Bigger Challenges on the Employment Front

Automation is coming back with a revenge in advanced economies and it is now contemplated that digitalised machines and robots will do those jobs in the advanced countries themselves at a fraction of what they are currently costing in distant developing countries. It implies jobs are at risk in countries like ours, too

The structure of employment in Mauritius has undergone considerable shift over time. And pressures are building up internationally to go on shifting it further.

A bird’s eye view of the historical structural shifts

From several centuries past, we were fundamentally an agricultural economy engaged exclusively in what is called primary sector activity.

Ninety per cent of our total labour force was engaged in this primary sector initially. By the 1960s, about a quarter of our labour force was already out of jobs. This was a demonstration, if need be, to show the typical limits of an economy concentrated on primary sector activities, with no capacity to take on more employees.

Beginning in the 1970s, however, there took place a shift of employment towards a new activity, notably textile and apparel manufacturing. Manufacturing, together with construction, electricity, gas and water, are considered as secondary sector activities. Work becomes more skill-based in such a sector on a platform putting man and machine together, in contrast to the primary sector which juxtaposes man and land essentially.

Soon, mass production textile factories spread out to nearly all parts of the country, boosted by our cost-competitiveness compared with developed markets. Construction and tourism also gathered pace, due to multiplier effects from manufacturing and prosperity in external markets. By 1987, there was barely any unemployment in the country.

This situation of near full-employment and our entrepreneurs’ lack of incentive to go beyond the new status quo acted like a brake on the economy’s further development. Just like agriculture at the earlier stage, however, our secondary sector activities did not go on evolving dynamically enough to keep generating more and better diversified jobs, competitively with other global producers. We could have gone for the local production of generic pharmaceuticals, bicycles, TV, telephone and radio sets, sewing machines, tourism implements like surfing boards, speed boats, etc., to expand our secondary sector activities. We preferred to go on importing them all. Being content with what we had, we missed the global electronic wave altogether.

Faced with this kind of situation, the Mauritian economy placed its emphasis on yet another shift in its structure of employment as from the 1990s. This happened with the expansion of the services or tertiary sector activities, which includes a whole range of services from wholesale and retail trade, accommodation and restaurants to the provision of information and communication, education, health, financial and public administrative services.

The tertiary sector is an area which leans on specialised training and skills – which we had to some extent. Local insurance companies and banks spread out to several parts of the country as increasing numbers of people who had remained outside the financial system joined it up as customers. Our DTA with India spearheaded the provision of international financial services by Mauritius-based companies in a world of liberalizing capital controls. The information and communication services added to this momentum. After 2003, thousands of communication jobs migrated from other expensive countries to local call centres, thereby adding scope to tertiary sector activity and to additional employment in Mauritius. We were tying up our fate with the world, irretrievably, and for good reason.

From nearly all the workforce employed in the primary sector over centuries, only 8% of those employed are engaged in this sector currently. On the other hand, the secondary sector – manufacturing, construction, electricity, gas and water — accounted for 30% of all employment in 2014 from a negligible level barely four decades ago. It could have been better. The lion’s share has shifted however in favour of the tertiary sector, notably the provision of all sorts of services, which employs 62% of those in employment today.

Mauritius’ unemployment rate has been hovering around 8% of the labour force for quite a few years now. Recent indications are that we might be hitting a difficult hurdle over here, given that half the unemployed are young people, many of them highly educated.

Why not keep adapting?

We therefore currently have 30% and a little over 60% of our total employment in the secondary and tertiary sectors, respectively, something that would have been unthinkable when sugar dominated economic activity on the island. We’ve achieved this fairly painlessly, adapting economic activities to match our skills base and to meet global demand. We have done all this without wrenching ourselves brutally from our customary ‘joie de vivre’. We grumble, of course, but at heart, we still have our pristine happiness.

A new threat is now emerging at the global level. Producers in advanced countries (makers of shoes, construction firms, car makers, fashion houses, etc.) are using modern digital technologies to reverse the huge flow-out of jobs, which began decades back, to several developing countries, including ourselves (textiles, call centres). Automation is coming back with a revenge in advanced economies and it is now contemplated that digitalised machines and robots will do those jobs in the advanced countries themselves at a fraction of what they are currently costing in distant developing countries. It implies jobs are at risk in countries like ours, too.

It will be sometime before a number of jobs in countries like ours will be made redundant by this shift towards application of modern digital technologies in the production processes in developed economies. Countries which have big internal markets will suffer less despite workers being made redundant in the emerging new technological environment. So, we would be right to be working ourselves into a bigger, closely-knit regional economic hinterland in which we could identify specialisms that suit us best. That will mean giving more meaning and substance to our regional economic and political tie-ups. Are we seriously minded to go this direction?

Yet, by proceeding in this direction, we would be doing more than meets the eye by saving our jobs against the technological onslaught tending to reverse the flow of jobs back to the advanced countries. We can, of course, adapt to the new technology as best we can. Beyond that however, we have to save our jobs for a higher purpose: we will doing that by defending an entire lifestyle, a culture of well-being and peace in a closely-knit social fabric and healthy family life, immune from a relentless pursuit of profit and inordinate wealth to the few. It is a battle worth fighting for. We must use our insights to preserve our pristine values and not get submerged into a world which keeps putting pressure on workers to keep eroding them of their intrinsic worth as human beings.

We don’t have to ape the aggressive robotization of work as it could well be the case in advanced countries. The more we target high levels of “productivity” – producing goods and services of the highest standard at lower cost than before – the better our chance to adapt to this new phase of economic evolution will be. One will be curious to know if there are guys over there who are planning for the next shift in our structure of employment if only to make our social aspirations to live a more fulfilling life, free of the pursuit of wanton wealth, a reality.

• Published in print edition on 24 July 2015