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Reforms to Improve Business Environment and Skills Vital to Inclusive Growth, Poverty Reduction in Mauritius – New World Bank Report



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STORY HIGHLIGHTS
  • Mauritius needs to improve its labor force skills set, develop infrastructure, and further improve its business environment to attract foreign direct investment and generate domestic investment, according to a new World Bank report
  • The report further suggests a new set of labor market reforms to foster inclusiveness, support flexibility, and reward higher productivity in the country
  • It also discusses the disadvantaged position of women in the labor market, describing the gender wage gap as severe and increasing

PORT LOUIS, February 18, 2016 -- Policies designed to upgrade infrastructure, support research, development and innovation, advance public-sector efficiency and further improve the business environment are deemed key to boost productivity, according to a new World Bank report.

 The report, Inclusiveness of Growth and Shared Prosperity, adds that economic growth and declining inequality are equally important for the reduction and possible eradication of poverty in Mauritius.

“I’m sure this report will be an important tool in helping our current efforts to achieve the sustainable development goals, more particularly those aimed at eradicating poverty in all its forms and everywhere,” Prithvirajsing Roopun, Mauritius Minister of Social Integration and Economic Empowerment said in his opening remarks during the report launch.

Recent Economic changes associated with the deterioration of the traditional primary sectors, led to an increase in income inequality the report says, which negatively impacted shared-prosperity indicators in the country. Furthermore, incomes of the bottom 40 percentile of the population deteriorated in relative terms.

The report also highlights the disadvantaged position of women in the labor market, concluding that women experience substantially lower employment levels. Furthermore, the gender wage gap is deemed severe and increasing in the country. The report concludes that the inclusiveness of growth in all its forms remains the main challenge for the current growth pattern in Mauritius.

“This is an important piece of knowledge and I believe we can extract whatever is of importance for us and see where we can put on strategies to reduce vulnerability and poverty, especially for women,” said Loha Virahsawmy, Gender Links board member representing civil society groups. “As acknowledged in the report, it’s sad to see these persistent gender gaps in our society when it comes to shared prosperity. I think there’s something that needs to be done and urgently about it.”

Regarding the labor market more globally, the report suggests options to foster flexibility and reward higher productivity, as follows:

  • It warns of the need to control wage increases above productivity gains, which have for years eroded the competitiveness of traditional sectors and lowered private investment and employment creation;
  • To develop high-tech industries, it will be important to address skills mismatches by addressing current scarcity of highly qualified labor force;
  • Regarding regulatory framework, the report suggests key factors are spillovers from the more dynamic sectors and large public-sector salary increases as well as inertia in determining wage growth in relation to inflation rather than productivity;
  • Finally, on gender, the report suggests policies with the potential to activate female labor market participation, and more generally, employment policies targeted at young people.

According to the report, labor force skills mismatch grew by 30% between 2001–2012, signaling an urgent need for policies to support high-tech and services-oriented sectors. Therefore, the report notes, educational reforms are needed to provide people with the appropriate and relevant skills essential for today’s Mauritius.

The report also suggests the need for public-sector reforms to improve accountability at all levels and improve planning, procurement, and management processes across the system. Efficient country-level monitoring and evaluation systems could be developed to further support evidence-based policymaking, according to the report, and reforms in public enterprises also have the potential to create fiscal space for productive spending.

For Mauritius to reach its goal of becoming a high-income country in the medium term, the report concludes it will need to improve the labor force skills set, develop infrastructure, and further improve the business environment to attract foreign direct investment (FDI) and generate domestic investment.


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