New Measures to Strengthen the labor market in Mauritius

At the beginning of this month, the Jugnauth clan’s government presented the 2023/2024 Budget with popular measures. According to Ken Poonoosamy, CEO of the Economic Development Board (EDB), these measures could add up to 2.5% to the GDP.

According to a joint study by the EDB and Maurice Stratégie in 2022, the labor shortage is acute in all island sectors, ranging from 11.6% in tourism to 1.7% in health, which could cost up to 5.3% of GDP. The 2023-24 Budget proposes measures to address this issue.

Among others, the proposal for reforms to facilitate the recruitment of foreigners by streamlining Work Permit and Occupation Permit applications is one of the pillars of the Budget. There are six main points to note. The first concerns introducing the principle « Silent is consent » whereby a work permit application is considered approved if no response is received from the Ministry of Labor within four weeks of the application. The second classifies companies recruiting foreign labor into three levels (A for the most established with good grades, B for the less experienced but compliant, and C for the rest) based on their establishment and compliance. The third wants to abolish the ratio of foreign workers to Mauritian workers in certain sectors such as agriculture, construction, or manufacturing. The fourth point involves developing a new framework for employing immigrant domestic workers, including house employees and babysitters. Lastly, the fifth proposes an exemption regarding the initial investment when issuing permits. However, proof of fund transfer must be presented within four weeks after the permit issuance. And the last point concerns revising the Occupation Permit criteria, whereby the base monthly salary threshold will be reduced to 30,000 MUR for professionals, regardless of the sector. In addition, Occupation Permit applicants will receive a 120-day Business Visa without needing to leave Mauritius to apply.

Moreover, the measures established in the Budget also include a decrease in the price of gasoline from 74.10 to 69 MUR, an increase in the guaranteed minimum income of 15,000 MUR (instead of 11,580) for 85,000 Mauritians at the bottom of the wage scale, and a tax reduction for 150,000 taxpayers. In addition, people who have reached the age of majority since January 1st will receive a subsidy of 20,000 MUR.

« It is estimated that this policy could add up to 2.5% to the GDP in the coming fiscal year », emphasizes Ken Poonoosamy. The policy will take time to implement fully, but stakeholders are confident that benefits will be reaped.

Ianja Ny