeking employment are notably mismatched.
“Further investment delays relative to the baseline could lower growth. While Saint Lucia is currently able to refinance its debt and has been successful in lowering the cost of debt and lengthening its maturity, in a risk scenario, it could face challenges in raising public debt, which could result in an abrupt fiscal adjustment. Saint Lucia remains vulnerable to a global slowdown and supply disruptions,” the IMF, added. “A well-functioning labor market is essential for sustainable and inclusive growth. To mitigate these risks, authorities could consider cyclical multiparty reviews, sector-specific differentiation, active labor market policies, and targeted investment to address skill mismatches as well as youth and gender gaps in salaries and labor force participation.”
Mindbending, political strategy: $500 can block a hole!
The foreplay with taxpayer revenue that successive governments venture to distribute willingly, at strategic times and to particular sectors is not without modelling.
In 2008, civil servants in Saint Lucia benefited from a $25 million package, in back-pay and salary increases.The payments took effect on Thursday October 23, 2008.
The then prime minister and minister for finance Stephenson King, in a UWP administration, said that the decision for the pay was necessary in light of the current economic situation.
“For the first time in the history of this country, this government has approved for the public servants a 14 percent increase in their salaries and wages. We gave it to them because we understand the plight the people of this country are in. But while we would have liked to give you 24 percent, [prevailing economic conditions do not allow] and we are prepared to meet you half way and we are giving you 14 percent, so as to allow you to live comfortably,” said King, currently serving in the Pierre-led administration. “Daily paid workers, he said, have not been left out of the loop, but will in addition to their percentage increase receive a bonus of $500 each.”
Familiarity breeds contempt
Amid the hardships and financial burdens, Saint Lucia’s are expected to feel contented that the government is working in their best interest, placating to the electoral force of the public service (12,381) that has a trickle-down effect to a factor of four in Saint Lucia.
Meanwhile, other sectors are at the bounty of “a hustler economy,” as explained by an economist. “ The struggle continues – each man/woman for self.”
