Senior Reporter
andrea.perez-sobers
@guardian.co.tt
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.
