Salary relativity is currently the “Talk of the Town.” Although the report has not yet been made public, some private sector companies are already expressing their apprehensions about the consequences of implementing a new salary review.
After the increase in the minimum wage to Rs 16,500 at the start of the year, many workers in the private sector are expected to benefit from a further salary increase in the coming months. The National Wage Consultative Council (NWCC) has been working on a wage readjustment for several months, with a report currently being finalized. The objective is to guarantee greater pay equity. However, the increase in the minimum wage to Rs 16,500 could be seen as a disadvantage for those in the middle of the pay scale. Thus, it is envisaged to readjust the salaries of all those already earning Rs 15,000, which will also lead to adjustments for higher levels.
The employees concerned
The wage adjustments are mainly for employees earning the lowest salaries, such as typists, receptionists, machine operators and similar positions, excluding senior management. Only employees earning less than Rs 30,000 per month are expected to be included in this readjustment exercise. The NWCC plans to revise around 30 Remuneration Orders (ROs) across various sectors for this initiative. It is worth noting that this report also takes into account the new occupation-based wage classification.
Although companies are ready for a salary readjustment, they do not hide their fears about the repercussions of this exercise. Moreover, the calculation of the payroll is, in most sectors of activity, the first item of expenditure of a company and can represent up to 80% of the operating budget for some.
Questions for…
Kevin Ramkaloan, CEO of Business Mauritius: “Salary adjustments are already common and periodic within companies”
What processes are currently in place for salary adjustments in companies in Mauritius?
It is important to understand that salary adjustments are already common and periodic within Mauritian companies. In several sectors, there are remuneration orders and companies in these sectors already have their own processes for adjustments, supervised by the NRB. In addition to these adjustments, companies also follow their own internal procedures. Currently, in most sectors, companies are in the process of salary adjustments to take into account the increase in the minimum wage at the beginning of the year. Business Mauritius recently launched a study to assess the practices of companies and sectors in this regard.
What factors influence the formulas used to determine salary adjustments in companies?
These adjustments are influenced by several factors, including labour market conditions, internal company policies and ability to pay, as well as productivity and value added. Sectoral realities also play a crucial role, particularly for sectors such as ICT and financial services, which operate internationally. Thus, wages and their periodic adjustments are currently determined by companies and sectors themselves.
What potential challenges are raised by the recent salary reviews in Mauritius?
Currently, there are discussions about job classification, with potential implications not only for businesses of all sizes, but also for the markets, competitiveness and attractiveness of Mauritius. It should be noted that this classification, according to the International Labor Organization, does not exist anywhere else. In addition, several recent measures have introduced additional costs in a short period of time – the increase in the minimum wage, wage compensation and wage adjustments. This is in addition to the salary increases already planned by the companies' internal policies, with another salary compensation planned for December this year. All of these elements must be taken into account when determining salaries. However, a definitive assessment is difficult to make until a report from the relevant authorities is available.
The expectations of private sector employees
The announcement of a readjustment of salaries in the private sector has created, for several months, strong expectations and impatience among employees. Vikash, 47 and a helper in a textile company, says that since January, there has been some frustration among some employees. “The oldest and most experienced employees like me, who have more than 10 years of service, have trouble seeing that young people without experience and without training receive more or less the same salaries as us,” he confides. According to him, there is a certain injustice at this level and it is high time to correct this anomaly. Sarah, 25, who works in an offshore company, agrees. “I graduated from college. It is not normal that a colleague who only has the Higher School Certificate as academic background receives the same salary as me. It’s not worth pursuing tertiary studies in this case,” she laments.
4. Less investment capacity
An increase in wages will result in higher costs for employers, which may have a negative impact on their profitability and financial viability. According to Jean Claude Ip Man Pun, this drop in profitability can lead to a reduction in investments and a lack of capacity to invest in expansion plans. “In my case, I am considering purchasing new equipment for production, the price of which is Rs 450,000. With the salary readjustment, I do not know if I will always have the means to make this purchase,” asks himself -he. For Ajay Beedassee, with salaries continuing to increase since the start of the year, the question of investment does not even arise. “Moreover, it is not only salaries that have increased, we must also take into account electricity and raw materials which are becoming more and more expensive. So, at the end of the month, we have nothing left to invest,” he laments.
5. Risk of closure
The worst scenario that employers, especially SMEs, foresee with a further increase in wages is the closure of their companies. “If wages are revised upwards, without the government providing support, we will be forced to shut down,” laments the director of Mac & Allan Ltée. The president of SME Chamber agrees. “Moreover, there are already large companies in Mauritius which have closed their doors to establish themselves in other countries where labor is cheaper. As an SME, we do not have the means to set up elsewhere,” points out Ajay Beedassee. However, he says he fears closures are inevitable.
An electoral gift?
The Prime Minister's promise
On the occasion of International Civil Service Day at the Swami Vivekananda Centre in Pailles last Sunday, Prime Minister Pravind Jugnauth said that the Pay Research Bureau is working on the salary readjustment. He made it clear that the work has already started and that the PRB will come with its recommendations. “Special attention is being given to this issue. As soon as the recommendations are ready, we will implement them. When I give my word, I keep it,” he promised.
