Between increases and readjustments: salary issues and social challenges on the sidelines of the Budget

As the clock ticks towards the long-awaited presentation of the 2024-25 Budget, the question of salaries occupies a prominent place in the discussions. Some believe that the Grand Argentier will make it one of his trump cards. Others mention paying a 14th month as a key measure. Will companies be able to survive a new wage increase? Will the government be able to continue to support them so that the tax burden is lower?

Two major events are on the government's agenda to improve the salaries of employees in the public and private sectors. The Ministry of Labor plans to present and put into practice two decisive reports: that on salary relativity and another dedicated to “occupation-based salaries”.
The report on salary relativity, for example, aims to correct the anomalies created by the increase in the minimum wage, implemented on payroll at the end of January. This increase caused imbalances in salary scales. What do operators think?

Reflection

François de Grivel, industrialist, highlights the difficulties that companies are already facing due to the increased tax burden, explaining that the minimum wage increased from Rs 11,575 to Rs 16,500. “In January, there was a big increase salary, which is very difficult to bear. There are no specific categories. Young people who arrive receive the same salary as those who have 20 years of experience. More thought would have been needed. I hope the Budget will take this category into account,” he said.

Consumption

François de Grivel goes further by warning that a new increase would be “dangerous” for the country. “By increasing wages, we increase costs, which hurts consumption. Employees will pay more for consumer goods, which will increase the cost of living and will not produce the desired effect. We cannot build a national economy on repetitive wage increases. These increases are not accompanied by additional productivity,” he believes.

Long term goal

François de Grivel goes on to explain that the objective must be to create wealth and employment. “If we don't achieve this structure, it will be counterproductive for any government. As things stand, a further increase is difficult. Previous increases weigh heavily. We must be careful and more objective in the long term, and not make short-term decisions. This concerns both employers and employees personally,” he emphasizes.

For his part, trade unionist Reaz Chuttoo speaks of “extrapolation” and believes that the Budget should not necessarily bring salary increases. “These are measures that the government will pay for. A salary increase must be decided by the National Wage Consultative Council. The Budget could announce a 14th month and the government will pay for it,” he believes.

Classification by profession

Reaz Chuttoo emphasizes the importance of classifying individuals according to their occupation in order to ensure fair remuneration. According to him, since 1975, women working in the service sector have not been covered by any Remuneration Order.

“This omission has led to an alarming situation, where almost 30% of women earn only the minimum wage, in effect since 2018, regardless of the work they do. There are women in the commercial sector who only earn minimum wage. It is important to correct this social injustice. Classification by occupation is essential,” insists the trade unionist.

Reaz Chuttoo relies on the fact that the Minister of Labor had promised that this classification would come. The Budget should, according to him, bring about changes at the social level. “The minimum wage was defined in 2017 based on food security. Is it normal that today, people who receive a pension do not have the right to this security? “, he asks.

He believes that pensions should be increased to Rs 16,500 to ensure a decent standard of living for beneficiaries. “Is it normal for families to have to pay for the education of their children with disabilities? No less than 200 non-governmental organizations receive subsidies, but it is the parents who have to pay,” he laments.

Political decisions

The trade unionist adds that today, the general concern is about the increase in prices. “Political decisions must aim to relieve the population. Isn't it high time we prioritize producing, storing and processing our own food? Is it really necessary to import tomatoes when we have the capacity to produce them locally? “, he said.

He adds that we are shooting ourselves in the foot by continuing on this path. “The budgetary exercise is an opportunity for the government to adopt corrective measures to promote social harmony and correct social injustices,” he says.

Corrective actions

Reaz Chuttoo also highlights the importance of acting in a context of strong economic growth, where wealth is generated. “Mauritius is designated as an upper middle income country. Many private companies make a profit. This is therefore an opportunity to take corrective measures,” he says, emphasizing the importance of guaranteeing decent work and fair remuneration.

Boundaries

As for economist Chandan Jankee, he highlights the recurring cycle of salary increases and notes that the government has regularly introduced increases in the past. “I think it needs to balance its revenues taking into account its current economic performance and its future forecasts. It should be based on expected performance, expected income and expenses. All this must be done within certain limits, because the government must maintain a budget deficit at a manageable level and continue to reduce public debt,” he emphasizes.

Forecasts

Chandan Jankee expresses his opinion that every Budget is crucial to sustain economic growth. “If a government has the capacity, in its forecasts, to maintain economic growth at a rate of 5% to 6%, it will have no difficulty in maintaining and adjusting salaries in accordance with its commitments as well as its objective to preserve the quality of life, particularly for those at the bottom of the social ladder,” he says.

The economist also points out that with the increase in wages, the money supply in the country is experiencing an increase, especially after a period of economic closure due to the COVID-19 pandemic. “It is beneficial for the economy and development. The more money people earn, the more they tend to spend part of their income, repay loans and save. This creates a multiplier effect, thus stimulating economic dynamism,” he explains.

He also believes that the government must persevere in finding ways to stimulate economic expansion. “This dynamism will attract more investment, promote growth and generate more wealth in the economy. The role of the welfare state is to redistribute this wealth. It is important not to engage in a negative debate on this,” concludes Chandan Jankee.