by Nirmal Kumar BETCHOO

Trade unions suddenly emerged from inertia following the compensation rate of 5% "across the board" announced by the Minister of Finance earlier this month. There had previously been tensions among trade unions concerning leadership but these were put aside once the compensation rate was declared. Apparently, trade unions wanted more than 8% of compensation graduated across salary bands so that an average of Rs 392 would be obtained by most of the employees.

The compensation of Rs 135 might have appeared derisory in relation to the rise in the cost of living that keeps soaring namely as a result of upward price shifts and the increase in the exchange rate of the Euro. Both employers and trade unions had their own share of the debate. Employer organisations seem to have become burdened with annual compensation that directly impacts on productivity and creates risks for job losses. It was argued that the textile and sugar sectors did not deserve any compensation because of impending threats affecting them and that are now so often repeated to the common citizen.

Trade unions have shown their dissatisfaction by claiming that inadequate compensation barely contributes to the improvement of the fate of the employee, especially the lower classes. They have also commented that the threshold of compensation has declined from Rs 4300 to Rs 2700 while the 5% compensation rate could have been raised.

Government now forwards having a wage council based on the Singaporean National Wages Council which will oversee compensation and related issues. Actually, the government has found it a bit overbearing that trade unions have not appreciated its move in a situation that calls for sacrifice. It would be therefore risky to ask for higher compensation which would raise the ceiling from some Rs 130 million to an awkward figure of Rs 350 million which would undermine government?s strategy to put the economy back on the track.

From tripartite to a Wages Council

The Mauritian workplace has since its modest beginnings claimed that the tripartite system should remain the foundation of collective bargaining. This has been the outcome of a democratic setting where institutions owe their respect to communication, independent arguments and good governace. Since the mid 1930s to date, the tripartite system has helped overcome the feudal remuneration of 50 cents a month, subsistence living based on consuming rice and dholl to a dynamic remuneration system where compensation is agreed upon collective bargaining. To this end, the compensation rate is calculated according to the inflation rate.

Trade unions have always shown reservation to the compensation but rarely complained on the tripartite mechanism. In 1992, the Minister of Employment and Industrial Relations claimed that trade unions should be modernised with more intellectuals joining in. This would overcome the constraints of collective bargaining and discreetly lead to a Wages Council. This year, government proposed that the model should be close to the Singapore National Wage Council.

Singapore?s Wage Council

First and foremost, Singapore applies a sophisticated paternalistic pattern of employee relations. Trade unions are strictly regulated and the Opposition only benefits from a Minister without portfolio. Singapore?s strict legislation is globally known like the death penalty for drug trafficking, crime and carrying weapons (arme blanche). Further, strikes have never loomed since decades under the former Lee Kwan Yew regime and this has persisted ever since.

Singapore?s economy is not totally stable though the appearance is as such. Though the tsunami reached the Sumatran trench in 2004, the bird flu and SARS reached South-East Asia, little was rumoured on Singapore?s fate. It had its own safety belt, apparently immunising the city state from threats.

The Singapore National Wage Council remains a tripartite body of employers, trade unions and the government. Compared with the tripartite where federations from the public and the private sector are freely represented, the wage council comprises members appointed for a fixed term who mainly form a panel that decides upon the form of compensation and policy to be implemented.

In 2000, the Singapore government stated that it had adopted a proposal by the National Wages Council (NWC) for another year of wage restraint in the city state as it recovered from recession. The council also felt that performance across companies and sectors was very uneven.

?The government supports the NWC's recommendation to continue to restrain wages so that a full-fledged recovery of the economy can be achieved," the Minister of Manpower said in a statement. Previously, the government adopted the council's proposal for sweeping pay cuts to help pull the island out of recession and sharpen its competitive edge against lower-cost neighbours. This included a reduction in employer contributions to a state pension fund from 20 percent to 10 percent of workers' salaries for two years from January 1, 1999 and wage cuts of five to eight percent.

The NWC's recommendation for wage restraint for the period from July 1, 1999 to June 2000 was ?to avoid nipping the recovery process in the bud?, the council's chairman said at a press conference. However, the Minister said that companies which performed strongly could look at wage increases, largely through the introduction of a monthly variable component. Such a component, already existing in the public sector wage structure, could also give companies the flexibility of adjusting wage costs downwards ?more responsibly? in the event of an economic recession or sharp business downturn.

The Mauritian Case

Singapore?s model of wage negotiations cannot be copied word for word by Mauritius. Wage cuts and restraints have not so far been a feature of the Mauritian industry, except for a "no compensation case" following the publication of the PRB report.

The Wage Council looks to be a regulating body that places the responsibility on the various parties concerned. There is a certain level of political correctness when it comes to regulating wages in times of recession and when sacrifice is urged from the population. Also, the Wage Council aims to reduce disputes and favours more convergence from the parties concerned.

The only question remains whether industrial democracy is preserved or not. In a country that has fought for almost seven decades on the improvement of the worker condition, the upcoming issue remains nuanced.