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Chamber Warns of Economic Collapse, While PM Gambles Political Survival on Controversial Wage Promise

BASSETERRE, ST. KITTS – July 1, 2025 — Mass layoffs, business closures, and a deepening economic crisis could be on the horizon for St. Kitts and Nevis, as Prime Minister and Minister of Finance Dr. Terrance Drew prepares to move forward with a minimum wage increase to $500 per week—a decision met with strong resistance from the Chamber of Industry and Commerce, prominent business leaders, and small business groups.

In a high-stakes meeting late Thursday afternoon, PM Drew sat down with representatives of the Chamber, the private sector, and small business associations in what sources say was a tense and urgent discussion. Business leaders pleaded with the government to reconsider the timing of the increase, warning that the move will have far-reaching repercussions—including massive layoffs, reduced hours, and the closure of small businesses, particularly in a stagnant economy already facing high unemployment and the lowest growth rate in the OECS.

Despite the outcry, PM Drew signaled his administration’s intention to proceed, citing a campaign promise and “a moral obligation to improve workers’ lives.”

But critics argue the decision is politically motivated, with government favourability and popularity at an all-time low. Political analysts say the Prime Minister is desperately trying to cling to relevance, as recent polls show a sharp decline in public confidence and a respected veteran opposition figure surging ahead as the preferred leader of the nation.

“This is less about economic logic and more about political survival,” said one political observer. “PM Drew knows he’s slipping fast in the polls. Delivering on this wage promise, despite the economic consequences, is his attempt to salvage credibility with the public.”

Meanwhile, the private sector is reeling from a wave of compounding financial pressures:

IMMEDIATE ECONOMIC THREATS:

• Mass Layoffs: Businesses are preparing to slash staff to remain afloat.
• No New Investment: The country has no major capital projects or foreign investments in progress to offset the burden.
• VAT Hike Impact: The government’s rollback of the 6-month VAT reduction to the full 17% as of June 30th is expected to choke household spending and crush business margins.
• Loss of Support Programs: The $250 monthly low-income benefit has been discontinued, removing a safety net for struggling families.
• Rising Costs: Inflation, shipping costs, and operational expenses are already pushing businesses to the brink.

“This decision may win a headline, but it will cost thousands of people their jobs,” said a senior executive within the Chamber. “We want higher wages, but not at the cost of businesses shutting down. This is not how responsible governance works.”

The backlash has been swift and growing, with many accusing the Drew administration of prioritizing political optics over practical solutions. With no job creation plan, no fiscal stimulus, and a shrinking economy, the minimum wage hike may ironically leave more workers without wages altogether.

As one disheartened small business owner put it:

“The government says they’re helping the poor—but if I have to fire half my staff, how is that helping anyone?”

With the economy teetering and the political winds shifting rapidly, observers say the next few months may determine not only the survival of hundreds of businesses, but the political future of Prime Minister Drew himself.

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