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NATIONAL ECONOMIC AND SOCIAL COUNCIL
INTEGRATION INTO THE GLOBAL ECONOMY
SOCIO-ECONOMIC CHALLENGES AND
POLICY IMPLICATIONS FOR MAURITIUS
MAY 2010
NESC REPORT 14 NATIONAL ECONOMIC AND SOCIAL COUNCIL 10th Floor, Victoria House Cnr Barracks & St Louis Streets Port-Louis Republic of Mauritius Tel: (230) 2130772, Fax: (230) 2130765 E-mail: [email protected] Website: www.nesc-mauritius.org
THE NATIONAL ECONOMIC AND SOCIAL COUNCIL
The NESC Act 2001 The National Economic and Social Council (NESC) was established in April 2002 following the enactment of the NESC Act 2001 in the National Assembly of the Republic of Mauritius.
Mission The Act provides for the establishment of the National Economic and Social Council whose object is to foster consensus-building through dialogue among social partners including civil society. The Council represents a forum for a wider participation of civil society in the process of decision-making at national level and provides the opportunity to all segments of the society to participate in nation building.
Objects and Functions The objects of the Council are primarily to: (i) promote dialogue as a means to achieving consensus for social integration to keep
pace with economic development; and (ii) express its opinions and make appropriate recommendations to Government, for the
promotion of social integration and national development. The functions of the Council for the pursuit of its objects are to: (i) undertake studies on socio-economic issues of national importance; (ii) build consensus through a permanent and sustained social dialogue for a greater participation of
civil society in the democratic process with the aim of ensuring that social harmony keeps pace with economic development;
(iii) formulate its opinions and make recommendations to Government regarding economic and social policies;
(iv) undertake such studies as it deems fit and give its opinions and recommendations; (v) examine and express opinions on any proposed legislation; and (vi) promote industrial relations at large to ensure social harmony.
The Act also provides for regular meetings and consultations between the Council and the President, the Prime Minister and the Leader of the Opposition.
Commissions Under the provisions of the NESC Act, the Council is supported by three Commissions, each of which is chaired by a Commissioner appointed by the Council, consisting of 8 to 12 members. These are:
a. Commission on Economic Affairs; b. Commission on Infrastructure, Physical Resources, Environment and Sustainable
Development; and c. Commission on Social Affairs and Human Resource Development.
The functions of the Commissions are to: -
(i) undertake such studies and prepare such statements, reports and recommendations as the Council may require;
(ii) recommend to the Council the undertaking of such studies as it considers necessary; (iii) recommend to the Executive Committee the appointment and constitution of working groups for
the purpose of undertaking the studies and outline the objectives, broad terms of reference and means of functioning of such working groups;
(iv) make recommendations to the Executive Committee for the carrying out of any research, including the recruitment of any research assistant or the assignment of any consultancy to undertake any specific study that may be necessary; and
(v) advise the Council on any other matter referred to it by the Council.
NATIONAL ECONOMIC AND SOCIAL COUNCIL
INTEGRATION INTO THE GLOBAL ECONOMY
SOCIO-ECONOMIC CHALLENGES AND
POLICY IMPLICATIONS FOR MAURITIUS
MAY 2010
NESC REPORT 14
NATIONAL ECONOMIC AND SOCIAL COUNCIL 10th Floor, Victoria House Cnr Barracks & St Louis Streets Port-Louis Republic of Mauritius Tel: (230) 2130772, Fax: (230) 2130765 E-mail: [email protected] Website: www.nesc-mauritius.org © NATIONAL ECONOMIC AND SOCIAL COUNCIL (May 2010) All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including photocopying and recording, without the written permission of the copyright holder. Published by National Economic and Social Council Printed by Multiprint Company Ltd Sun YatSen Street, P.Louis ISBN
COMPOSITION OF COUNCIL January 2010 Mr Mohamad A. VAYID, G.O.S.K., C.M.G., F.C.M.I. Chairman Mrs Vijay Lutchmee RAMSAMY Vice-Chairperson Mr Mahmood CHEEROO Commissioner for Economic Affairs Mr Rashid IMRITH Commissioner for Infrastructure, Physical Resources, Environment and Sustainable Development Dr Satish BOOLELL, O.S.K. Commissioner for Social Affairs and Human Resource Development Workers’ Organisations Mr Rajpalsingh ALLGOO, M.S.K., M.B.E. - National Remuneration Board Mr Toolsyraj BENYDIN - National Trade Unions Confederation Mr Pradeo BULDEE - Mauritius Trade Union Congress Mr Bye Cassam KURREEMUN - Mauritius Labour Congress Business Organisations Mr Michel HARDY - Joint Economic Council Dr Azad JEETUN - Mauritius Employers’ Federation Civil Society Mr Jean Claude AUTREY, C.S.K. – International Society of Sugar Cane Technologists Mr Jean Noël HUMBERT - Mauritius Sugar Syndicate Prof. Jagadish MANRAKHAN, G.O.S.K. - Former Vice-Chancellor, University of Mauritius Mr Yatranand ROPON - National Youth Council Mrs Indranee VARMA - Senior Citizen’s Council Government Representatives Mr Yanduth GAONJUR - Principal Assistant Secretary, Prime Minister’s Office - Alternate to the Head of the Civil Service Mr Kreshna Nundun BUNJUN - Deputy Director General, Ministry of Finance and Economic Development Mr Anbanaden VEERASAMY - Permanent Secretary, Ministry of Social Security, National Solidarity, Senior Citizen Welfare & Reform Institutions Mr Jean Claude PIERRE LOUIS - The Island Chief Executive of the Rodrigues Regional Assembly
This report has been prepared by the Commission on Economic Affairs, which is composed as follows:
Members of the Commission
Mr Mahmood CHEEROO - Commissioner
Mr Rajpalsingh ALLGOO, M.S.K., M.B.E.
Mr Jean Claude AUTREY, C.S.K.
Mr Kreshna Nundun BUNJUN
Mr Yanduth GAONJUR
Mr Rashid IMRITH
Prof. Jagadish MANRAKHAN, G.O.S.K.
Mr Jean Claude PIERRE LOUIS
Mrs Vijay Lutchmee RAMSAMY
NESC
Mr Mohamad A. VAYID, G.O.S.K., C.M.G., F.C.M.I - Chairman
Secretariat
Mr Jayeraj RAMJADA - Secretary-General
Mrs Daisy Rani BRIGEMOHANE - Assistant Secretary-General
Mrs Naznin BUTONKEE - Research Executive
Miss Sattyavanee SOOBRAMANIEN - Confidential Secretary
Mr Vikash Baboo SEEBOO - Messenger/Driver
Contents
Page
Acknowledgements iii &iv
List of Tables v
List of Figures v
List of Box v
List of Abbreviations vi
Executive Summary 1
1. Background 6
1.1 Introduction 6
1.2 Picture at micro-level 8
1.2.2 The labour market issues 8
1.2.3 The social dimension 9
1.2.4 Volatility in prices and exchange rates 9
1.2.5 Pauperisation and poverty 10
1.3 Purpose of study 10
2. Impact of Globalisation on Distribution of Income and Poverty 13
2.1 Introduction 13
2.2 Impact on Income Distribution 13
2.3 Globalisation and Poverty 14
2.4 The truth behind the GINI coefficient 16
2.5 Definition of Poverty 16
2.5.2 Absolute poverty 17
2.5.3 Relative poverty 18
3 Addressing the Challenges of Poverty 19
3.1 Unemployment and poverty 19
3.2 The labour force mix 21
3.3 The employment situation and the informal sector 23
3.4 The impact of sectoral changes on poverty 27
3.4.2 The sugar sector 27
3.4.3 The textile sector 28
3.5 Understanding poverty 30
3.6 Fighting poverty 33
3.6.1 Dealing with extreme poverty 33
3.6.2 Alleviating the effects of joblessness 34
3.7 Social aid 36
4. Conclusions and Recommendations 38
4.1 General remarks 38
4.2 Grass roots assistance and accountability 38
4.3 The use of food vouchers 40
4.4 Professionalisation of social work 42
4.5 Unemployment and the work placement programme 44
4.6 Evaluation of poverty alleviation programmes 45
4.7 The need for institutional linkages 46
5. The Way Forward 48
List of persons consulted 50
ii
Acknowledgements
This study, which is about the impact of globalisation on the life of the population, has been commissioned to respond to a specific situation and to assist policy makers in defining an appropriate strategy. Countries, which accepted to integrate into the global economy, have been shaken by forces, which they were not expecting to face. Entire populations are living under conditions of higher uncertainty and making forecasts about the future has become a hazardous exercise. This study focuses primarily on the incidence of globalisation on poverty-related problems which groups within the population are currently facing. In conducting the study, the NESC was assisted by Messrs S. K. Bundoo and I. Koodoruth, both members of the teaching staff of the University of Mauritius. These two external consultants who have both conducted earlier research on international trade and social issues respectively, were selected, following an invitation to tender. The NESC is thankful to the Minister of Social Security, National Solidarity and Senior Citizens Welfare & Reform Institutions, who was consulted prior to the start of the study, for her support in undertaking this exercise, which she considered as essential for framing new policies. The staff of the Trust Fund for the Social Integration of Vulnerable Group (TFSIVG), the Eradication of Absolute Poverty (EAP) and the Decentralised Cooperation Programme (DCP) contributed significantly, in providing a large amount of data and information on projects being undertaken to alleviate poverty, at community level. The Council is also thankful to the Permanent Secretary, Ministry of Labour, Industrial Relations & Employment, who enlightened the researchers on how the new labour legislation altered the dynamics of the market for jobs. The Director of Small and Medium Enterprises Development Authority, who was also consulted, provided useful advice, by demonstrating how the creation of small businesses could be an important means for integrating poor people with skills in productive activities. The contribution of Mr S. Mauree of the Ministry of Social Security, National Solidarity and Senior Citizens Welfare & Reform Institutions, focusing on the various
iii
forms of assistance offered to vulnerable groups, formed part of the materials used in the study. The staff of the Central Statistics Office has also been of much help in accepting to produce data, presented according to desired formats, required by the researchers. These unpublished data, shed light on various facets of the life styles of poverty-stricken groups as well as on trends of income levels of specific segments of the population. The Council believes that the report provides a balanced view of those who expressed their opinions or made representations on the subject. Based on an analysis of the facts examined, the Council makes a number of recommendations, which would hopefully help the authorities in defining new strategies to cope with the problems generated by poverty.
National Economic & Social Council May 2010
iv
List of Tables
Page
Table 1. Main social indicators
14
Table 2. Average monthly household incomes (Rs) of two segments of Mauritian households
15
Table 3. Main economic indicators 1996 - 2008, E.O.E* Sector
20
Table 4. Composition of labour force, 2002 -2008
22
Table 5. Employment and foreign labour by economic sectors in Mauritius 2006 (large establishment)
23
Table 6. Number of Registered Jobseekers as at end of October 2009
24
Table 7. Distribution of persons engaged in small establishments by industry group, 2007
26
Table 8. Employment in Textile Sector, 1996 - 2008
30
Table 9. Alcohol consumption as percentage of total expenditure
31
Table 10. Divorce or (separation) as % of heads of households in segment 31
Table 11. Job Placement Programme, 2007 -09
34
Table 12. Workfare Programme, Feb 2009 - Jan 2010 35
List of Figures
Figure 1. Average monthly household income (Rs) for the richest and poorest Mauritian
households
15
Figure 2. Employment and Exports, E.O.E Sector - 1994 – 2008
21
List of Box
List of major grant items for social progress
37
v
List of Abbreviations
CEB Central Electricity Board CIS Corrugated Iron Sheet COMESA Common Market of Eastern and Southern Africa CSO Central Statistics Office CWA Central Water Authority DBM Development Bank of Mauritius Ltd EAP Eradication of Absolute Poverty EPZ Export Processing Zone E.O.E Export Oriented Enterprises EU European Union GDP Gross Domestic Product NEF National Empowerment Foundation NESC National Economic and Social Council NGOs Non Governmental Organisations MACOSS Mauritius Council of Social Services MOFEE Ministry of Finance and Economic Empowerment SADC Southern African Development Countries SMEDA Small and Medium Enterprises Development Authority SMEs Small and Medium Business Enterprises TFSIVG Trust Fund for Social Integration of Vulnerable Groups
vi
Executive Summary
1. The economic and social implications of globalisation are critically important but instead of dwelling on all of them, this report will focus on how the process of globalisation has affected the lives of Mauritians living in conditions of extreme poverty.
2. Mauritius was able to realise uninterrupted growth over the last thirty years. Its
Gross Domestic Product has more than doubled over the last ten years and the unemployment level of 7.7% for the year 2009 can be judged as comfortable when compared to the unemployment situation in most western democracies.
3. However, regarding performance by sectors, the picture has been rather mixed. With globalisation, Mauritius has experienced the removal of many of its trade preferences, which has affected sugar and textiles, both of which were previously protected from open competition by the Sugar Protocol and the Multi Fibre Agreement. During the last ten years, these two sectors have seen a drop both in terms of number of factories and workers employed.
4. Despite the above setbacks, the economy has managed to realise healthy growth, due mainly to the emergence of new business clusters, geared towards export markets.
5. Despite the healthy economic indicators, the economy still harbours inherent
weaknesses and the new challenges have both economic and social implications. The labour market has lost the stability of the past. Because of greater competitiveness in world markets, globalisation has reduced the life cycles of business enterprises, making job tenure more insecure. The influx of foreign workers, to take up jobs Mauritians are unwilling to perform, is coinciding with the migration of predominantly white collar Mauritian workers, towards countries where wages and standards of living are perceived to be higher. This so-called circular movement of manpower, which is inevitable, is the source of various social problems.
6. The influx of foreigners, whether as workers or new residents of real estates, is creating imbalances, often unwelcome by local residents. The massive purchase of residential property by foreigners has had the effect of sharply boosting the
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prices of housing, to the extent of placing them outside the reach of even middle-income Mauritians.
7. An open economy with minimum tariff barriers exposes the whole population to imported inflation and this situation has damaging effects on those living in poverty. More than the volatility of commodity and financial markets, the other corollary of globalisation is the ease with which the outside world can pour into the country undesirable products such as illicit or spurious drugs of all kinds, corruptive media, cultural hegemony and harmful foodstuffs.
8. Globalisation has also brought about a wider dispersion of the distribution of income, with the gap between the rich and the poor constantly widening. This gap between the haves and have nots is becoming a cause for concern, the more so, as market forces seem incapable of alleviating the problems of the poor. What is more disturbing is that the income of the richest segment of Mauritian households is progressing at a higher rate than that of the poorest segment.
9. The initiative to conduct this study was taken by the Commission on Economic Affairs. The National Economic and Social Council (NESC), which was assisted by two external consultants, has attempted to dig deep into existing databases, to bring out those factors relating to current poverty levels in the country. Much of the data produced in the report has been processed and tabulated by the Central Statistics Office (CSO), at the request of the NESC.
10. There is no universal definition of poverty. The World Bank threshold of one U.S dollar per day is certainly not the poverty line that can be applied to Mauritius. The idea is widely accepted that a distinction should be made between absolute and relative poverty. Absolute poverty reflects living conditions of families with incomes below a minimum threshold, while relative poverty reflects living conditions due to the life style of families.
11. The opening up of the economy, especially since the turn of this century, has transformed the industrial landscape of the country. The services sector, the free port, Export Oriented Enterprises (E.O.E), tourism development, information communications and technology services have emerged as new areas of activity requiring skilled labour, not always available locally.
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12. It is often argued that the new labour legislations have caused more prejudice to the working class than the previous Industrial Relations Act, they have replaced. Although hard statistics are not yet available, many of those officially unemployed are known to be actively engaged in the informal sector. In fact the picture about unemployment based on the job seekers register may be misleading. The official figures give a fragmented picture of the extent to which the population of working age is genuinely out of work. This may be the reason why any study on the extent of poverty may become fraught with distortions.
13. The informal sector is one where many jobseekers succeed in earning a living. This sector, which is unregulated, is however assuming increasing importance in terms of its potential to create both jobs and wealth.
14. Globalisation has also revealed the resilience of the Small and Medium Business Enterprises (SMEs) sector. Many small enterprises were able to take advantage of new market opportunities which suddenly were open to them. Small textile companies, for instance, were able to outsmart foreign competitors by demonstrating their capacity to innovate, upgrade their products and ensure their just-in-time delivery to markets.
15. According to the Trust Fund for Social Integration of Vulnerable Groups (TFSIVG), the living standards of the poorest fringe of our society are of growing concern. The latest figures reveal that the 7,000 families earning an income of less than Rs 4,000 monthly are facing severe housing problems. The TFSIVG, operating under the aegis of the Empowerment Fund, is involved in implementing grass root assistance programmes, which focus on providing low cost housing, pre-primary and primary schooling and training in specific skills which are more job centred. The idea is not so much to provide permanent assistance to the poverty-stricken families as it is to offer them a minimum support coupled with training and counselling to make them self reliant.
16. The TFSIVG, working in conjunction with a sister unit, the Elimination of
Absolute Poverty (EAP), has undertaken a country-wide exercise involving, firstly the identification of pockets of poverty, followed by a phased programme for rehabilitating those families.
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17. The Ministry of Labour, Industrial Relations and Employment currently runs specific schemes in support of individuals who, (a) as registered unemployed, are genuinely in search of a job and (b) have lost their jobs.
18. Mauritius has always taken pride in its provision of highly supportive programmes to assist vulnerable social groups. The concept of the “Welfare State”, dear to all political parties, has seldom been questioned.
19. The Council considers that the mechanism put in place for directing aid to those who need it has the merit of being targeted towards the needy. It does appear, however, that the manner in which resources are channelled to those targeted, requires better management and control. Accountability is not always evident in the use of public funds.
20. The Council feels that the state can improve the effectiveness of programmes to assist families living in dire poverty. It is suggested that a food voucher given to each of these 7,000 families to procure them essential food items such as milk, edible oil etc could be a means to that end. Assuming the value of each voucher to be Rs 800 monthly, the total cost of running the scheme would be around Rs 65 million per year.
21. Social workers need to improve their management skills and this can only be achieved by training and mentoring. Hence, Non Governmental Organisations (NGOs), involved in poverty alleviation should, with the assistance of Mauritius Council of Social Services (MACOSS), provide training facilities for their membership.
22. An evaluation of all poverty-related programmes should be conducted by professional consultants, to ensure that an impartial feedback is obtained. Such feedback would be of great value for policy decisions and execution. The NESC suggests that the National Empowerment Foundation (NEF), which is the umbrella body financing poverty alleviation projects, could commission a reliable consultancy firm, to conduct the appropriate study.
23. The TFSIVG and the EAP have gained some experience in providing support services which those affected by poverty badly need. They, however, still lack the essential expertise required to engage people in gainful economic activities.
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Hence a proper linkage between bodies promoting self employment and the two above institutions would go a long way in strengthening our capacity to combat poverty.
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1. BACKGROUND 1.1 Introduction
1.1.1 By virtue of its past history, Mauritius has inherited an open economy, producing, at first, mainly sugar for export markets and relying on imports to meet most of the needs of the population. Well after the country became independent, the openness of the economy to the world has remained a distinctive feature of its development. Even with the emergence of other sectors such as textile, tourism, seafood, financial, information and communications technology services, the economy remains geared to serve external markets.
1.1.2 Our development strategy was, however, based not just on producing
for exports but also on protecting our local markets, using appropriate trade barriers, to allow local businesses to flourish. The country was able to realise uninterrupted growth over the last thirty years, despite short term fluctuations in performance. The outcome of these three (3) decades of growth has transformed the economy into one with a more diversified base, but still highly export oriented.
1.1.3 However, with regard to performance at sectoral level, the picture has
been rather mixed. Since our integration into the global economy, the country has witnessed a gradual erosion of the protective agreements, which had so far allowed two main sectors, namely sugar and textile, to flourish and expand. The sugar protocol, which had guaranteed both prices and a fixed quota for our sugar exports, was gradually emptied of its substance with the coming into force of the new rules of free trade. The textile sector knew a similar fate following the disappearance of the Multi Fibre Agreement which had so far given preferential market access to our textile products.
1.1.4 These two traditional sectors, which were both labour intensive, took
the full blow of trade liberalisation as the country stepped into the 21st century. The sugar industry went through a phased downsizing, which drastically reduced its workforce from 34,600 in 1996 to 15,900 in
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20081. The textile sector, the second after the sugar sector, to be most disrupted by the opening up of the economy, had to adapt without any form of external support. Employment in the textile sector plummeted from 72,666 in 1996 to 57,339 in 2008.
1.1.5 However, despite the above setbacks, the economy has managed to
realise a healthy growth performance, due mainly to the emergence of new business clusters, oriented largely to serve export markets. Tourism alone has seen its gross revenue multiply threefold from Rs 14.2 billion in 2000 to Rs 41.2 billion in 20082, and that happened at a time when the disruption in the textile and agricultural sectors was at its highest level. Similarly, our integration into the world economy coincided with the fast expansion of the other new service-based sectors. The contribution of the financial sector to GDP has been on the rise since the turn of this century moving from 9.7% in 2000 to 11.7% in 2009. The share of the Information Communication Technology (ICT) sector to GDP has increased mildly from 5.0% in 2003 to 5.4% in 2008.
1.1.6 These structural changes at sector level, when compounded together,
yield a positive picture for the whole economy. Thus unemployment level, which started creeping up since year 2000, reached a peak of 9.6% in 2005, to be followed by a gradual decline which continued despite the recent financial crisis. The unemployment rate of 7.7% for the year 2009 can be judged as comfortable when compared to the unemployment record of most of the western democracies, during the recent economic downturn. GDP at market prices has more than doubled over the last ten years, rising constantly from Rs 120.3 billion in 2000 to reach Rs 277.1 billion in 20093.
1.1.7 The healthy performance of the Mauritian economy can be, to some
extent, attributed to the mix of policies which the authorities pursued in the face of globalisation. Tax reform, the review of legislation regulating business start ups, and the further exposure of the economy
1 CSO, Digest of Labour Statistics, various issues 2 CSO, Digest of International Travel and Tourism Statistics 3 CSO, National Accounts Estimates, December 2009 Issue
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to the outside world, contributed to strengthening our competitiveness in global marketplace.
1.2 Picture at micro-level
1.2.1 Yet, despite the healthy economic indicators, the economy still
harbours certain inherent weaknesses and some of the new challenges have both economic and social implications. A few of the prominent challenges to which the authorities are confronted are briefly outlined below.
1.2.2 The labour market issues 1.2.2.1 The labour market has lost the stability of the past. Because of more
competitiveness in world markets, globalisation has reduced the life cycles of business enterprises, thus making job tenure become more insecure than was the case earlier. Job losses bring uncertainty in the lives of families and unless the unemployed can quickly shift to other occupations, families can be temporarily deprived of their normal incomes.
1.2.2.2 The opening up of the economy has transformed the structure of our
workforce. Mauritian workers are now showing reluctance for certain stressful and low-paid occupations mainly in the construction and textile sectors, preferring to move towards those which bring leisure and higher pay. Businesses are having to fill the void by recruiting more foreign labour, which today accounts for around 6% of our total labour force.
1.2.2.3 The influx of foreign workers is coinciding with the migration of
predominantly white collar Mauritian workers, who are moving to countries where wages and standards of living are perceived to be higher. This so-called circular movement of manpower, while being of benefit to the country, is also becoming the source of other social problems. An increasing presence of foreign workers is often
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perceived as the cause of other social ills such as drug proliferation, prostitution and alienation.
1.2.2.4 Further, the internationalisation of job searches has created huge
disparities in wage levels between those at the two extremes of the income scale. The gradual deregulation of wage fixing mechanisms has allowed market forces to prevail more heavily in the negotiation of salaries. Contractual employment, mobility of workers from jobs becoming obsolete to those needed by the market and the constant training of workers to cope with skill deficiencies, have become new features of our job market.
1.2.3 The social dimension 1.2.3.1 On the social front, globalisation is bringing about changes, which in
certain cases, are running out of control. The influx of foreigners, settling down in the country, is creating imbalances, often unwelcome by local residents. The massive purchase of real estate by foreigners has had the effect of sharply boosting the prices of housing units, to the extent of making them unaffordable to even middle-income Mauritians.
1.2.3.2 Although statistics are not available, reports often appear in the press, of growing discontent among local residents, over the attitudes and behaviour of foreigners living in tightly-knit communities, leading to the notion of a disguised apartheid or of a state within a state.
1.2.4 Volatility in prices and exchange rates
1.2.4.1 Opening our frontiers to the world has brought more volatility to prices
and to the value of our local currency, in a manner which places certain sectors under stress.
1.2.4.2 Open trade with minimum tariff barriers, exposes the whole population to imported inflation and in an open economy like ours, this situation has damaging effects on those living in extreme poverty. Even industry is not spared. Those producing for export markets or relying on earnings from tourism would certainly find their competitiveness
- 9 -
eroded by an appreciation of the local currency, but certainly would benefit, when the currency depreciates. Such turbulences are certainly unwelcome, especially as they are unpredictable. But more than the volatility of commodity and financial markets, the other corollary effects of globalisation is the ease with which the outside world can pour into the country undesirable products such as illicit drugs of all kinds, corruptive media, cultural hegemony and harmful foodstuffs etc, raising the need for control and vigilance, which the authorities are not always able to cope with.
1.2.5 Pauperisation and poverty 1.2.5.1 Globalisation has also brought about a wider dispersion in the
distribution of income, with the gap between the rich and the poor constantly widening. Statistics produced later in the report, reveal the nature of this trend in greater detail. To the common observer, the widening gulf between the haves and have nots is becoming a cause for concern, the more so, as market forces seem incapable of pulling up the income levels of those living in situations of deep poverty.
1.2.5.2 The problems associated with poverty are complex and often exacerbate emotions and debate. There is one school of thought, which argues that poverty should be measured against what the individual or family earns as income. The other school, strangely enough, takes the view that poverty reflects style of living, which is more the outcome of attitudes and social behaviour than anything else. These two divergent schools have led policy makers to develop two definitions of poverty, namely absolute poverty, which is linked to a minimum level of income and relative poverty which reflects lifestyles.
1.3 Purpose of study
1.3.1 The economic and social implications of globalisation can be stretched
endlessly and it is not the intention of this study to provide an extensive documentation of all the changes that have swept over the country since it embraced the new world economic order. In order to make the study
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more meaningful, the National Economic and Social Council (NESC) has chosen to adopt a more focused approach by concentrating on how the process of globalisation has impacted on the lives of Mauritians living in situations of extreme poverty.
1.3.2 Whether or not globalisation is leading to more poverty is still an open
question. Countries, which are integrating into the world economy, are experiencing the problems of poverty in different ways. Countries of eastern Asia, for instance, have been less vulnerable to poverty-related problems compared to those of the West where a surge in unemployment has left more people in situations of extreme poverty. Where does Mauritius fit in this complex matrix is the issue which this study will attempt to elucidate.
1.3.3 The initiative to conduct this study was taken by the Commission on
Economic Affairs chaired by Mr Mahmood Cheeroo. Given the complexity of the subject, the Commission secured the assistance of two researchers from the University of Mauritius, namely Assoc. Prof. S. K. Bundoo and Mr I. Koodoruth, both of whom are known for the research work they have conducted earlier on poverty-related projects. The researchers were guided in their investigations by the following terms of reference: i. To make a brief assessment of the impact of globalisation on the
main economic activities and the resultant incidence on the main social parameters.
ii. To specifically evaluate how income distribution had evolved and its incidence on (further) pauperisation of segments of the population and propose corrective measure(s) as appropriate.
iii. To examine projects for revenue enhancement through employability/skills enhancement.
iv. To identify dysfunctions, if any, in the delivery of assistance and social security benefits and propose appropriate remedial action.
1.3.4 Attempts to cope with problems resulting from poverty have a long
history, which can be traced back to the days the country became independent and even earlier. Successive Governments have applied
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different means and policy measures to cope with poverty related problems.
1.3.5 The study has attempted to dig deep into existing databases, to bring
out those factors relating to current poverty levels in the country and on the efforts being undertaken to cope with problems resulting from poverty.
1.3.6 As the initial report of the Consultants was judged inadequate by the
Commission on Economic Affairs, both in terms of its content and depth of analysis, the Commission was led to take the difficult decision of not accepting the report in its actual form but of virtually rewriting it and retaining only parts of it that were considered useful. This task, assigned to the Secretariat of the NESC, involved the collection of new sets of data from a wide variety of sources, including those in the private custody of institutions, whose permission had to be obtained for their inclusion in this report.
1.3.7 Much of the data produced in the report have been processed and
tabulated by the CSO, at the specific request of the NESC, to throw light on certain facets of the livelihood of Mauritian families. Also much of the data and information contained in the report has been obtained from institutions directly or indirectly involved in poverty alleviation schemes.
1.3.8 This report is composed of four main chapters. Chapter 1 describes the
background and objectives of the study. Chapter 2 of this report dwells on the impact of globalisation on income distribution with focus on the widening income gap between the rich and the poor. Chapter 3 attempts to investigate the underlying forces, which explain the uneven spread of income and therefore poverty-related problems between population groups employed in certain key sectors of the economy. In chapter 4, an attempt is made to propose recommendations which, the Council believes, would help relevant authorities engaged in the alleviation of poverty to better orientate their efforts.
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2. IMPACT OF GLOBALISATION ON DISTRIBUTION OF INCOME AND POVERTY 2.1 Introduction
2.2.1 There exists no universally accepted definition of globalisation. The notion of globalisation can be better understood in terms of its effects on countries and societies. In its simplest form, it is the process that takes place when goods, services, investments, people and businesses are allowed to move freely, across frontiers without being hindered by any barrier established by national Governments. The world is still far from that ideal situation where national frontiers do not hinder such flows. But the more the movement of goods and people is liberalised, (especially when aided by information technology), the more are societies exposed to insidious mutations, affecting their economy, environment, culture and even politics.
2.2.2 The effects of globalisation often generate passionate debate because
just as it can create opportunities for advancement, globalisation can also provoke disastrous social consequences. The way Mauritius has responded to our gradual integration into the world economy can be variously interpreted, as shown in this report, but so far the effects have been largely positive.
2.2 Impact on income distribution
2.2.1 Globalisation has certainly disturbed income distribution. The CSO
collects, on a periodical basis, a huge amount of statistics on the incomes of Mauritian families and a few of the tables prepared by the CSO reveal the evolution of key income indicators. Table 1 shows a few of these indicators.
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Table 1: Main Social Indicators Year 1996-97 2001-02 2006-07 Median Income (Rs)4 4,008 5,608 7,642 Half Median monthly household income per adult equivalent (Rs)
2,004 2,804 3,821
Estimated No of households 273,600 307,000 335,000 Estimated number of poor households 23,800 23,700 26,400 % households below the half median income
8.7 7.7 7.9
Gini coefficient 0.387 0.371 0.388 Source: CSO, Poverty Analysis 2006/07
2.2.2 In Mauritius, there is no established poverty line. However, a
household is considered poor if its income fall below a certain level called the poverty threshold. A frequently used measure of poverty is based on the half-median income. Thus, all the households falling below the half median are qualified as “poor”. According to the CSO publication “Poverty Analysis 2006/07”, which makes use of the half median income, a one-person household is considered to be “poor” if its income falls short of Rs 2,004 in 1996/1997, Rs 2,804 in 2001/02 and Rs 3,821 in 2006/07 as shown in table 1. The information can be presented differently to simplify understanding of the problem. If we are to group the 25% of the poorest Mauritian families as a broad category, then each adult member of an average family can be reckoned to have earned Rs 2,004 in 1996/97, Rs 2,804 in 2001/02 and Rs 3,821 in 2006/07.
2.2.3 Table 1 also shows that the number of “poor” Mauritian families, based on the definition used by the CSO, has increased over the last decade from 23,800 in 1996/97 to 26,400 in 2006/07.
2.3 Globalisation and poverty
2.3.1 It is certainly not easy to establish a causal relationship between the process of globalisation and the level of poverty it generates.
4 The median household income is the value that divides households into two equal-sized groups, one with income lower than, and the other with income higher than the median.
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Globalisation and poverty level are both non-measurable phenomena which cannot therefore be statistically correlated.
2.3.2 Changes in poverty levels, over time, can be further distilled out of figures obtained from household budget surveys, conducted by the CSO. To clarify understanding, the CSO has prepared, at the request of the NESC, simple tabular presentations of poverty related data, which appear in this report. Table 2, which is also portrayed in graphical form in Figure 1, shows the average incomes of the 20% of poorest and the 20% richest of Mauritian families respectively over the period 1996 - 2007.
Table 2: Average monthly household incomes (Rs) of two segments of Mauritian households
1996/97 2001/02 2006/07 20% of poorest 3,003 4,578 5,850 20 % of richest 23,513 31,362 43,567
Source: compiled by C.S.O at request of NESC
Figure 1: Average monthly household income (Rs) for the richest and poorest Mauritian households
0
10,000
20,000
30,000
40,000
50,000
1996/97 2001/02 2006/07
20% poorest20% richest
Source: derived from CSO data
Rs
2.3.3 The CSO data, obtained on three occasions only, makes it difficult for
the readings to be utilised for forecasting purposes. It does appear, however, that if the observed tendencies persist, the gap between the richest and poorest segments of our population would continue to widen.
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2.4 The truth behind the Gini coefficient
2.4.1 The evolution of the Gini Coefficient computed from the household budget survey data gives an ambiguous picture of poverty. Table 1 shows the magnitude of the coefficient, based on data collected from past household budget surveys.
2.4.2 In simple language, the Gini Coefficient is a measure of the inequality of income within the population. Its value ranges between one (for complete inequality) and zero (for complete equality). The data at Table 1 shows a slight increase in the value of the coefficient from 2001 onwards which suggests a gradual widening of the income gap. However, the presentations at Table 2 and Figure 1 give a more realistic picture of how the income gap has been evolving.
2.4.3 The picture illustrated in Figure 1 makes understanding very simple.
The rate of increase of income for the richest segment of Mauritian households is higher than that of the poorest segment. In more precise terms, the average income of 20% of richest Mauritians has moved up at the rate of Rs 2,005 per year over the period 1996-2007 as opposed to only Rs 284 per year for the 20% of poorest Mauritians. These figures were not adjusted for inflation.
2.4.4 If one is to make simplistic projections of the observed trends, the
conclusions may appear rather disturbing. If this trend is maintained, at the time of the next survey, i.e. 2011/12, the 20% of richest Mauritians would be earning Rs 53,592 per month against Rs 7,270 per month for the 20% of poorest Mauritians.
2.5 Definition of poverty
2.5.1 An enquiry into poverty should start with an acceptable definition of poverty. The World Bank threshold of one U.S dollar per day is certainly not the poverty line that can be applied to the Mauritian situation. Debate with local stakeholders has revealed that the concept of poverty cannot be based only on income measurement. There is
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fairly general consensus that while income is a determining factor, other social factors need to be included in the definition. Hence, the idea is widely accepted that a distinction should be made between absolute and relative poverty. Absolute poverty reflects living conditions of families with incomes below a minimum threshold, while relative poverty reflects living conditions due to the life styles of families which leave them in a state of deprivation.
2.5.2 Absolute poverty
2.5.2.1 Fixing any poverty line has the potential to stir much debate and even controversy. Trade Unions have persistently pressed the idea that a “minimum vitale” must be established to demarcate the haves from the have nots. Not that this demarcation line can always be disputed but, more importantly, its use is limited because once established it will keep moving with inflation. Apart from the poverty line established by the CSO (i.e. half median income), other thresholds have been utilised by Government agencies to demarcate Mauritians who should be eligible for certain types of state benefits. Thus for the refund of SC and HSC examination fees, Mauritian households earning less than Rs 8,500 monthly are entitled to a full refund as opposed to those drawing incomes between Rs 8,500 and Rs 11,000 monthly whose entitlement is limited to a refund of 50% of fees payable. For payment of income tax, the threshold used to identify those, who need not pay any tax is even higher, having been raised this year to Rs 19,615 per month for an individual tax payer. Other thresholds do exist such as those applying to eligibility to purchase low-cost houses.
2.5.2.2 For the purpose of this study the Council found it convenient
to adopt the poverty line used by the Trust Fund for Social Integration of Vulnerable Groups (TFSIVG) for implementing its poverty related programmes. However, this threshold, (currently standing at Rs 4,000 monthly) chosen by the Fund is
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far below what the Council believes to be the minimum income needed by a family, even if it is to live a frugal life.
2.5.3 Relative poverty
2.5.3.1 Relative poverty is more an elusive concept, difficult to define.
Its significance is however real. It rests on the idea that poverty is the outcome of one’s life style, tastes and social practices rather than the real amount of income earned. This definition of poverty would occasionally be utilised in the course of this study.
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3. ADDRESSING THE CHALLENGES OF POVERTY 3.1 Unemployment and poverty
3.1.1 The opening up of the economy, becoming more prominent with the turn of this century, has gradually transformed the industrial landscape of the country. The Export Oriented Enterprises (E.O.E) sector has been more hardly hit, given its vulnerability to international trade.
3.1.2 Statistics convey only an incomplete picture of how the industrial scene in the E.O.E sector has evolved. Table 3 reveals the following remarkable features of industrial production over the period 1996 - 2008: • The total number of export oriented enterprises has dropped after
reaching a peak in 2005. • The same scenario is reflected in the size of the labour force
employed in the E.O.E sector, where the decline has started as early as 2002.
• The paradox is that despite the decline in number of enterprises and employed labour, the E.O.E sector has registered an increase in both exports and value addition.
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Table 3: Main economic indicators, 1996-2008, E.O.E* Sector
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1 2008 2
No of enterprises as at December 481 480 495 512 518 522 506 506 501 506 441 404 412 Employment as at December 79,793 83,391 90,116 91,374 90,682 87,607 87,204 77,623 68,022 66,931 64,962 67,314 62,276 Exports (f.o.b, Rs Million) 21,001 23,049 26,075 29,131 30,961 33,695 32,683 31,444 32,046 28,954 33,610 37,840 35,080 Value added
¹ at basic prices (Rs Million) 8,202 9,179 10,510 11,697 12,523 13,681 13,603 13,171 13,134 12,108 13,694 15,584 15,945 Investment (Rs Million) 930 1,245 1,445 1,755 1,702 1,758 1,468 1,418 2,508 2,376 2,245 4,301 2,164
* E.O.E consist of all those enterprises, previously operating with an EPZ certificate, and those enterprises manufacturing goods for exports and holding a registration certificate issued by the Board of Investment. 1 revised 2 provisional Source: CSO, the Export Oriented Enterprises, 3rd Quarter 2009
3.1.3 These simple facts alone are evidence of growth achieved with less labour; a phenomenon which characterises modern industrial production. Positive growth is often equated with more jobs being created. For the E.O.E sector, the plot at Figure 2, showing employment level and value of exports, over the period 1996 - 2008, gives a clear picture of more wealth being created with fewer hands employed. Hence production seems to be driven more by reliance on technology and higher productivity. Figure 2: Employment and Exports, E.O.E Sector, 1994-2008
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1994 1996 1998 2000 2002 2004 2006 2008 2010
Employment
Exports (Rs Million)
Year Source: CSO, Economic Indicators (Various issues)
3.2 The labour force mix
3.2.1 The opening up of the economy has seen the relaxation of many of the barriers to the entry of foreign workers into the country. Table 4 shows the constant rise in the number of foreign workers employed in the country, with all signs showing that the trend will persist. This inflow has coincided with the migration of Mauritians mostly of working age, to countries where salaries and standards of living are perceived to be higher. Unfortunately, no reliable statistics exist of the numbers migrating, as many are those who, while going abroad for their studies, choose not to return. Hence the liberalisation of the economy has ushered a new situation marked by an increasingly higher percentage of foreigners in the local labour force. Whether or not this new situation is desirable is a matter of debate as many observers argue that
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Mauritius is subsidising the education and training of professionals for overseas employment.
Table 4: Composition of labour force, 2002 -2008
Labour Force
Employment Foreign Workers
% foreign workers
over labour force
% foreign workers over employment
level
2002 514,200 493,800 17,000 3.3 3.4 2003 522,700 500,400 18,200 3.5 3.6 2004 531,300 504,200 17,500 3.3 3.5 2005 542,500 507,200 16,600 3.1 3.3 2006 548,400 515,300 16,700 3.0 3.2 2007 548,900 523,700 21,600 3.9 4.1 2008 559,400 543,000 24,000 4.3 4.4 Source: CSO, Annual Digest of Statistics, various issues. The current number of foreign workers in the country is now estimated to 36,000.
3.2.2 There is one school of thought, which is squarely in favour of having
more foreign skills, increasingly viewed as a necessity in making our productive sectors more efficient. Another school, opposed to the first, focuses more on the social problems that may result by having more foreigners in the local population. This school often has the upper hand, as the majority of foreigners employed are of low or semi skilled grades. Table 5, which shows the numbers employed by industrial groups, clearly illustrates the predomination of low skilled manual workers in the population of foreign employees. Although no statistics are officially published, one often hears of police reports, in the media, about foreign workers who just melt away in the local population after the expiry of their work permits.
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Table 5: Employment and foreign labour by economic sectors in Mauritius 2006 (large establishment)
Economic Sectors Employment Foreign Labour
% foreign labour over employment
Agriculture, forestry and fishing 21,636 7 0.0
Manufacturing sector of which EPZ
91,021 (64,362)
14,504 (13,964)
16 (22)
Electricity, gas and water 2,988 2 0.0 Construction 12,925 716 5.5 Wholesale & retail trade, repair of motor vehicles, motorcycles, personnel and household goods
18,113 43 0.0
Hotels and restaurants 21,341 249 1.1 Financial intermediation 18,333 174 0.0 Real estate, renting and business activities 9,009 55 0.0
Public administration and defence; compulsory social security
14,841 228 1.5
Education 24,045 111 0.0 Health and social work 12,670 10 0.0 Other community, social and personal services 6,192 160 2.6
Source: CSO, Annual Digest of Statistics (various issues) 3.3 The employment situation and the informal sector
3.3.1 The above title covers two contingent sectors which, for the purpose of this study, are bracketed together.
3.3.2 It is often argued that the new labour legislations have caused more
prejudice to the working class than the previous Industrial Relations Act, they have replaced. These new legislations have, it is claimed, enabled employers to hire and fire workers without an acceptable safety net.
3.3.3 To what extent the new legislation has impacted on the quality of life
of the workforce is a subject which has yet to be investigated. Its distinctive feature, however, is the fact that it has brought a new dynamics in the employment of our manpower resources. Thus not all jobseekers are actually unemployed. Available statistics suggest that more than 50% of officially registered jobseekers are already employed
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in some form of occupation. The most recent statistics of the unemployed shown at Table 6 reveals the high percentage of jobseekers, already in employment.
Table 6: Number of Registered Jobseekers as at end of October 2009
Unemployed jobseeker In Employment jobseeker Male Female Total Male Female Total 8,429 17,171 25,600 12,432 5,072 17,504
Source: Ministry of Labour, Industrial Relations & Employment
3.3.4 Although hard statistics are not available, many of those officially unemployed are known to be actively engaged in the informal sector. They are mostly self employed, with hawking being seen as an activity which many have joined. The informal sector is a source of revenue, but many of those engaged in it still choose to be registered as a job seeker, just in case some unemployment benefit is doled out, or a more suitable job becomes available.
3.3.5 Hence the picture about unemployment based on the job seekers
register, may be misleading. Certainly not all of those, who are unemployed, seek jobs through the registration facilities of the Ministry of Labour, Industrial Relations & Employment. Hence, allowing for the fact that not all jobless persons choose to be registered but certain seek jobs through recruitment agencies, the interface between the world of informal businesses and the pool of unemployed labour is too fluctuating to allow reliable monitoring of the situation. Therefore, official figures of job seekers give a fragmented picture of the extent to which the population of working age is genuinely out of work. This may be the reason why any study on the extent of poverty prevailing within society may become fraught with distortions.
3.3.6 The problem of joblessness is made more complex by the way
jobseekers respond to offers made to them by the newly created National Empowerment Foundation (NEF). In an interview given by the Chairman of the Fund in the l’Express newspaper of 9th November 2009, the point is made that when responding to job offers, only 34 out of 288 seekers accepted the offers. It is therefore undeniable that those, who are unemployed are not all desperate enough to accept any job
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offer. They may prefer to remain unemployed rather than accept a job that does not meet their expectations. Employers have therefore no alternative but to recruit foreign labour to keep their enterprises running. The above is clear evidence that, to the average Mauritian worker, job content and pay conditions can turn them away if these are judged unsatisfactory, especially as family solidarity usually guarantees them a roof and a meal in the meantime.
3.3.7 It would be difficult to establish the impact (if any) of the new labour
legislations on the level of joblessness and therefore poverty. It may be argued (as it actually is, by Trade Unions) that these new legislations have made it easier for employers to hire and fire employees at their own will. This could be too simplistic an argument, as the legislations prescribe conditionalities under which the employer is allowed to lay off workers. Indiscriminate laying off would lead the employer to be questioned by the Ministry and eventually the Industrial Court. In its broad philosophy, the new legislations facilitate the movement of workers from skills becoming obsolete to those needed by the labour market. These legislations prescribe a range of measures to support the workers affected by redundancy. The above analysis however is not intended to be a pronouncement on whether or not the new legislations have been beneficial to the working class.
3.3.8 The informal sector is one where many jobseekers succeed in earning a
decent living. This sector, which is very unstructured, is however assuming increasing importance in terms of its potential to create both jobs and wealth. Globalisation has taken its toll on the informal sector due to the influx of a wide variety of cheap foreign goods for which Mauritians have quickly developed a preference.
3.3.9 However, the opening of the economy to the outside world has
generated a new impetus to the informal sector. This sector is too often considered as synonymous to the world of small and medium business enterprises (SMEs). Earlier, the formulation of policies for the SMEs sector was hindered by the absence of a clear legal definition for a small and medium enterprise. At the time of writing this report, a definition based on revenue turnover has been given legal recognition.
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3.3.10 Hence in broad terms the informal sector can be viewed as inclusive of all SMEs and small operators, conducting any form of activity, with or without a licence, duly delivered by an authority. This sector, which accounts for 43% of total employment, is becoming the main driver of growth, as evidenced by the statistics shown in Table 7.
Table 7: Distribution of persons engaged in small establishments by industry group, 2007
Industry group Number Percentage Manufacturing 30,373 14.4 Construction 34,267 16.2 Wholesale and retail trade: repair of motor vehicles, motorcycles, personal and household goods
73,770 34.9
Hotels and restaurants 19,531 9.2 Transport, storage and communications 24,268 11.5 Financial intermediation 505 0.2 Real estate, renting and business activities 8,549 4.0 Education 4,503 2.1 Health and social work 3,227 1.5 Other services 12,589 5.9 Total 211,582 100.0
Source: C.S.O, Census of Economic Activities, 2007
3.3.11 Because of its fluidity and capacity to stretch to any line of activity, including those carried out by housewives or heads of families, the informal sector has potentially the solutions to our poverty problems. The SMEDA has the mission of guiding business oriented people towards productive activities, in areas where they are seen to have some natural competence. Evidence obtained from the SMEDA, does suggest that a few of the remaining hindrances, which were still a deterrent to business start-ups, have been removed and because of their importance, these are listed below: • Access to finance from the DBM has been made easier through a
booster loan scheme which removes all need for providing any form of collateral security.
• The Business Facilitation Act, which has drastically reduced to a minimum, the period for processing applications for opening a business.
• Access to information on everything of interest to those who want to be initiated to the notion of business. The SMEDA has achieved promising results following its newly initiated programme of “Caravane de l’entrepreneuriat”, a mobile unit, moving from one
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region to another, to provide an all inclusive service to those interested in business.
3.3.12 Globalisation has revealed the resilience of the SMEs sector. Many small enterprises were able to take advantage of new market opportunities which suddenly were open to them. Small textile companies, for instance, were able to outsmart foreign competitors by demonstrating their capacity to innovate, upgrade the quality of their products and ensure their just-in-time delivery to markets. In the textile sector, where the design of products changes with the season, just-in-time delivery is critically important. In a similar manner, family run businesses have mushroomed, using small-sized machinery available from countries of the East, to produce for market segments previously supplied with imported goods. SMEs have also gone for aggressive marketing by targeting markets in SADC and COMESA countries, where Mauritian products have won a good reputation.
3.4 The impact of sectoral changes on poverty
3.4.1 Unlike the financial crisis, which is a recent phenomenon, the effects of trade liberalisation and the end of protectionism have started becoming visible since the turn of this century. Those sectors, which have been hardest hit by the meltdown of trade preferences, are the sugar and textile sectors, which were both sheltered from open competition by the Sugar Protocol and the Multi Fibre Agreement respectively. These two sectors have gone through their own process of change, although in the case of the sugar sector, the transition was better planned than for the textile sector. The restructuring of the sugar industry was strongly supported by financial assistance made available by the European Union.
3.4.2 The sugar sector
3.4.2.1 The restructuring of the sugar industry implied simultaneously the centralisation of milling operations and the downsizing of the labour force which was drastically reduced from 34,600 in
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1996 to 15,900 in 20085. Whether those made redundant became poorer or better off is still a live issue, with the unions and employers (i.e. the Mauritius Sugar Producers Association), as main protagonists. It is true that those, who left the labour force voluntarily under the Voluntary Retirement Scheme (VRS) due to downsizing had, on their own, to shape the rest of their working life. Many of those, who could manage it, recycled themselves in other fields of activity, while a significant number became impoverished, mainly because of addiction to alcoholism or idleness. Although figures are not available at industrial level to reveal the aftermath effects of VRS, the survey conducted by the CSO6, covering the ex-employees of two factories, having closed down, reveal that a healthy percentage (64%) of those, who responded, reported that closure had improved the quality of their lives as against 33% who developed health problems due mainly to smoking and drinking. Despite the limitations inherent in all sample surveys, the report of the CSO provides a fairly representative picture of how the downsizing of the labour force in the sugar industry impacted on the lives of those who accepted voluntary retirement.
3.4.2.2 Those in the business of growing cane have also faced
growing pauperisation due mainly to the declining price of sugar and rising cost of production. Poverty related problems within the community of cane growers may require a study on its own, but the deliberate abandonment by many planters, of their cane growing activities is a sign of a gradual depression of the sector, with serious economic and social consequences.
3.4.3 The textile sector
3.4.3.1 The textile sector, the second, after the sugar sector, to be most disrupted by the opening up of the economy, has evolved
5 CSO, Digest of Labour Statistics, various issues 6 CSO: Results of a tracer study on ex-workers of St. Antoine and The Mount sugar factories, October - November 1997
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under conditions unlike those which applied to the sugar industry. With no external support to restructure itself, the textile sector coped with the dismantling of the multi-fibre agreement under more disruptive conditions, especially for workers being laid off. The EU market became more accessible to low cost producers, based in countries such as Bangladesh, India and Pakistan, thus narrowing down market opportunities for Mauritian producers of textile products. Redundancies due to the closing down of factories became recurrent and those laid off did not obtain the sort of support and benefits which enabled their counterparts in the sugar industry to survive their transition to other activities.
3.4.3.2 The Ministry of labour, did commission, in 2007, a study with the support of the UNDP, to make an assessment of the impact of the phasing out of the multi fibre agreement on employment in the textile industry, with special reference to strategies for coping with retrenchment. The report made a number of recommendations which paved the way to the repositioning of the industry and the retraining of workers affected by redundancy in order to equip them with the right skills needed to cope with different factory operations.
3.4.3.3 However, despite the policies to cushion the disruption caused
to the industry, redundancies did take place on a massive scale and the picture is shown at Table 8.
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Table 8: Employment in Textile Sector, 1996-2008 Year Textile Wearing
apparel Total
1996 5,212 67,454 72,666 1997 5,517 67,495 73,012 1998 5,336 72,348 77,684 1999 5,537 77,031 82,568 2000 9,210 72,810 82,020 2001 8,180 75,766 83,946 2002 7,995 69,982 77,977 2003 7,784 68,344 76,128 2004 8,282 59,691 67,973 2005 6,054 52,659 58,713 2006 6,813 49,501 56,314 2007 6,926 50,881 57,807 2008 6,778 50,561 57,339
Source: CSO, Digest of Industrial Statistics, various issues
3.4.3.4 The drop in employment was not as drastic as in the sugar industry and the textile sector responded quite promptly to the removal of trade preferences. Many enterprises repositioned themselves by customising their products to suit niche markets and statistics reveal that investments in technology driven processes increased in the early stage of the crisis. Hence, the employment situation in the textile sector was somewhat redeemed. Re-employment became common, facilitated by reskilling oriented towards new technologies and production systems, as manufacturers moved up the value chain and upgraded their products.
3.5 Understanding poverty
3.5.1 Debate over relative poverty almost always spills over the lifestyles of families. The argument is often put forward that poverty is the outcome of reckless living and that families with frugal life styles somehow manage to live decently. Assuming the above argument is correct, it is possible to examine its validity by having recourse to statistical evidence. Two indicators, namely alcohol consumption and divorce rate have been used as yardsticks for responsible lifestyle. The data shown at Tables 9 and 10 reveal the following:
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(i) there is no significant difference in alcohol consumption (expressed as percentage of total expenditure) between the 20% of poorest and the rest of Mauritian families.
(ii) the divorce (or separation) rate among the 20% of poorest Mauritian families is significantly higher than for the 20% of richest families.
Table 9: Alcohol consumption as percentage of total expenditure
Year 20% poorest Rest of population 1996/97 1.5 1.9 2001/02 2.0 2.2 2006/07 2.0 2.1
Source: compiled by CSO at request of NESC
Table 10: Divorce or (separation) as % of heads of households in segment Year 20% poorest 20% richest
1996/97 8.1 1.9 2001/02 9.3 1.9 2006/07 10.7 2.2
Source: compiled by CSO at request of NESC
3.5.2 The percentage of house owners among the poorest segment of
Mauritian society, which has averaged around 90% for the period 1996-2007, may be regarded as a healthy figure in comparison to even European house ownership record. According to the TFSIVG, the desperate living standards of the poorest fringe of our society are of growing concern. The latest figures made available by the Trust Fund reveal that the 7,000 families earning an income of less than Rs 4,000 monthly are facing severe housing problems. The Trust Fund has succeeded in locating those areas where pockets of poverty do exist. Although, as may be expected, it is not easy to give a strict definition to what may be called a pocket of poverty, the Fund roughly reckons a pocket as being a collection of around 15 families living in total deprivation. The 7,000 households, spread over 229 pockets, are located in the regions of: • Roche Noires • Vallée Pitot • Belle Mare • Poste de Flacq • Bambous • Le Morne
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• L’Escalier • Surinam • St Hilaire/St Hubert • Rose Belle/Cluny • Roche Bois
3.5.3 The TFSIVG, operating under the aegis of the Empowerment Fund, is
involved in implementing grass root assistance programmes, which focus on providing low cost housing, pre-primary and primary schooling and training in specific skills which may help family members to become gainfully employed. The idea is not so much to provide permanent assistance to the poverty-stricken families as it is to offer them a minimum support coupled with counselling to make them self reliant.
3.5.4 However, information, more of a qualitative nature, does suggest that
many of those living in extreme poverty have lifestyles which tend to perpetuate their existing problems. Broken families are more common among the poorest class. Table 9 shows a significantly higher rate of divorce within the segment representing the 20% of poorest families as opposed to the segment on the higher end of the income scale.
3.5.5 Unstable families are associated with other social ills such as drug
addiction, prostitution, alcoholism, unwanted births and child delinquency, all of which have the combined effect of pulling families further down the social ladder. Certainly, counselling coupled with the right form of social aid, would help families to emerge out of the spiral of poverty but deeper investigations suggests that other problems associated with poverty are keeping families perpetually confined to a miserable life.
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3.6 Fighting poverty
3.6.1 Dealing with extreme poverty
3.6.1.1 The TFSIVG, working in conjunction with a sister unit, the Elimination of Absolute Poverty (EAP), have undertaken a country-wide exercise involving, firstly the identification of pockets of poverty, followed by a phased programme for rehabilitating those families. It would not be within the scope of this report to give a comprehensive coverage of the work carried out by the two inter-dependent units, both operating under the aegis of the Ministry of Finance and Economic Empowerment (MOFEE).
3.6.1.2 Both are working on the basis of the country-wide survey carried out a
few years earlier, but regularly updated to take on board changing circumstances. The latest update suggests the existence of 229 pockets of poverty throughout the country, grouped in 69 clusters. For the purpose of managing the project, pockets are grouped in clusters and a cluster roughly comprises of 4 to 5 pockets. A number of such clusters are placed under the charge of professional social workers.
3.6.1.3 In a nutshell, the TFSIVG and the EAP are jointly responsible for
providing low cost shelter, termed CIS (for corrugated iron sheet) houses to the families within a cluster. This is followed by a variety of support measures which include counselling, micro-credit facilities for starting home-based businesses, provision of school materials, adult education and connecting eligible family members to job opportunities through the Empowerment Fund.
3.6.1.4 At the time of writing this report, the rehabilitation programme was
being implemented in 24 clusters, covering around 2,400 households. The extension of the programme to cover all the 69 clusters, could take three (3) to four (4) years.
3.6.1.5 The TFSIVG and the EAP are networked with a number of Non
Governmental Organisations (NGOs) which are providing vital services such as self-help construction of houses and “hand holding”
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counselling to help families move through the painful transition leading to self-reliance. The challenges being faced are immense and often insurmountable. Cases were reported of how young girls living in the derelict settlements were induced by unscrupulous outsiders to indulge in prostitution thereby enabling them to earn higher incomes than what they could earn by taking advantage of the incentives offered. These and similar illegal (but remunerative) activities such as drug peddling were known to the rampant, making the tasks of NGO workers harder than ever.
3.6.1.6 These cases of extreme poverty are not easy to combat, and each has to
be handled on its own merit. However, those responsible for running the project gave abundant evidence of individual cases of desperate families being pulled down into deeper poverty because of the addiction of family members to alcoholism, drugs and prostitution. These factors, compounded together, were leading families to eke a living from meagre incomes, thereby exposing the younger members to all forms of delinquency.
3.6.2 Alleviating the effects of joblessness
3.6.2.1 The Ministry of Labour, Industrial Relations and Employment currently
runs specific schemes to offer a protective net to individuals who, (a) as registered unemployed, are in search of a job and (b) have been laid off from their employment. For an unemployed job seeker the Ministry runs a “job placement” programme which involves the search for a suitable job for the job seeker. This task is undertaken on a country-wide basis, through a network of Employment Information Centres whose operations are facilitated by a computer-based labour information system. Table 11 shows the number of job seekers “placed” against the number submitted to employers, over the period 2007- 2009.
Table 11: Job Placement Programme, 2007-2009
Year 2007 2008 2009 No. of jobseekers referred to employers 44,518 38,985 38,329 No. of jobseekers placed 2,031 2,010 1,305
Source: Ministry of Labour, Industrial Relations and Employment
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3.6.2.2 A second scheme, the Workfare Programme, is designed to give temporary support to workers having lost their jobs. This support takes the form of a monetary benefit which is payable over a period not exceeding 12 months. According to the legislation, the quantum of the benefit, is on a diminishing scale, subject to a minimum of Rs 3,028 and a maximum of Rs 9,085 as given below:
90% of basic wages for first 3 months 60% of basic wages for next 3 months; and 30% of basic wages for next 6 months
3.6.2.3 The payment of the transitional unemployment benefit is supplemented by efforts to provide to the laid off workers access to a gainful employment. Three options are available to them under the Workfare Programme, namely:
(i) Accepting an alternative job, provided through the “job placement programme”;
(ii) Receiving training for redeployment to another activity; and (iii) Receiving necessary assistance to start an appropriate small
business.
3.6.2.4 Since the coming into operation of the Workfare Programme in February 2009, the results registered have been quite promising and the data shown at Table 12 gives the numbers who have joined the Workfare Programme and the options exercised by them. The table also shows the total amount disbursed to beneficiaries of the Transitional Unemployment Benefit.
Table 12: Workfare Programme, Feb 2009 - Jan 2010 Male Female Total Job placement (Employment Division) 747 897 1,644 Training & re-skilling (NEF) 69 159 228 Starting a small business (SMEDA) 154 102 256 Total 970 1158 2128 Total sum paid as Transition Unemployment Benefit (TUB) = Rs 64,792,983 Source: Ministry of Labour, Industrial Relations and Employment
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3.7 Social aid
3.7.1 Mauritius has always taken pride in the highly supportive forms of aids it offers to vulnerable groups within the population. The concept of the “Welfare State”, dear to all political parties, which have been in power, either alone or in alliances, is still accepted as the protective net that deserves to be maintained. The budget allocation for the grant of various form of social aids, remains colossal, accounting, in 2009 for almost 50% of total government expenditures.
3.7.2 Not all forms of grants are directed towards poverty alleviation, and being more of a universal nature, they benefit rich and poor alike. A list of the major support measures aimed towards aiding vulnerable groups is given below, together with the amount allocated in the 2008-2009 budget.
Rs (Mn) • Free travel for students, old age pensioners and
disabled persons 792
• Eradication of absolute poverty programme 375 • Social aid (various forms) 371 • Assistance to fishermen 60 • Income support for rice and flour 130 • Old age pension (universal) 7,687 • Subsidy on S.C and H.S.C Examinations 85.7 • Subsidy for rice, flour and cooking gas 1,300
3.7.3 The list of grant items is much longer and an exhaustive list is shown at
Box 1. When compared to many developed countries, Mauritius can claim to be a country which cares for its population. Virtually no citizen suffers from total deprivation of the necessities of life. The universal pension, offered indiscriminately to all Mauritian citizens who cross the age of 60 years, is a scheme the like of which does not exist in even the most advanced counties of Western Europe and North America. Its universality is sometimes viewed as a weakness in certain quarters as it fails to target the needy old age citizen, but whatever be the wisdom behind keeping it in its current form, it does at least ensure that any elderly citizen in the country is not left totally helpless.
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Box 1: List of major grant items for social progress The Government has designed new engines of social development which have reached more than 100,000 persons who are either living in poverty or on the edge. These are enumerated as follows: • an Empowerment Programme with an initial endowment of Rs 5 billion • an innovative Integrated Housing Programme • an Eradication of Absolute Poverty (EAP) Programme with a focus on children of pre-
primary age from vulnerable families • a CSR requirement on IRS promoters and all corporations • a statutory Corporate Social Responsibility • a four-prong partnership, involving Government, the corporate sector, NGOs and
development partners to implement programmes at grass roots level • strengthening of the Trust Fund for Integration of Vulnerable Groups • integrating the Development Cooperation Programme of the European Union in our
overall framework to combat poverty and social exclusion • a total reengineering of the redistributive role of fiscal policy to give more to needy
families • greater institutional and implementation capacity • an independent Poverty Observatory In addition to these actions focused on specific areas, there are social achievements with a much wider outreach. These include: • free bus transport for over 120,000 elderly; • free bus transport for some 280,000 students; • universal old age pension; • free school materials to 6,600 needy students; • full payment of SC and HSC examination fees for some 9,000 students from families
with modest income; • increasing significantly the gross enrolment ratios at tertiary levels, from 28 percent in
2005 to 41 percent in 2008; • providing capacity for 8,000 more seats at tertiary level; • doubling the subsidy on flour and cooking gas; • doubling the income support for about 100,000 beneficiaries; • arranging for 10,500 out of the 16,000 eligible families with modest income to become
owners of CHA homes; • giving financial support to help pig breeders recover from the impact of the swine fever
epidemic; • granting 4,400 fishers shares in the Fishermen Investment Trust; • providing Rs 1 billion to support small planters for derocking, irrigation and land
preparation; • reducing cess payment of 20 percent for small planters for each of the crop seasons
2009/10 and 2010/11; • writing off DBM loans for 1,535 small businesses in Mauritius and Rodrigues at a cost
of Rs 85 million.
Source: Budget Speech 2010
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4. CONCLUSIONS AND RECOMMENDATIONS
4.1 General remarks 4.1.1 Of late, there has been a shift in the strategy of Government to cope
with problems generated by poverty. In the past, Government’s concern was more to give direct assistance to those in vulnerable situations, and the long list of aid items supported by the budget of the Ministry of Social Security, National Solidarity and Senior Citizens Welfare and Reform Institutions has been testimony of its emphasis on care for the needy.
4.1.2 While the wide array of aid items have been maintained, there has been a recent shift in policy towards making vulnerable families become self-supportive by engaging them in activities which are remunerative. This has led the Government to carry out the complex task of identifying the families living in helpless conditions and providing them with the necessary back-up support to enable their integration into mainstream society.
4.1.3 Many of the schemes and projects outlined earlier in the report are
targeted to achieve the above objective. The goals are certainly well-intentioned but the Council considers that certain adjustments are needed regarding the manner some of these schemes are administered. Many of the improvements can be realised by applying “soft” methods, not entailing the mobilisation of extensive resources. In the rest of this chapter the Council makes a number of recommendations which, it hopes, would help the authorities concerned to take a critical look at current plans and projects, and introduce improvements which would enable them to realise their objectives.
4.2 Grass roots assistance and accountability
4.2.1 Public opinion in Mauritius is generally favourable to the idea that public funds may be utilised to uplift families living in deep poverty,
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provided they do not become permanently dependent on state assistance. The TFSIVG and the EAP programme have embarked on the difficult task of identifying poverty stricken families, with the aim of providing them with the essential necessities of life, namely housing (based on self help), education and eventually integration into mainstream society. Those running the project have succeeded in establishing a reliable database of existing pockets of poverty grouped within clusters, and covering the whole island. All grass root, hand-holding types of support are provided by NGOs, which are close to the affected communities and they operate under the supervision of trained social workers, who themselves report to those managing the project.
4.2.2 The Council considers that the mechanism put in place for directing aid
to those who need them has the merit of being targeted towards the needy. It does appear, however, that the manner in which resources are channelled to those targeted, requires better management and control. The two implementing agencies are both disbursing financial and physical resources, with NGOs being a key player in managing those resources. It is true that there can be no replacement for the dedicated people grouped within an NGO which is motivated to help the poor. NGOs, as a broad category, may have within their membership people to whom accountability for the use of public funds may appear unimportant.
4.2.3 It is considered that it would only take a few cases of embezzlement of
funds to be reported for the whole programme to be discredited. Already certain allegations (whether founded or not) have been made, but if these proliferate, the project may lose its credibility and alienate public opinion.
4.2.4 Accountability is extremely important as a means of controlling how
public funds are being used. It implies three basic conditions; firstly items on which funds have been spent are clearly spelt out, secondly these funds have been channelled according to rules of good governance and thirdly the results achieved are evaluated and reported to those responsible for the project.
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4.2.5 It is felt that it would be unreasonable, on the basis of subjective judgement, to start the exercise by deliberately excluding NGOs which are reportedly unreliable. This would create ill-feelings within the NGO membership, and lead to division and apathy to the project. The real issue boils down to tightening the rules and the procedures, especially those relating to accountability and transparency.
4.2.6 The control mechanism must be well-defined and made binding upon
those NGOs which are entrusted with responsibilities to implement the project. Those at the head of poverty-related programmes may be well-advised to rethink the control mechanisms of the projects, with the assistance of external consultants (under the capacity building programme) so as to tighten accountability and control.
4.2.7 Insistence on accountability will lead NGOs to become more
professional in their approach towards spending public funds. The weaknesses in the implementation mechanism are bound to show up, if those in charge of the project rely entirely on their subjective judgement in choosing NGOs for execution of programmes without insisting on responsible management.
4.3 The use of food vouchers 4.3.1 In Mauritius, we do not have the type of poverty, which involves
deprivation from food or drink, leading individuals to die of hunger. The state has always been known to provide a wide enough range of assistance in order to rule out all possibilities that groups within the community live under conditions bordering on famine.
4.3.2 Yet the evidence gathered suggests that the pauperisation of a segment
of the population is growing simply because the system does not allow the most unfortunate citizens to be identified for corrective action. Much of the poverty seen is of the relative type, caused mainly by adult members of the family who mismanage their incomes and the lives of children under their care. However, low family income has also been
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seen as a contributory cause of poverty and the 7,000, so far identified families, are part of that exclusive segment.
4.3.3 Few Mauritians will accept the fact that when the country can boast of
a per capita income exceeding US $ 10,000 (on purchasing power parity basis) a typical family can afford to live decently with an income of Rs 4,000 a month. One may argue that with the liberalisation of wage fixing in the informal sector - which is growing in size - the number of wage earners drawing a monthly income below this threshold is likely to rise.
4.3.4 The Council feels that the state can show greater compassion towards
this class of unfortunate Mauritian families. The suggestion being made is to offer a food voucher to each of these 7,000 families which can procure them only essential food items (such as milk, edible oil etc - to be listed on the voucher). Assuming the value of each voucher to be Rs 800 monthly, the total cost of running the scheme would be around Rs 65 million per year.
4.3.5 The Council is aware that such a scheme is beset with many difficulties
and the following suggestions are made: • Firstly, each voucher, having a specific value, may be traded off by
an unscrupulous holder, for a lesser amount of money which may subsequently be spent on wasteful items, such as alcohol and drugs. It would be fairly reasonable to believe that, women with families are less prone than their male counterparts to misuse funds, meant to feed their family members. Hence, the rather radical recommendation is made that this voucher should, in priority, be in the name of the housewife (or equivalent) rather than that of the male householder.
• Secondly, the vehicle for delivering the food vouchers may pose serious problems, as it has to ensure transparency while involving minimum bureaucracy. Given our local administrative set up, there exist two ways for distributing these vouchers to those who deserve the food aid; these are firstly the Ministry of Social Security, National Solidarity and Senior Citizens Welfare and Reform Institutions and secondly the social workers employed
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under the EAP. Both delivery modes have their strengths and weaknesses but the EAP has some inherent advantage, which makes it better qualified to administer the food voucher programme. Firstly, it is the owner of the database of families below the established poverty line, and its proximity to these families makes contact with them easy. More importantly however, its front line field workers are NGO members rather than civil servants attached to the sub offices of the Ministry and their mobility with regard to field operations is a recognised fact. Certainly the EAP will have to readjust its own procedures and strengthen control measures to ensure that the food aid is properly delivered to deserving recipients.
• The third problem that may be encountered is that the list of beneficiaries would be in constant mutation, requiring close monitoring of the database of the EAP. The pool of poverty stricken families would be having both incoming and outgoing elements and unless the EAP can promptly update its database, the food aid may face the risk of being misdirected or abused.
4.4 Professionalisation of social work 4.4.1 It appears, from the evidence gathered, that doing social work requires
dedication, and this quality is seen mainly in volunteers grouped within NGOs. They attend to the day-to-day needs of people in distress and also their proximity allows them to make a fairly good evaluation of the problems of families living in poverty. However, in addition to the above, social workers need to professionalise their work methods, and this can only be achieved by mastering the tools for conducting social work. The argument was often put forward, during consultations with various stakeholders that voluntary social work is not necessarily meant for those having followed university courses on the subject. The argument is sound as social work directed towards the poor, needs dedication more than academic qualifications. However, dedication alone is not a sufficient requirement. Many examples were documented of how social workers were more effective in helping the poor when they are able to complement hand-holding care with
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knowledge-based skills such as negotiations with external stakeholders, and preparing simple projects that may be marketed for fund raising purposes.
4.4.2 In fact genuine social workers, involved in helping the poor, need to possess the following qualities: • A real motivation to devote their efforts in lifting people out of
poverty and improving the quality of their lives. This would, in turn, imply studying the needs and problems of families concerned and also the channels of social mobility.
• Capacity for making precise assessment of resources needed to provide them with the necessary support, and hence mastering the simple tools of budgeting.
• Develop working relationships with agencies providing essential needs to communities namely water, electricity, and access roads. Hence networking with agencies such as the CWA, the CEB and the District Councils may be considered critical.
• Prepare simple reports of resources utilised and targets achieved for evaluation and reporting purposes.
• Provide counselling, especially to induce youngsters to discard deviant practices such as drugs, alcohol and prostitution and redirect their energy towards jobs or self employment for which they need to develop their natural aptitudes.
4.4.3 The reason for profiling the nature of social work is simply to show
that this task should be taken seriously and that NGOs involved in social work should not develop the notion that dedication is the only quality needed for being effective. The NESC therefore seriously takes the view that while NGOs should be thanked for the good work which they do, their membership should urgently be trained to master the skills needed to give all-inclusive support to communities, in an effective manner.
4.4.4 Hence, NGOs, active in poverty eradication, should with the assistance of MACOSS, identify training facilities for their membership, to be presented to aid donors (including the Government) as part of their internal capacity building programme. Without proper training there is
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always the risk that poverty alleviation programmes can get derailed during implementation.
4.5 Unemployment and the work placement programme 4.5.1 There is certainly no reason to be alarmed by the current rate of
unemployment, which during this time of the financial crisis, is well below the level prevailing in most of the western democracies. The Government has been prompt in not allowing unemployment to creep up despite new job seekers coming into the labour market. The ranks of unemployed had momentarily ballooned because of job losses in many of the key sectors like tourism and textiles, affected by the financial crisis. The various programmes, implemented by the authorities, namely the job placement programme of the Ministry of Labour, Industrial Relations and Employment and the placement for training programme of the NEF have helped both in alleviating unemployment, and reducing the mismatch between skills available and those needed by the market.
4.5.2 Despite the aims of the placement programmes in reducing unemployment and averting joblessness, the results observed are not to the satisfaction of the authorities. The poor level of recruitment or acceptance of job offers are signs that the placement programmes have certain weaknesses which need to be remedied.
4.5.3 It would not be helpful to argue that job seekers are ill-intentioned
when they turn down job offers. Certainly not all are unemployed when they register themselves as job seekers. Turning down a job offer is the expression of a choice between their expectations of the benefits associated with a job, and those the job actually brings. Many factors were cited as the causes for the refusal of job offers. It was argued that many of the job seekers were already performing some gainful activity in the informal sector, while others were enjoying the support of their families.
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4.5.4 The NESC feels that it is the legitimate right of any individual to progress in life and turning down a job offer should not be blindly condemned.
4.5.5 The point has also been made that some employers are reluctant to
recruit workers beyond a certain age. Whatever be the motive behind such discriminatory practice or the refusal of job offers by those in search of an employment, the NESC considers that the motives must be investigated and properly evaluated. Failure to do this will imply that the authorities would follow the same trodden path, only to perpetuate the poor results being currently registered. In the meantime, efforts and valuable resources would continue to be wasted, with only an insignificant fraction of job placements being successfully effected. The NESC would suggest that the NEF could undertake an investigation, using telephone or email, as means of communicating with those having turned down job offers. It may turn out that on analysis of the outcome of the exercise (which can be conducted at low cost), the job placement programmes could be improved to serve the population of job seekers better.
4.6 Evaluation of poverty alleviation programmes 4.6.1 One of the tasks that should be carried out without delay is an in-depth
evaluation of the various poverty alleviation programmes. Currently, with the various schemes in operation, one does not have a clear idea of how satisfied we should be of the results obtained. It does appear that the thrust of poverty alleviation policies is on achieving results as opposed to making an assessment of how well the policies are being applied, which might bring the executors to change course. Some of the actions being undertaken are stop-gap measures which bring immediate relief to those in distress. The longer term problems such as providing decent housing and basic necessities, namely water and electricity to communities may be receiving lower priority because of the difficulties involved in providing them.
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4.6.2 Although the underlying philosophy of the poverty-related programmes is to make families become self reliant rather than keep them permanently assisted, it is important to assess the extent to which the NGOs concerned are achieving success on that score. Examples were reported of how families once assisted do their best to keep aid flowing in. Hence the success of programmes for the elimination of absolute poverty should be measured on the basis of the number of families becoming self supportive, as a result of the assistance provided.
4.6.3 A good evaluation of the poverty-related programmes should be
conducted by professional consultants, to ensure that an impartial feedback is obtained. Such feedback would be of much value to those responsible for running the programmes by enabling them to make the right adjustments for better performance in achieving the objectives set. The NESC would suggest that the NEF, which is the umbrella body financing poverty alleviation projects, could commission a reliable consultancy firm, to conduct the appropriate study.
4.7 The need for institutional linkages 4.7.1 The informal sector, as a new frontier for the creation of jobs and
wealth, holds the key for our plans to eliminate poverty. At the time of writing this report, the informal sector was recognised to account for 43% of total employment and 22% GDP.
4.7.2 The evidence produced earlier suggests that local SMEs have shown more success in adapting to the new changes associated with the integration of the country in the global economy. Statistics also reveal how SMEs have proliferated since the turn of this century.
4.7.3 Certainly job creation is one of the means to combat poverty. But in
the absence of job opportunities, self-employment becomes the other best option. Hence the informal sector, where opportunities for both new jobs and self-employment do exist, is the sector for making people economically self-reliant.
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4.7.4 The Council considers that self-reliance is a “sine-qua non” condition to unlock the desired solutions for alleviating poverty. The information made available to the NESC reveals the impressive number of individuals who have been initiated to new opportunities for self development and economic emancipation.
4.7.5 It is felt that our current fight against poverty should be based on a
strong linkage between the TFSIVG and the EAP (as front line entities) and institutions such as SMEDA which has the expertise to bring people, of working age, into mainstream economic activities. This linkage is a tenuous one right now.
4.7.6 The TFSIVG and the EAP have developed their own strengths in
providing support services which those affected by poverty badly need. They, however, do not have complete mastery of the expertise of pulling the unemployed into useful activities. Hence a proper linkage between bodies promoting self employment and the two above institutions would go a long way in strengthening our capacity to combat poverty.
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5. THE WAY FORWARD 5.1 Because of their very nature, pockets of poverty are bound to occur in our
society. The process of globalisation has unleashed new forces which have changed the dynamics of the economic and social environment in the country.
5.2 Falling into and getting out of poverty are happening more unpredictably than ever before and are in sharp contrast with the stable social order prevailing when trade and economic exchanges were regulated by international agreements.
5.3 But, facing the consequences of the new world order, the state has to cope with the phenomenon of poverty, using new tools and approaches. It can be safely said that the government has significantly moved away from the conventional approach of providing direct assistance and grants to those who need support. The challenges today are different and addressing the problem of poverty requires the authorities to explore the means of making families self-reliant in the long run, by helping themselves in the first place.
5.4 The NESC feels that the authorities have adopted the right approach in offering assistance to families, in the first instance, and to induce them gradually to fend for themselves.
5.5 Some of the weaknesses in our strategy have been identified, and it is hoped that the recommendations made will help to correct existing deficiencies and make the fight against poverty more effective.
5.6 To sum up, it is recognised that, when embracing the new world economic
order, the country has been swept by a variety of forces, bringing both positive and negative changes to our society. As spelt out earlier, the Council chose to focus its investigation on how globalisation changed the dynamics of development, which have a direct bearing on poverty-related problems. While other issues generated by the opening of the economy have been deliberately avoided, it remains the intention of the Council to focus attention on them, in a subsequent study.
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5.7 Finally, two facts stand out clearly in our study: (i) there is heightened awareness in the country of the plight of poverty stricken groups and (ii) the state has mobilised vast resources to rescue these groups from deprivation and help them to achieve self reliance. These resources as well as the substantial subsidies provided to alleviate poverty are not always fully appreciated, but the results are tangible enough to make a difference for those concerned.
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List of persons consulted
1. Mr Ishwarduth Abbanna Assistant Manager Eradication of Absolute
Poverty 2. Mr Jean Noel Adolph Project Manager, Trust Fund for the Social
Integration of Vulnerable Group 3. Mr José Allet Assistant Project Manager, Trust Fund for
the Social Integration of Vulnerable Group 4. Mrs Yasmin Cassimally Assistant Director, Central Statistics Office 5. Mr Sandrasagarren Naidu Programme Coordinator, Decentralised
Cooperation Programme 6. Mr Premode Neerunjun Secretary, Trust Fund for the Social
Integration of Vulnerable Group 7. Mr Hootesh Ramburn Director, National Empowerment Foundation 8. Mr Vijay Ramgoolam Managing Director, Small and Medium
Enterprises Development Authority 9. Mrs Vijay Lutchmee Ramsamy Permanent Secretary, Ministry of Labour,
Industrial Relations & Employment
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