QUESTION 2: WHAT ARE THE MAIN CAUSES OF UNEMPLOYMENT IN MAURITIUS AND

ANALYSE CRITICALLY DIFFERENT POLICY MEASURES ADOPTED BY THE GOVERNMENT DURING

THE PAST 10 YEARS IN ORDER TO REDUCE UNEMPLYMENT.

DEFINITION OF UNEMPLOYMENT

An unemployed is a person who is willing to work and trying to find a job at the existing market
wage but is not able to find one. Unemployment is the total number of unemployed in a
particular country. It is expressed as a number or percentage. Moreover, according to Statistics
Mauritius Figures, the rate of unemployment was evaluated at 7.8% in 2011 and 8.0% in 2012
and 2013. In 2013, the rate of unemployment for male was 5.3% and for female was 12.2 %. On
the other hand, during the first quarter of 2020, the rate of unemployment for male was 43%
and for female was 57%.

The unemployment rate can be calculated as the proportion of the number of unemployed to
the labour force.

UNEMPLOYMENT RATE= TOTAL NUMBER OF UNEMPLOYED DIVIDED BY WORKING

POPULATION (LABOUR FORCE) X 100%

Labour force which is also called the working population is defined as the individuals who are
presently employed as well as individuals who are unemployed

CAUSES OF UNEMPLOYMENT IN MAURITIUS

One of the main causes of unemployment in Mauritius is the “introduction of technology and
creation of new job categories. There may be mismatch between jobs and jobs needed in the
labour market causing structural unemployment.” (Usha Devi Chuttoo) For instance, there is a
high level of female youth unemployment in Mauritius because of skills mismatch. The skills
mismatch may include shortage of skills due to lack of qualification, knowledge and experience
as well as skills exceeding job requirements industry leading to higher unemployment. The risk
of not resolving skills mismatch may be drastic as it may add real costs on people, businesses
and societies. Besides, the lack of qualification may also trigger a rise in unemployment because
there are many college drop-outs who are willing to work but do not have a School Cambridge
Certificate. In fact, according to the Statistics Mauritius, “49% of the unemployed did not have a
School Cambridge Certificate or equivalent”.
Another main cause of a rising rate of unemployment in Mauritius is that most employers look
for applicants who have work experience. Consequently, these individuals will never gain work
experience unless they find employers who are willing to hire them without any experience.
However, if employers are willing to give on-the-job training, the rate of unemployment can
significantly decrease. For instance, with adequate knowledge and skills achieved by the
employees, they can develop problem-solving competency. Apart from this, another problem
giving rise to unemployment is the lack of communication between employers and workers. It is
noted that in Mauritius young graduates are unable communicate with employers, colleagues
and clients efficiently whether it is in English or French. People have been only focused in
reading and writing that they have failed to master communication skills and others have great
ideas but the inability to express them disrupts their performance at work. Also many
individuals rely mostly on technology-based communicates which can negatively affect
productivity.

THE IMPACT OF COVID-19 ON UNEMPLOYMENT IN MAURITIUS

The Covid-19 outbreak has been declared a pandemic by the World Health Organization (WHO) it has
also taken a huge toll on the global economy. As of 11 November 2020 around 51 million cases have
been confirmed worldwide, with more than a million deaths. Individuals who are the only breadwinner
in the family are having an arduous time in catering the needs of their family members. Self-employed
workers and informal workers have been greatly exposed to the job and income losses prompted by the
global pandemic. On the other hand, overall employment is gradually ameliorating, most workers are
not earning as much money as they used to earn before the lockdown. Moreover, the tourism industry
as a whole is a fundamental element of the Mauritian economy and it has been shaken up the Covid-19
outbreak, causing so many people to lose their jobs and until now there are a lot of individuals who are
jobless. As Mauritius is one of the vulnerable countries which may suffer more in the long-run as it is
highly dependent on other developed countries.

POLICY MEASURES ADOPTED BY THE GOVERNMENT

One of the policies adopted by the Mauritian government is the Expansionary Fiscal Policy. The Fiscal
Policy refers to the government’s capability to regulate economic and social consequences, in particular
with respect to the rising economic growth and sharing gains from supplementary economic activity.
Moreover, Fiscal Policy has focused on assuring that spending remains related to resource availability.
Ever since the COVID-19 pandemic, Mauritius has focused tax and financial assistance actions
comprising the removal of penalties for taxpayers who are not able to submit returns. During the global
crisis, the government promoted work-from-home policy and tax credits for businesses that were
affected by the pandemic. In addition to this, the government brought forward a tax reduction scheme
in 2020 which provides employers a double tax reduction in respect of emoluments payable to its
employees who work from home and a 5% tax credit on the acquisition of information technology
system. Moreover, the Government has focused on decreasing the impact of the recession on the
economy as well as on jobs and they are preparing to invest in people and education, investing in
infrastructure and capacity building.

Another policy adopted by the Government in Mauritius is the Monetary Policy. The Monetary Policy
refers to the actions undertaken by a nation’s central bank to control money supply and achieve
macroeconomic goals that promote sustainable economic growth. The Bank of Mauritius has defined
Monetary Policy as “…the set of actions taken by the central bank to influence the amount of money and
credit in the economy. It largely affects the economic and financial decisions of consumers and
businesses and ultimately influences demand across the economy—that is, the willingness of households
and firms to spend on goods and services as well as their expectations of movements in key economic
and financial factors.” Monetary Policy is coordinated by the Bank of Mauritius and its Section 4 define
the main objective of the Bank as that of sustaining price stability and of stimulating orderly and
balanced economic development. When prices are steady and anticipated to remain steady in future,
inflation is no longer viewed as a factor for price and wage-setting in the economy. A low inflation rate
helps retain the value and confidence in the domestic currency. Price stability also forms a sound basis
for macroeconomic stability and long-term growth of the economy. Monetary policy has an effect on the
various sectors of the economy with lags that vary across sectors and eventually on inflation. The task of
decision makers on monetary policy is made difficult by uncertainties concerning as to how changes in
monetary policy are transmitted to different sectors of the economy, as well as changing expectations of
individuals.

CRITICAL ANALYSIS
According to a report in IMF, ”There is a little consensus in Mauritius as to the exact nature and causes
of the unemployment problem. In addition, there is a lack of analysis of the possible linkages between
labour market institutions and unemployment. While it is easy to blame ‘labour market rigidities’ for the
problem, a more rigorous analytical framework of the role of labour market institutions would be useful
to facilitate dialogue between Mauritian social partners.” In simpler terms, we do need more experts to
work on the real causes of unemployment so that we can eradicate the issue of unemployment
significantly and ease the suffering of the population to a certain extent. For instance, it was announced
in August 2015 that 100,000 new direct and indirect jobs will be created within the coming five years
(20,000 per annum). In financial year 2015-2016, only some 16000 new jobs were being created in these
sectors. The lack of importance given towards the issue of unemployment is disrupting the economy of
Mauritius.
To conclude, unemployment in Mauritius is indeed alarming and new policies as well as measures need
to be taken to prevent harmful consequences towards a country’s economic growth.