The long-awaited new labour legislations have finally been passed by Parliament. They come at a time when the industrial relations framework that had been in existence since the 1970s no longer matched the twenty first century context of global competition within which the Mauritian economy is called upon to manoeuvre and the ensuing expectations of enterprises for greater flexibility, productivity and competitiveness as well as of their employees for better pay and employment conditions.

The process of globalisation, driven by advances in communication technologies, transportation, economic cooperation and openness to trade and capital flows, has transformed the world economy into a global village. This implies both greater interdependence and competition among nations. While globalisation poses many challenges and threats, it also represents opportunities hitherto unexplored.

The key to success in this era of globalisation is adaptability, that is, the ability to make do with what one has at hand and flourish. Darwin?s Theory of Evolution comes to mind here: ?It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.?

In recent years, Mauritius has sought to improve its global competitiveness to take advantage of the benefits from globalisation and mitigate the impact of negative external shocks through broad-based reforms designed to open up, restructure and diversify the economy, improve the business environment and enhance the skills base and quality of infrastructure. The new labour legislation framework is an intrinsic part of Government?s supply side reform agenda and seeks to promote the well-being of employees and enterprises through greater labour market flexibility and positive working relationships.

Labour Market Flexibility

Greater flexibility in the labour market refers to the increased ability and speed of the labour market to adjust to a changing economic environment while delivering positive labour market outcomes such as low unemployment and inflation, high employment creation and growth in real incomes. A flexible labour market is vital for enhancing the resilience and adaptability of the Mauritian economy to global competition and technological change.

<I> «The new legislative framework is also expected to improve occupational mobility and smoothen the shift of labour from traditional sectors of activity to emerging ones.» </I>

The new labour laws give further employment flexibility for enterprises to organise work patterns more efficiently and respond swiftly to competitive product market conditions. They encourage part-time, shift work and other flexible working practices and should help to reduce labour costs and raise productivity and competitiveness. The flexibility gained by enterprises is crucial for meeting the operational needs of the export, financial and emerging ICT/BPO sectors in particular and to promote the shift toward a 24/7 economy.

The new legislative framework is also expected to improve occupational mobi-lity and smoothen the shift of labour from traditional sectors of activity to emerging ones. Provision is made for a Workfare Programme that aims at upgrading the skills and employability of retrenched workers, thereby reducing their unemployment spell and likelihood of joining the informal sector. This could go a long way toward contributing to the development of a trained and competent workforce to meet the changing human capital needs of the Mauritian economy.

Collective Bargaining

One of the most important features of the new labour laws is the promotion of collective bargaining. The Employment Relations Bill provides a framework for encouraging decentralised collective bargaining, i.e. at the enterprise level, as an effective vehicle for engagement between employers and employees.

Collective bargaining is a process of negotiation and decision making between parties representing the interests of employers and workers. It is a powerful means of creating positive employment relationships and reaching collective agreements on pay and working conditions in the mutual interests of the nego-tiating parties.

A potential economic benefit of collective bargaining is that it encourages efficient bargaining over wages and employment, taking into account firm specific considerations like productivity, product market competition, profitability, capa-city to pay and purchasing power of wor-kers as well as general labour market conditions and the economic implications of the bargaining outcome for employers and workers. This may lead to greater wage flexibility, enabling the labour market to adjust more quickly and reach a stronger equilibrium at higher levels of employment, productivity and real earnings.

In an IMF study, McDonald and Yao (2003) observed that the highly centralised wage determination system in Mauritius serves to limit wage differentials between traditional industries with low levels of productivity and competitiveness and the high performing emerging sectors, which in turn contributes to job destruction in the traditional sectors and insufficient investment in education from the young to supply skilled labour for the new sectors. With collective bargaining at the enterprise level, a more decentralised wage determination system is likely to emerge with rewards being closely linked to skills, producti-vity and performance. This may lead to healthy wage dispersions between sectors and enable a swifter economic transition toward higher skilled and value added sectors.

Moreover, the areas of bargaining are not limited to pay issues only. They can normally cover a number of workplace matters including training, health and safety and so on. Enterprise-based collective bargaining also promotes fast and effective resolution of disputes in a fashion that is responsive to the positions of both labour and management.

In fact, there is little doubt that collective bargaining symbolises the most significant expression of social dialogue. It provides a unique opportunity for employers and the unions to relinquish their traditional adversarial relationship by engaging in meaningful dialogue and developing stronger workplace cooperation between both parties. A change in mindset is thus required to adapt to the new rules of the game. This is not only crucial for the sustainability of the collective bargaining process itself but also to ensure that collective agreements deliver positive social and economic outcomes.

Dr Vishal Ragoobur

Economist ? Mauritius Employers? Federation