u003cpu003eu003cstrongu003eThe World Bank recently launched a report assessing the inclusiveness of growth and shared prosperity in Mauritius. Several hurdles need to be overcome before the country graduates to a high-income economy.u003c/strongu003eu003c/pu003eu003cpu003eAfter three years of intensive preparation, the World Banku0026rsquo;s report titled u0026lsquo;Mauritius: Inclusiveness of Growth and Shared Prosperityu0026rsquo; is out and provides an in-depth analysis of the issues surrounding growth in the country. Poverty, inequality, social protection, the ambitious graduation from a middle-income into a high-income economy and the skills mismatch in the labour market are some of the topics brainstormed in the report.u003c/pu003eu003cpu003eDespite its general success story in the early 2000s, the Mauritian economy has reached its long-term potential and labour market indicators have started to deteriorate while the Gross Domestic Product (GDP) rate is stagnant, points out Victor Sulla, task team leader of the report. Productivity is slowing down in Mauritius, he observes. Mauritius is facing challenges on several fronts. GDP growth is losing steam as the positive impact of reform wanes. Job creation remains slow, income inequality is increasing and economic vulnerability is not falling, reads the report.u003c/pu003eu003cpu003eu003cstrongu003ePoverty remains lowu003c/strongu003eu003c/pu003eu003cpu003ePoverty is low in Mauritius by international standards. The headcount poverty level was 6.9 percent in 2012; measured by the international standard of US$2 per day, poverty was less than 1 percent. However, the comparison is bitterer when it comes to shared prosperity. u0026ldquo;u003cemu003eGrowth inequality impedes poverty reductionu003c/emu003e,u0026rdquo; he states. According to the World Banku0026rsquo;s analysis, the reduction of absolute poverty in Mauritius would be almost twice as large if growth was better shared and inequality would not have worsened (from 0.36 to 0.93 measured by the Gini coefficient).u003c/pu003eu003cpu003eTargeted policy interventions could be the solution to boost poverty reduction. Three scenarios are proposed by the World Bank but with none of them being the ideal one that could fully res-pond to the challenges of the increase in inequality that the Mauritian economy is currently facing. They are: a 30 percent gradual expansion of social protection without improvements in targeting efficiency, a 20 percent reduction in the unemployment rate and an increase in the primary and secondary sectorsu0026rsquo; labour productivity.u003c/pu003eu003cpu003eSocial assistance, highlights the report, has paid off in terms of poverty reduction. The poverty-reducing effect could however be significantly higher for the amount of financial resources spent (Rs 13.9 billion/3.8 percent of GDP).u003c/pu003eu003cpu003eFurthermore, since 2010, reforms have faltered and relatively accommodative monetary and fiscal policies have been difficult to rein in. Implementation of reforms has slowed substantially, further accelerating the decline in gross national saving to below 15 percent of GDP and leading to a stagnation of private investment at around 18 percent of GDP. u0026ldquo;u003cemu003eAs a result, economic growth has been on a slowly declining trajectory, from 4.1 percent in 2010 to 3.2 percent in 2013u003c/emu003e,u0026rdquo; the report states.u003c/pu003eu003cpu003eu003cstrongu003eSkills mismatch up 30%u003c/strongu003eu003c/pu003eu003cpu003eSkills mismatches are associated with rising levels of unemployment and weak job creation in Mauritius. Between 2001 and 2010, skills mismatches increased by almost 30%. Lack of inter-generational mobility has potentially very adverse effects on the overall economyu0026rsquo;s growth potential, highlights the report.u003c/pu003eu003cpu003eAnother cause for concern is the substantially low levels of unemployment among the fairer sex, in spite of girls outshining boys academically. Women are becoming more educated, on average, than men but this is not translating into better wages. For Loga Virahsawmy, director of Gender Links Mauritius, addressing this issue means delving deeper and addressing parallel problems such as gender violence.u003c/pu003eu003cpu003eIt is imperative to find jobs for women, highlights economist Pierre Dinan. Harnessing our yet untapped resources such as the Ocean economy could mean developing sectors where women would be employed, he states. The report highlights the fact that the gender wage gap is severe and, unlike the gaps related to labour force status, shows no sign of decreasing, with women still earning significantly less than men while being on the same competency level. This gap is showing no signs of decreasing and has in fact widened over the years.u003c/pu003eu003cpu003eThe World Bank further examines what it considers to be a puzzling sign for the local economy: a disproportionate increase in real wages in the public sector. The public sector, during the period under review, had a 23.5% increase in wages, compared to 7% in the private sector, where tradable goods are produced.u003c/pu003eu003cpu003eYoung people are also affected by substantially worse labour market outcomes than the rest of the population. Youth unemployment is slightly higher in Mauritius than in other countries but the rates are not extraordinary. In general, individuals aged between 14 to 24 experience worse labour-market outcomes in terms of employment, unemployment and inactivity rates.u003c/pu003eu003cpu003eWhere do the solutions lie? Productivity is a big option, and a complex one at that. u0026ldquo;u003cemu003eThe country growth model should be changed to boost productivityu003c/emu003e,u0026rdquo; states the report.u003c/pu003eu003cpu003eAside from that, dedicated efforts will be needed to raise the quality of the entire education system, including a vocational stream responsive to private sector demands. Policies with the potential to activate female labour market participation need to be implemented, such as a special fiscal regime favouring womenu0026rsquo;s labour, affirmative action measures to discriminate in favour of women in the labour market and public provision of child care. Also, employment policies for the youth deserve further support. These are but a few insightful solutions chalked out by the World Bank in order to catalyse some of the countryu0026rsquo;s most fervent growth ambitions.u003c/pu003eu003cp style=text-align: center;\u003eu003cspan style=color:#000080;\u003eu003cstrongu003eLabour markets needs to reward higher productivityu003c/strongu003eu003c/spanu003eu003c/pu003eu003cpu003eu003cspan style=color:#000080;\u003eAddressing the rigidity of labour regulations, the report states that the labour market needs to reward higher productivity. The salary compensation and Remuneration orders (the two complementary minimum-wage support systems in Mauritius) are designed to reduce disparities, but they hardly impact wage determination in the intended way. The thresholds are set at very low levels by the international standards u0026ndash; on average, 22% of the way. u0026ldquo;In addition, the national tripartite negotiations set up in 2010 make it more difficult to maintain competitiveness. In the longer term, an appropriate balance between work protection and labour market flexibility has to be found in Mauritius,u0026rdquo; the report recommends.u003c/spanu003eu003c/pu003eu003cp style=text-align: center;\u003eu003cspan style=color:#008080;\u003eu003cstrongu003eReal mean wages surged by more than 8%u003c/strongu003eu003c/spanu003eu003c/pu003eu003cpu003eu003cspan style=color:#008080;\u003eThe World Bank also analyses wages and earnings in the country; taking note that since 2001, real mean wages in Mauritius have surged by more than 8%. The tourism and tertiary sectors paid around 40% more than agriculture in 2012, while manufacturing salaries were 30 percent more and workers in the services sector earned the highest salaries.u003c/spanu003eu003c/pu003e
World Bank unveils its recipe to boost growth and reduce poverty
