A recent report by the National Economic and Social Council (NESC) underlines the growing importance of foreign labour in Mauritius. Statistics from the Ministry of Labour, Industrial Relations and Employment show that there were almost 35 000 migrant workers with valid work permits as at November 2007, which represent around seven percent of total employment in Mauritius.

The sectoral distribution of foreign labour is heavily skewed toward employment in manufacturing (mainly textiles and clothing) and also construction, community, social and personal services and tourism.

The recruitment of expatriates is, first and foremost, motivated by a positive productivity differential over local labour. Foreign workers tend to work longer hours and as a result are, on average, more productive than their Mauritian counterparts. This represents a major attraction for employers who are faced with a constantly changing and increasingly fierce global competitive environment. Incidentally, according to the Mauritius Employers? Federation (MEF) Annual Business Trends Survey 2007, nearly three out of four enterprises surveyed expect a higher degree of competition in 2008.

<I>«Only three percent of the student population successfully get through tertiary education and even then many of our graduates lack the core competencies and key employability skills that are expected of them to perform effectively in the world of work.»</I>

Because the year on year rise in labour cost has been unmatched by productivity gains Mauritian export enterprises have suffered from an erosion of competitiveness over time. In addition, as revealed by the MEF study, businesses face major constraints to improving productivity, notably in the form of a lack of industrial culture, shortage of management, technical and skilled personnel, absenteeism and high labour turnover. Consequently, to maintain a competitive edge, export-oriented enterprises have become reliant to a large extent on a depreciating rupee.

They have also sought other means to remain competitive such as diversifying into the production of value-added products, adopting a flexible approach as to the size of orders processed and providing a quality service with just-in-time delivery of consignments. But above all, the use of foreign labour, particularly in textiles and clothing, has given a definite productivity and competitive advantage to our enterprises. The NESC report thus notes ?in the absence of this advantage many companies may choose to relocate to countries offering better facilities?.

The employment of foreign labour becomes almost inevitable where there are marked shortages of skills locally. The MEF Annual Business Trends Survey 2007 shows that skills shortages are mostly anticipated in management, professional and technical positions with respondents to the survey expecting this trend to continue in the medium term. Turning to skilled expatriates then represents the most obvious solution, at least in the short term. As a matter of fact, to encourage skilled labour migration, the procedures and eligibility criteria for foreign workers to obtain permanent residence and acquire property have been relaxed in line with the Budget Speech 2007/08.

Migrant workers are often also called upon to fill in vacancies for unattractive jobs that no longer appeal to Mauritian job seekers. According to the NESC research, local labour shows little interest for jobs in industries like fishing, seafood processing, construction and bakery that reportedly exhibit poor working conditions.

Whilst this signals an opportunity for the pool of Mauritian workers to move toward high skills-high wage employment, it may just take a long while to materialise for the large majority of the local workforce who neither have the required education, training nor skills to take up higher skilled jobs. For instance, only three percent of the student population successfully get through tertiary education and even then many of our graduates lack the core competencies and key employability skills that are expected of them to perform effectively in the world of work. Additionally, more than 70 percent of the unemployed do not possess the School Certificate, and a quarter have not even passed the Certificate of Primary Education. Therefore, it is likely that in the foreseeable future we will see an increasing number of foreigners employed at different levels within Mauritian enterprises and coexisting with high structural unemployment in the labour market.

The success of the Mauritian economy will be determined by the quality of the human resources available, with the local workforce being supplemented by foreign labour. For the long term, in the words of the former British Prime Minister, Tony Blair, the priority more than ever has to be ?education, education, education?. This requires an urgent re-evaluation of our educational system and more emphasis given to the skill upgrading of our labour force.

<B>Dr Vishal RAGOOBUR</B> <I>Economist Mauritius Employers? Federation</I>