To this question on raising the minimum wage -“ Face a la hausse du tout de la vie, it y a une forte demande auprès des syndicalistes pour revoir le salaire minimum. Partagez-vous le même avis ?”, the Chief Operating Officer of Business Mauritius replied that
“….une augmentation des salaires ne va pas résoudre le problème. Même si les salaires sont revus a la hausse, les prix au niveau mondial vont continuer de grimper. ….… Ainsi, je pense qu'une intervention monétaire n'apportera pas des solutions. Par ailleurs, la revision du salaire minimum est une decision du National Wage Consultative CounciL(NWCC). Celui-ci prend en considération non seulement l'inflation mais aussi le chômage, I'emploi, l'investissement, la balance des paiements, entre autres. “
When Govt decided to provide and extend the Government Wage Assistance Scheme (GWAS) which was credited by the Mauritius Revenue Authority directly to the bank account of eligible employers…was it a decision of the NWCC ?
The decision to protect jobs rather than incomes, was it a decision of the NWCC?
If left to the NWCC , perhaps , it would have been better inspired to protect incomes rather than jobs, because
a) the Wage Assistance Scheme, with the provision that employers were prohibited from laying off employees ,was acting as a break(a disservice) on some sectors which badly need cost-cutting and a rethinking of their strategies and
b) post-Covid , some sectors, including the hotel industry which would be taking 2 or 3 years to get back on its feet, would be cutting some costs especially employment costs.
This is what we are noticing now ! We would have fared better by protecting incomes.
It is not the NWCC but the corporations that create the rules they play by. Privatize the profits, socialise the losses - another form of our crony capitalism.
Our big boys of the hospitality sector, who has the habit of shifting economic rents upwards and desperation downwards, failing to build up cash reserves and relying mostly on debt and not paying that much of taxes as there are always renovating, always end up in getting big checks/rebates from the government.
To make up for the shortfalls in funding from the commercial banks, they pressed for the uninspired and misguided concoction - the MIC- putting at risk the central bank balance sheet- to subsidise them at taxpayers’ expense…
And the private sector did not find anything wrong with Govt’s printing of money by crediting the Govt’s account at the central bank-one of the the worst type of money creation, without any check and discipline- a war chest of Rs 80 bn for the MIC and exceptional transfers to Govt.
However, because this was a permanent injection in the financial system, there was less leeway for the central bank to reverse course and apply counter inflationary policies when prices start rising. Thus , the printing of money , a most inflationary means of financing, has resulted in direct and sizeable pressure on the rupee causing higher inflation. Our inflation rate has now reached 11%, among the highest across the emerging market economies and peer countries (see table below)
Now that there is a strong demand for an increase in the minimum wage and compensation for the sharp rise in the cost of living , the private sector, which was not so keen on raising interest rates to try to tackle the record inflation rate, is now raising the fear that a spiralling pay growth will mean price pressures becoming entrenched, risking a “wage-price spiral”.”
Quelle hypocrisie !
They kept quiet when they were enjoying the spoils of the money creation, least bothered that the monetizing of deficits was undermining the ability of the BOM to keep inflation under control. Now the country is heading towards a deeper crisis .The worst fears about the economy are coming true- a result of the reckless management of our economy by the irresponsible duo – the Minister of Finance and Governor of the BoM -with the support of the private sector.
