The Welfare State

The Welfare state was established in Mauritius by the Colonialists and it has been maintained
and preserved since it gained independence in 1968, and all successive governments have
invested heavily with emphasis on social welfare, education and health sectors.

The Mauritian State has preserved and maintained the Welfare state after ratification and signing
the Universal Declaration of Human Rights and more specifically UN Covenant on
Economic, Social and Cultural Rights, (in defence of the Welfare state and Pension rights)
which states that:

Recognizing that, in accordance with the Universal Declaration of Human Rights, the
ideal of free human beings enjoying freedom from fear and want can only be achieved if
conditions are created whereby everyone may enjoy his economic, social and cultural
rights, as well as his civil and political rights and freedom;

Recalling the indivisibility of human rights and the adherence of the Mauritian State to
the African Charter on Human and Peoples' Rights which states that;

Convinced that it is henceforth essential to pay a particular attention to the right

to development and that Civil and Political rights cannot be dissociated from
economic, social and cultural rights in their conception as well as universality and
that the satisfaction of economic, social and cultural rights are a guarantee for
the enjoyment of Civil and Political rights;

Considering that the education, health care, pensions, subsidies on food, transport and
housing, are amongst the basic human rights of all human being;

Considering that social rights are universal, that is its accessed and guaranteed to each
and every citizen and that any law, order, or “means testing” represents measures
restricting the exercise and the dissolution of these rights;

Considering that “means tested” provision of social rights represents a return to the
humiliating and degrading Poor Law that existed during colonial time;

Recalling that free, public and universal access of education and health care, subsidised
food, transport and housing, universal old age pension are the results of more than a
century of struggles of the working people;

Considering that social rights as guaranteed under our Welfare State represent an
advanced form of social and wealth redistribution from the rich to the poor in conformity
to human dignity;

Bearing in mind that the wealth created by the working people are constantly being
appropriated by a tiny few rich;

Recalling that rich people are paying less and less taxes and the working people are
shouldering more and more the tax burden, through indirect taxes, like the VAT;

Affirming that it is the unequal access of wealth that should “targeted” and not social
rights of citizens;

Affirming that budgetary and economic policies should be formulated in conformity to

social rights and not the other way round;
Preserving and maintaining the Welfare state - social rights such as pensions, free health care,
free education, subsidies on food, free transport to students and the elderly people and housing
are amongst the basic human rights of all human beings – are being identified as the driving force
of the socio-economic success of Mauritius. Moreover, the Welfare state in Mauritius provides for
childcare, social amenities such as public parks and libraries, as well as many other goods and
services.

The Welfare State with the provisions Universal Basic Pensions have been preserved and
consolidated by enshrining social rights as fundamental rights within the Constitution for the
sustained prosperity of the nation.

Moreover, Universal old age pension which is a core human right and the fruit of the working
people struggle in 1937 and 1943 in Mauritius is being preserved and maintained.

According to the last Budget Speech, consolidation is being made to attain more social
achievements with a much wider outreach. These include:

(i) free bus transport for over 120,000 elderly;

(ii) free bus transport for some 280,000 students;

(iii) restoring universal old age pension;

(iv) free school materials to 6,600 needy students;

(v) full payment of SC and HSC examination fees for some 9,000 students from
families with modest income;

(vi) increasing significantly the gross enrolment ratios at tertiary levels, from 28
percent in 2005 to 41 percent in 2008;

(vii) providing capacity for 8,000 more seats at tertiary level;

(viii) doubling the subsidy on flour and cooking gas;

(ix) doubling the income support for about 100,000 beneficiaries;

(x) arranging for 10,500 out of the 16,000 eligible families with modest income to
become owners of CHA homes;

(xi) giving financial support to help pig breeders recover from the impact of the
swine fever epidemic;

(xii) granting 4,400 fishers shares in the Fishermen Investment Trust;

Land preparation;

(xiii) providing Rs 1 billion to support small planters for derocking, irrigation and

(xiv) reducing cess payment of 20 percent for small planters for each of the crop

seasons 2009/10 and 2010/11;

(xv) writing off DBM loans for 1,535 small businesses in Mauritius and Rodrigues at
a cost of Rs 85 million.
Industrial Laws

Prior to 1973, the industrial relations legal framework was characterised by a collective laissez-
faire approach and industrial disputes were left to the parties themselves. There was no
obligation to refer disputes to the Labour Commissioner, who had no power of arbitration unless
both employers and unions consented to such a practice and there was unrestricted right to
strike, except in essential services. The Trade Disputes Ordinance of 1965 did not provide the
proper machinery for the prompt settlement of disputes or for a coordinated approach to wage
determination. Ad-hoc wages boards were set up under the Regulation of Wages and
Conditions of Employment Ordinance, 1961.

In 1973, considering the situation as a threat to political and economic stability, the then
Government introduced the IRA as “a response to the consistent demand for more effective
communication and more industrial democracy and to the concepts and the legitimate aspirations
of a modern society. It seeks to introduce confidence and stability to the system of free collective
bargaining; it prescribes orderly procedures for the peaceful and the speedy settlement of
disputes, and enunciates clear principles for the free association of workers and employers
consistent with a proper degree of order and discipline.”

The Mauritian industrial relations system is said to have worked fairly well in maintaining industrial
peace, and thus in contributing to increasing investment, employment creation and for economic
development. The IRA brought fundamental changes to the industrial relations system by –

 marking a shift from a voluntary to a more institutionalised regime of industrial

relations;

 providing new mechanisms and procedures for recognition of trade unions,

collective bargaining, industrial dispute resolution and industrial action;

 establishing institutional mechanisms for dispute resolution and arbitration;

 making the right to strike subject to some specific procedures, namely: (i) an
industrial dispute should be reported to the Minister, (ii) strike can be undertaken
only if dispute has not been settled or has not been referred to the Industrial
Relations Commission (IRC) or the Permanent Arbitration Tribunal (PAT); and
(iii) the strike commences within 56 days from the day of receipt of the report by the
Minister; and

 setting up the National Remuneration Board (NRB) to determine minimum

wages and other working conditions for various industrial and occupational
groupings. This has enabled the fixing of minimum wages in not less than 29
different sectors and about 85 % of employees in the private sector.

As we are living in an era of dynamic labour markets, in which employment relations have
become vital for the promotion of social justice and economic development, the Industrial
Relations legislation, which dates as far back as 1973, needs to be reviewed in order to keep
pace with the profound changes that have taken place in the labour market and the economy
both at national and international level and also to establish an industrial relations system which
would promote social progress and economic growth.

Over the past thirty years, the concept of work and employment relations have undergone far
reaching transformations with the advent of new technologies, the widening of the informal sector,
influx of labour migration, increased participation of women in the labour market and the adoption
of flexible market policies. A study of the International Institute of Labour Studies points out that
“practices such as subcontracting, outsourcing, and the hiring of temporary and part time
workers, long considered as atypical work, are becoming more common… In the past, labour
legislation and collective agreements embodying job security, wages and non-wage benefits
have taken into account the requirements of a relatively homogeneous workforce that conformed
to the normal employment pattern, characterised by full time jobs and stable career trajectories,”

In this changing context, the trade unions all over the world have experienced decreasing
membership and have to cope with a more diversified workforce, more complex issues and
broader societal concerns such as discrimination, harassment, work and family among others.
They have equally to address the problem of increasing individualism among workers. Trade
unions have to strengthen their capacity to participate in dialogue not only on wages and
protection, but also on competitiveness and productivity and macro economic policies.

On the other hand, employers have been confronted to new challenges such as enterprise
restructuring, more intense international competition and there is growing focus on the corporate
social responsibility of enterprises and sharing of productivity gains. Continued emphasis is laid
on conflict resolution through dialogue and partnership rather than on conflict and competition.

ILO underlines that: “dialogue enables employers and workers to find ways to improve work
performance and rewards and move away from the low-quality, low productivity and low-
wage basement of the global market. Parallel to the democratic continuum….., there is an
economic and social development continuum in which the practice of freedom of
association and effective recognition to collective bargaining plays a major role”. It has
further indicated that the recognition by public authorities of good governance of the labour
market based on respect for fundamental principles and rights at work makes a major
contribution to stable economic, political and social development in the context of international
economic integration, enlargement of democracy and the fight against poverty.1

However, all the parties concerned concede that there are a number of areas which need to be
improved in order to ensure a modern employment relations system that promotes freedom of
association, collective bargaining and voluntary and peaceful dispute resolution, namely with
regard to -

(a) Industrial Disputes

(b) Dispute Resolution
(c) Collective Bargaining
(d) Freedom of Association.
(e) Trade union membership
(f) Administration of trade unions

Hence, new labour legislations – the Employment Rights Act and Employment Relations Act
- are being introduced at a time when our industrial relations framework inherited from the bygone
era of the1970s no longer match the twenty first century context of global competition within
which the Mauritian economy is called upon to manoeuvre – to replace the IRA Act. They seek to
promote the wellbeing of employees and enterprises through greater labour market flexibility and
positive working relationships.

The Employment Rights Act and Employment Relations Act were passed in the National
Assembly on Friday 22th August 2008 and came into effect/implemented on the 2nd February
2009.

The new labour laws give further employment flexibility for enterprises to organise work patterns
more efficiently and respond swiftly to competitive product market conditions and help to reduce
labour costs and raise productivity and competitiveness. The flexibility gained by enterprises is

1
crucial for meeting the operational needs of the export, financial and emerging ICT/BPO sectors
in particular and to promote the shift toward a 24/7 economy.

The new legislative framework would also improve occupational mobility and smoothen the
movement of labour from traditional sectors of activity to emerging ones. Provision is also made
for a Workfare Programme that aims at upgrading the skills and employability of retrenched
workers, thereby reducing their unemployment spell and likelihood of joining the informal sector,
hence contributing to the development of a trained and competent workforce to meet the
changing human capital needs of the Mauritian economy.

One of the most important features of the new labour laws is the promotion of Collective
Bargaining. The Employment Relations Act provides a framework for encouraging
decentralised collective bargaining as an effective vehicle for engagement between employers
and employees. A potential economic benefit of collective bargaining is that it encourages
efficient bargaining over wages and employment, taking into account firm specific considerations
like productivity, product market competition, profitability, capacity to pay and purchasing power
of workers as well as general labour market conditions and the economic implications of the
bargaining outcome for employers and workers. This may lead to greater wage flexibility,
enabling the labour market to adjust more quickly and reach a stronger equilibrium at higher
levels of employment, productivity and real earnings. With collective bargaining at the enterprise
level, a more decentralised wage determination system is likely to emerge with rewards being
closely linked to skills, productivity and performance.

Moreover, the areas of bargaining are not limited to pay issues only. They can normally cover a
number of workplace matters including training, health and safety and so on. Enterprise-based
collective bargaining also promotes fast and effective resolution of disputes in a fashion that is
responsive to the positions of both labour and management. There is little doubt that collective
bargaining symbolises the most significant expression of social dialogue. It provides a unique
opportunity for employers and the unions to relinquish their traditional adversarial relationship by
engaging in meaningful dialogue and developing stronger workplace cooperation between both
parties. A change in mindset is however required to adapt to the new rules of the game. This is
not only crucial for the sustainability of the collective bargaining process itself but also to ensure
that collective agreements deliver positive social and economic outcomes.
Socially Aware Employers

Enterprises in Mauritius perform an important social function by making significant contributions

to many legally structured funds which are binding to employers promoting social welfare.

Hereunder are a few examples of funds established by law to which employers are contributing to
meet social objectives: -

Employers have to contribute 2.5 % of their basic wage bill subject to a ceiling to the Employees
Welfare Fund in the first half of the nineties. One of the main activities is the provision of
educational loans to contributors for the tertiary education of their wards. Thousands of
employees and their children have benefited and continue to benefit from this scheme at
concessionary interest rates. It is the largest educational fund in the country.

Employers are also contributing to the National Savings Fund 2.5 % of basic salary subject to
the NPF ceiling and it provides for a lump sum to employees at retirement and also contribute 6
% of basic wage bill to the National Pensions Fund for the benefit of employees.

In addition, employers pay a training levy which has increased from 1 % to 1.5 % earlier this year.

There are also a number of welfare funds to which employers in different sectors are contributing,
for example, EPZ Labour Welfare Fund, Tourism Welfare Fund, Planters Welfare Fund, Bus
Industry Welfare Fund etc.

These funds are all contributing to the promotion of social welfare and the sum total exceeds 10
% of labour costs. It is more than a fourteenth month salary which has a bearing on costs and
competitiveness.

Employers have not been content just with the above contributions but have increased their social
involvement through Corporate Social Responsibility (CSR).

The International Organisation of Employers which is the voice of business worldwide defines
CSR as “Voluntary positive initiatives by business that look to go beyond legal compliance in a
diverse range of social, economic and environmental areas.”

The first point to emphasise in this definition is that CSR is voluntary. This is highly significant
because if CSR depends on government legislation it is no longer voluntary.

Secondly, it is important to highlight the fact that CSR is an employer initiative. This initiative is for
the benefit of employees and society at large.

Thirdly, the scope for involvement of enterprises is well defined and broad enough to encompass
diverse activities. They are related to social, economic and environmental areas.

Fourth, something that is voluntary cannot be subject to legislation. If it is governed by legislation,

it cannot be termed CSR. CSR goes beyond legislative provisions.

This is not a new phenomenon. It has existed through decades. There has always been a high
spirit of solidarity among Mauritians, including the business community. It is not out of place that
the business community was behind the creation of the National Solidarity Fund in the early
eighties which were difficult times from the economic and social standpoints.

Contributions are voluntary and the Fund still exists today and provides assistance to individuals
in need for medical assistance, fire victims, and more recently support to sale by levy victims.
The Mauritius Employers Federation (MEF) has always encouraged a higher degree of
involvement in CSR on the part of employers. In fact, the first tenet of its Code of Practice states
that enterprises have dual objectives, both economic and social. The MEF conducts surveys
regularly on CSR which belie the notion that not much is done by enterprises and a long list of
diverse activities have been implemented by enterprises. Through CSR, enterprises are able to
complement government efforts in meeting numerous objectives and employers in the private
sector are very sensitive and responsive to government priorities. While government would like to
develop and strengthen NGOs, there is no objection if that is a priority of Government but there is
still the belief that it is not for CSR to finance and support NGOs. NGOs have their own raison
d’etre, structures and objectives. Government may support these objectives.

Internal and external CSR have to be differentiated. Employers run a number of programmes,
projects, schemes and activities for the benefit of employees and their families. The first
responsibility of the enterprise is to the shareholders and employees. If funds are channelled to
the government many of the enterprise schemes may be discontinued at the expense of the
welfare of employees. It is well known that many employers have medical facilities for their
employees as well as pension schemes, just to quote a few. Too much focus on the external CSR
activities will be at the expense of internal ones.

Furthermore, new legislations regarding health & safety have been introduced by Government
whereby every employer has the duty to ensure the Safety, Health and Welfare of workers at the
workplace through the Occupational Safety and Health Act, Act No. 28 of 2005 which provides
the framework for the implemention of safety and health in enterprises. The caption to the Act
provides “To consolidate and widen the scope of legislation on Safety, Health and the Welfare of
employees at work.” It has replaced the Occupational Safety, Health and Welfare Act, Act No. 34
of 1988 as from 1 September 2007.

The Act has introduced some basic changes that are relevant to all employers and employees
including the civil service. Among those changes are the special duties and responsibilities
covered in Part II of the Act backed by criminal penalty.

Besides, employers are more sensitized of the Sex Discrimination Act which provides for the
protection of individuals against discrimination based on sex, marital status and pregnancy in
employment, education, provision of goods, services and facilities, accommodation, disposal of
property, sports associations and clubs. The Act also provides for the elimination, as far as
possible, of all forms of sexual harassment in the workplace, in educational institutions and in
other areas of public activity.
The Rate of Unionisation

Over the past 35 years, the concept of work and employment relations have undergone far
reaching transformations in Mauritius with the advent of new technologies, emergence of new
sectors like ICT, Finance and Service Sectors, the widening of the informal sector, influx of labour
migration, increased participation of women in the labour market and the adoption of flexible
market policies.

In this changing context, trade unions all over the world have been experiencing decreased
membership and have to cope with a more diversified workforce, more complex issues and
broader societal concerns.

The labour movement in Mauritius is characterised by a multiplicity of organisations and a

membership breakdown from the returns of trade unions provided by the Registrar of
Associations shows the following:-

A total of only 102,901 workers are organised in as many as 338 Trade Unions in a total active
labour force of some 544,800 – which means about 18% unionised workers – a reasonable rate
as compared to many countries. While the rate of unionisation in the Public Sector is about
54%, it is shocking to learn that only 11% of workers in the Private Sector are unionised.

However, what is more astounding is the number of unions representing such a small workforce.
338 trade unions, out of which we have as many as 76 unions to-date with less than 30 members
– far below the membership requirement for a trade union to continue to exist under the
Employment Relations Act. This means that these unions have until February next year to
ensure they are in compliance with the requirements by taking relevant actions. Otherwise, they
will be simply scrapped off the official list of trade unions by the Registrar of Associations. It
should be noted that under the previous law, namely the IRA, only 7 workers were needed to
form a trade union.

We have about 175 unions having less than 100 members, and another 100 unions having
between 100 to 500 workers. Only 27 unions have between 500 to 1000 members, while another
22 represent between 1000 to 5000 members. Interestingly there are more than 50 unions in the
education sector alone.

In 1997, a Trade Union Trust Fund (TUTF) was set up by government having as primary
objectives: the promotion of workers’ education and of providing financial assistance to trade
union organisations. Notwithstanding the activities of the TUTF organised so far, it remains,
however, an irony that since the inception of the TUTF, the number of Trade Union Federations,
instead of declining, have further increased from 10 to 23. Some of these organisations have had
their membership dwindled substantially, while others have managed to increase their
membership.

The present breakdown reveals that there are 4 bona-fide Confederations under the present
legislation, and 19 Federations. These 4 confederations registered under the ERA are namely:
The National Trade Union Confederation (NTUC), Confédération Syndicale de Gauche-
Solidarité (CSGS), Confederation of Independent Trade Unions (CITU) and Confederation
des Travailleurs du Secteur Privé (CTSP). As regards the Mauritius Trade Union Congress and
Mauritius Labour Congress, they are no longer perceived as confederations. Under the
Employment Relations Act, they are now registered as Federations. It should also be noted that
the Registrar of Associations is actually processing an application for the registration of a new
confederation of trade unions.
In addition to the problems of trade union proliferation, the Trade Union movement has also to
confront its short comings in terms of Capacity-Building. With the exception of a few, many trade
union organisations do not have a proper office. They have inadequate finance, a lack of trained
and effective officers and negotiators. All these most certainly have an impact on the quality of
services provided by these organisations to their members. Other factors that have compromised
the strength of unions are inter-union rivalry, the inability to penetrate new emerging sectors of
the economy, amongst others.