After decrying the proposal of a minimum pension level, government has now approved a significantly higher compensation than the inflation rate costing an additional Rs 3.8 billion to the State and the private sector. This certainly provides a welcome financial relief to the growing number of income earners adversely affected by the continued erosion of their purchasing power. Where there is a will there is a way
The ongoing strike in the sugar sector which mirrors the distress which stems from the dire conditions of livelihood of the workers of the sugar industry should jolt us as a nation. We have all heard aghast the poignant testimonies of weather beaten labourers and seasoned artisans, both weathered by decades of diligent hard work saying on national TV on the picket lines of their current strike action that after more than 30-40 years of employment they still do not obtain enough wages to make both ends meet.
They added that they were pleased that after so many years, the workers finally decided to stand up for their rights and initiate a common action for a fairer remuneration commensurate to their contribution and their long career of dedicated service to the sugar industry. They nevertheless expressed regret at having to stay away from their work. The evolution of the negotiations in the absence of a potent government arbiter attests to an unequal battle.
A close look at the wages and remuneration of labourers and artisans confirmed in their declarations in the press reveals the stark inequity and inequalities still prevailing against the labour force in both field and mill when compared to the income distribution from the lower rungs up the echelon to the top brass working in the sugar sector. From information reported in the recent context of the tripartite, nearly half of the employees of the private sector earn up to Rs10, 000 per month in 2014. From the evidence provided by the striking labourers and artisans of the sugar sector themselves in reports to the media, they for the most also fall in this category.
The crying inequality in the income distribution among the different categories of workers and cadres in the sugar sector perpetuated and exacerbated over decades is an unequivocal indictment of a system incapable of arbitrating fairly among the various key vectors and factors of production generating wealth and prosperity for the sugar sector. How come that in an industry which faces the same threats and challenges as well as reaps wealth from opportunities, the workers who are a vital link in the chain of sugar production and its by-products which provide the substrate to the related and affiliated ventures in the sugar cane cluster continue to receive relatively low wages unable to provide them with a decent living whereas its higher echelon and top brass receive such disproportionately high remunerations?
It is also an indictment of the political establishment’s incapacity and lack of insight and clout to act as a fair arbiter in the teeth of such inequality and the distress of those at the lower rung earning low wages within the sector and unable to make both ends meet against a background of substantive erosion of their purchasing power. Equally, it is disconcerting to note that in response to the trade unions’ appeal for intervention, the Prime Minister reiterated his proposal for arbitrage by a foreign expert and threatened if the sugar sector remains paralysed to take necessary actions to bring the situation back to normal. Have those who claim political heritage from the initial trade union and Labour Party battles to better the lot of the workers in the sugar sector as from the late 30s so distanced themselves from the ideals and values which are the hallmark of the left — values and ideals which the freedom fighters of the country believed in and fought for in the pre-independence period?
In 1976, the Government of Mauritius bought Rose Belle S.E. for some Rs 20 million with the intent of enabling government to understand the modus operandi of a sugar estate and more importantly fathom the costing of sugar production and by extension master the economics and management of the sugar sector at a time when it was the sole pillar of the economy. Rose Belle was and has remained a glorious white elephant which over the decades has through a cohort of political appointees and cronies been despoiled of a substantial part of its original land assets and accumulated substantial debts towards the State. The upshot is that, by and large, government still does not seem to understand a bloody thing about the sugar cane sector let alone have an incisive understanding of the essential and driving elements of the industry. This is evidenced in their stance as they endeavour to arbiter and resolve the logjam between the employers and the workers in the sugar industry.
Prosperity spawning inequality
It should also be remembered that the sugar industry has all the trappings of a very special sector in the country. It is the sector that has benefited most from multilateral trade agreements negotiated by the Government such as inter alia the Sugar Protocol (SP) in 1975 or the Special Preferential Sugar Agreement (SPS) concluded in 1995. In the wake of the demise of the Sugar Protocol in 2009, it has benefited from the support of the Accompanying Measures negotiated and granted by the European Union (EU) to Mauritius as a Sugar Protocol country to implement the country’s MAAS (Multi-Annual Adaptation Strategy) aimed at restructuring the sugar sector into a sugar cane cluster.
During the 34 years of the Protocol, the sugar producers have benefited from the largest SP export quota of 500,000 tonnes, the ‘political’ rent and predictability of the EU guaranteed price which was at a significant price premium over generally low world prices prevailing on the world market. The SPS Agreement provided the sugar producers with an additional Tariff Rate export quota of some 85,000 tonnes as from 1995 for an initial six-year period and thereafter established annually by the EU on the basis of their annual sugar bilan. The price was fixed at 85% of the SP price.
As a consequence of these multilateral preferential trade agreements signed between the EU and the Mauritian State, the sugar industry had a limited exposure to the world sugar market which (except for the exports of high value special sugars sales to world market destinations) was mopped up and converted into preferential exports with the signature of the SPS Agreement. Shielded from the vicissitudes and low prices generally prevailing on the world sugar market, the sugar producers and the industry therefore enjoyed considerable prosperity over decades.
It is widely recognised that the profits generated from the sugar sector were judiciously invested by some of its key operators in the textile and tourism industry which were to become new pillars of the economy as Mauritius diversified its economic base and exports of goods and its offer of tourism services. This process was helped again by the preferential trade provisions of the Lome/Cotonou Agreements which also facilitated the successful diversification of the economy into the tuna canning industry.
The bulk of the substantial sum of some Euros 260 million (Rs 10.4 billion) earmarked as Accompanying measures for Mauritius have already been disbursed by the EU as general budget support for the economic reform programme of the Government of Mauritius and the re-restructuring of the sugar industry in the context of the EU sugar regime reform. This funding thus provided substantial financial support to implement the MAAS of Mauritius and enabled the restructuring of the industry from a sugar industry to a sugar cane cluster to adjust to the more competitive, liberalised and tougher market conditions post reform.
To this end and in accordance with the MAAS grid of allocations, the largest share of some 40% of the Accompanying Measures has been disbursed to the corporate sector. This has allowed them to inter alia streamline the industry to only four sub-clusters to reap economies of scale and to substantially enhance their production of electricity exported to the national grid. It has also enabled the corporate sector to significantly reduce their work force by some 7,000 workers through the various Voluntary Retirement Schemes (VRS), thus substantially reducing their operating costs and invest in an export oriented ethanol plant. In line with the MAAS objectives, the revenues from the sugar cane by-product ventures in the cluster are to shore and assure the sustainable and viable future of the sugar cane sector.
In addition, the corporate sector has through the provisions of the various VRS schemes, the measures contained in the Blue Print as well as the Illovo Deal obtained tax exemption from the payment of the land conversion tax applicable at a rate Rs 3.5 million per hectare on a total of some 7,500 arpents (3,165 hectares) of their land assets. This provides a significant land conversion taxexempt land bank for diverse commercial, residential and other projects.
The accumulation of wealth which is further evidenced by a trend of purchases of planters’ land holdings by the corporate sector contrasts with the deplorable conditions decried by the labourers and artisans of the sugar industry. In the light of the above, is it not high time to recognise the vital contribution of the labourers and the artisans in the field and at the mill in the production chain of the sugar cane cluster and remunerate them adequately to enable them to enjoy a dignified and comfortable livelihood? Without them there would neither be sugar, nor by-products nor cluster ventures.
In the broader context of the rampant inequalities in the country, an important step in addressing the distress afflicting a substantial proportion of the low paid workers in principally the private sector would be the establishment of a minimum wage. A country aspiring to become a high-income economy cannot do so by having large swathes of low paid workers within its midst to sustain the continued prosperity of the haves.
After decrying the proposal of a minimum pension level, government has now approved a significantly higher compensation than the inflation rate costing an additional Rs 3.8 billion to the State and the private sector. This certainly provides a welcome financial relief to the growing number of income earners adversely affected by the continued erosion of their purchasing power. Where there is a will there is a way. Let this will direct a changed tack for fairness and justice to prevail for a prompt and satisfactory resolution of the ongoing sugar cane industry conflict.
* Published in print edition on 28 November 2014