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The Thorny Issue of Minimum Wage

If we continue to get distracted into futile disputes rather than acting to redress a situation getting out of hands, we risk seeing an increase in the number of low-paid workers in the economy. This is in nobody’s interest

Anil Gujadhur

The National Wage Council (NWC) has begun its work. As expected, views are divided about granting a minimum wage across sectors. Properly engineered, however, free from momentary doubts about its feasibility, this exercise may launch a new phase of economic development in Mauritius. Let’s look at some background.

Unionisation of workers

The country’s biggest employer, when it was a plantation economy, was the sugarcane sector (planting and milling). Workers would call at the sugar estate office before sunrise for what was called L’Appel, in the hope of getting a job for the day. An official would then call out names of those who would be given a job for that day. Others whose name had not been called would go back, hoping that the next day would bring them better luck. Those who had “permanent” employment (a few only) did not face this kind of daily uncertainty.

 

Such was the precarious state in which workers lived every day. Textiles and garments, which came in the 1970s, picked up the surplus labour. It had always been difficult for workers to strike a good bargain with employers, given a situation of permanent surplus labour on the market. The government employed as many as it could but it had a limit on how many it could employ, given budget constraints.

The silver lining was that, despite fierce opposition from wealth owners, a fairly well organized trade union movement emerged alongside claims of political emancipation as from the 1930s. Obtaining a decent enough wage through a united front appealed to all workers across the board. This aspiration was strong enough to make workers unite, shedding aside class and communal distinctions in their struggle for being better compensated.

In spite of a whole arsenal of laws (e.g., Industrial Relations Act), unions organised sporadic and extensive strikes, forcing the employers’ hands to improve pay and working conditions. A centuries’ old history of employment relations fraught with oppressive practices was thus overtaken by an unforeseen expansion of Mauritius’ economic production to the benefit of all, employees and employers.

Minimum wage

Economic slowdown in general over the past several years in many parts of the world has made employers reluctant to employ full time additional workers. Contractual labour has increased. Mitigated economic activity has acted to restrain wage growth. Wage relativities have worsened. As a consequence, the power of unions to strike good deals with employers, as it happened in the past when both economy and employment were growing, has diminished. It explains why higher wage vindications by unions are not so common.

The pressure on workers has however come from another angle. Precarious employment conditions have helped to drive down salaries at the bottom of the scales. Numerous workers at the bottom of the scale have had to accept low wages due to an over-supply of labour in specific categories (e.g. shop assistants, household helpers, general labour, watchmen, clerks, etc.) and due to their limited ability to switch jobs. That is why there have been persistent calls to fix legal minimum wages.

It is in this context that a National Wage Consultative Council Act was passed in 2016, establishing the NWC to make recommendations to the Minister of Labour and Industrial Relations for the introduction of a national minimum wage in both the private and public sectors. Its purview relates to pay rates of the lowest paid workers, ‘young persons’ and ‘apprentices’, while also considering the ensuing wage relativity in the private sector with the introduction of such minimum wages.

The same Council will also make recommendations for payment of additional remuneration to compensate workers for annual increases in the cost of living. It is also expected to “protect employment” when making recommendations, taking into account the overall economic situation.

It may be said that protection of workers, especially those at the lower level, has for long been a concern for several governments. So far, however, no across-the-board minimum wage recommendation embracing all sectors of activity, in both the public and private sectors, has been implemented. It is a first for Mauritius.

Concerns

The establishment of the NWC marks a new departure to economically secure workers at the lower end of the employment spectrum. It merges, as it were, with the vindications of the worker movement which began in the 1930s by empowering those least able to defend themselves for a decent living standard against the onslaught of uncertain employment prospects.

Some opinions have been publicly expressed that the implementation of a minimum wage across sectors may result in the dis-employment of certain workers in the economically most vulnerable sectors. To avert situations such as this, a suggestion has been made that the government may subsidize the relevant sectors of activity the viability of which is called into question when minimum wage prescription has force of law. Fair enough, for some time perhaps, until the concerned activities have been re-engineered into higher sustainability.

Hopefully, there will be a minimum of such cases, given that the NWC is also required to pre-consider the economic impact of its recommendations. On the other hand, the minimum wage thresholds can’t be driven to insignificant low levels. A balance must be struck, considering also the wage relativity within enterprises: some cannot be paid gargantuan salaries and others mere peanuts. Some amount of re-balancing will preserve the social peace.

Public responsibility

It must be borne in mind that big challenges have sprung up of late on the economic and social fronts, causing voters in certain countries to make irrational choices. The way to put some order in all this is to bridge the widening gap between the richest and the poor, to enhance opportunities of those who risk being condemned to stay at the poor bottom by improving work adaptability of workers, improving their literacy and numeracy, focussing training on modern jobs, making housing socially more affordable, improving the quality of jobs and economic opportunities.

All of this requires good policy-making to make the country move up to higher platforms.

Trade unions, on their part, can no longer be content to vindicate; they would need to change, such as by implicating themselves more directly into the training and education of workers to rapidly adapt them to the modern work environment. For carrying out the needed structural changes, they would need to collect enough contributions and be reckoned as a force for good on workplaces.

So, beyond the issue of minimum wages, there is a public responsibility for governments, unions, workers and society to own up the public responsibility to invest in the right resources for general uplift of workplaces. We have to prioritise the long term. If we continue to get distracted into futile disputes rather than acting to redress a situation getting out of hands, we risk seeing an increase in the number of low-paid workers in the economy. This is in nobody’s interest.

Anil Gujadhur

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