Cost of doing business in St Lucia continues to rise, says Chamber of Commerce

• • • Rising shipping costs and protracted delays;
    • Increased wage with limited time to adjust
    • Operations and services of the Inland Revenue Department

CASTRIES, St Lucia, (St Lucia Chamber) – According to Inside Edge – Issue 69, “the cost of doing business in St Lucia continues to rise.”

“The effect of global phenomenon continues to impact local business. Once again, the issue of “shipping costs” surfaces. Ship agents have already started alerting firms purchasing goods from the Far East of reduced shipping capacity, rising shipping costs and protracted delays, that will require greater lead times.”

The communique advised that these increased costs will eventually be passed on to the consumer.

“However, firms are faced with having to place orders extremely early if they expect to have goods on the island at the time they wish. Adding to this, the continued challenges of unusual weather patterns will continue to impact shipping and global trade.”

Noting rising shipping costs, protracted delays and the increased cost of doing business, it was further communicated that:

“On the local front, a discussion has commenced on the issue of price of eggs and local meat products. The implementation of Article 164 treatment on animal feed, may send some shocks through the system, as producers who have been purchasing feed from non-OECS sources will have to pay the Article 164 duties (50% on CARICOM MDC feed and 100% on extra CARICOM feed).”

The response of farmers will determine the ultimate impact – Inside Edge – Issue 69, advised:

“Many farmers have argued that the OECS animal feed does not produce the level of output that the extra OECS animal feed provided. The farmer will have to decide whether the differential in price and output compels the use of OECS animal feed or extra-OECS animal feed.”

As to the impact, “This is a business decision they will have to make after careful and thorough analysis, as any significant increase in the price of animal products (eggs and local meat products) will have an effect on demand and ultimately affect the profitability of the farmers’ operations.”

The Chamber said it “has engaged the ministry of commerce and a meeting with affected members, the ministry of commerce (and the ministry of consumer affairs) along with the ministry of agriculture is being planned.”

‍Meanwhile, the minimum wage is (a) XCD 1,126.00 per month; or (b) 6.50 per hour, August 1, 2024:

“Conversation on the imminent minimum wage has remained mute -as some Chamber Members and other members of the business community have been sharing their concerns with the executive director,” reports Inside Edge – Issue 69. “With no word to the contrary, it is expected that effective August 1, 2024, the Minimum Wage Order will be in effect. While most Chamber members have not expressed any disagreement with the minimum wage and or its level, the Chamber remains disturbed by the approach taken to introduce the said wage.”

The Saint Lucia Chamber published a document, said:

“There has not been sufficient time provided for real dialogue and conversation on the minimum wage and its impact on not just employees, but also employers. In the limited discussions on the Minimum Wage, concerns were articulated by the MSME sector and the bakers in particular. The concern was the ability to afford an increased wage with limited time to adjust, prepare and even assess impact. The Micro Business Sector particularly, were extremely concerned, and no words of comfort, strategy or support were forthcoming.”

“Questions regarding, the need to increase [to] the stated minimum wage in one full swoop, have been met with terse response; as were questions as to the use of “dated statistics” and not more up-to-date data.

“The Chamber for its part remains concerned that it has had no opportunity to assess the potential impact on members and the wider business community and thus be in a position to offer advice and support to those who will be affected.”

According to the Equal and Minimum Wages Commission, 20 percent of all registered employees will be affected and benefit from the increased Minimum Wage. The expected impact on total wages according to the Commission is 3 percent. (i.e. it will result in an increase in total wages of 3%).

“Clearly the Commission did not take account of the effect this would have on firms who have persons near, at or just above the Minimum Wage, now seeing their subordinates getting an increase and their wages remaining stagnant.

“The issue of relative wages is real and affects relationships and productivity significantly. Thus, many businesses will experience a knock-on effect in their wage bills, which will have to be recouped from price increases to consumers.”

The above is just one example of the more thorough impact assessment that the Chamber has not been able to conduct due to the approach taken to introduce the Minimum Wage.

“The tendency to “inflict” policy, good or bad results very often in missed opportunities for more refined and systematic policy and policy implementation. We saw this with the Health and Security Levy and now, the Minimum Wage, where time for consultation and dialogue was curtailed by the approach adopted to introduce and implement.”

“To date, the ministry of finance has not offered a view or shared the result of their review of the Minimum Wage and its impact on the economy and society. The Chamber has expressed its concern to the powers that be, and it is left to be seen if this pattern of policy implementation remains the order of the day.”

Operations and services of the Inland Revenue Department

Meanwhile, the government of Saint Lucia has engaged the service of the former Comptroller of Inland Revenue Trevor Brathwaite to conduct a review of the operations and quality of services provided to the general public and the business community. The intention is for the consultant to recommend improvements to service delivery and other operations that will redound to the benefit of the institutions, its stakeholders and ultimately the nation.

Thus, a meeting has been scheduled for August 14, 2024, at the Chamber’s Conference Room from 2:30 p.m. This meeting will be a ”Listening Session” where the Chamber Members can be heard, and their views are taken into account – in the consultant’s report and recommendations.