Who is being taken for a ride in this game of vested interests?
By Rattan Khushiram
The 2019-20 Budget with its panoply of feel-good policies and give-aways to one and all, which the Government was expecting would sail them victoriously through the forthcoming elections, turned out to be a damp squid. Moreover, there were no big policy reform signals in the Budget to jumpstart the flailing sectors, no concrete measures to revive the faltering economy and usher in a higher growth momentum. As the simple macroeconomic logic that we need to focus on pushing for a higher growth target seems to escape this regime — the larger the size of the economy, the greater the prosperity it can bring to the country; the size of the cake matters, the larger the pieces people will get, the less will be the need for budgetary sops — it had to craft a bolder off-budget grand scheme: a pro-worker label or stance “de rendre la classe ouvrière ses lettres de noblesse”. This it hopes will stand a better chance of swaying voters on its side and at the same time deal a decisive blow to “anti-worker” Ramgoolam-Sithanen regime while staking a claim to the legacy of Anquetil and Rozemont, the historical heroes of the Mauritian working class.
No, it’s not about developing a new economic model for country with workers in the driving seat. It is more of a well-crafted plan, courtesy of the Kitchen Cabinet, which is limited at laying down the path for the journey to conquer power. The result may not be 100% but you can see the efforts they are putting in — the increase in the old-age pensions, the Minimum Wage, the Negative Income Tax and now the Workers Rights Bill – not a reformist agenda but a well-targeted populist manifesto. This is sheer opportunist politics to get people to focus on glorious pseudo pro-workers slogans in an economy where people are still susceptible to the siren song of populism.
This pro-worker stance by the present regime is not a repudiation of the established order but rather its reaffirmation. The regime’s all-out backing of the Employment Relations Amendment Bill and the Workers’ Rights Bill is a clever political tactic that postures them as defenders of the right to productive work, to decent and fair wages, to the organization and joining of unions, and to economic initiative. It is not Hercules cleaning out our Augean stables. They are just making the right noises much to the delight of the workers and unions and it ultimately earns political mileage.
And we are still caught in the belief that the hierarchies which govern society and the economy — politicians, bureaucracies and corporate — serve the interests of ordinary folk, the lambda citizen. Unfortunately, each government or the political elite in our economic model of development is a mere appendage servicing the dominant private sector and has its own pact with the economic elite. The economy is rigged in favour of vested interests. There will always be a covert or blatant interference or influence of the corporates and the political elite always responds accordingly careful not to bruise the business sentiment.
Where is the catch in the case of the Workers’ Rights Bill as the political elite seems to be at odds with the business sector, which feels that the former’s stance on the bill is a case of short-term expediency trumping long-term sensible policy? The catch is political financing by the corporate: they therefore know that they will have the last word and they understand the whole show for what it is. They will be using their long arm to ensure that the Bills goes through a whole process of committees and assessments before it can be implemented and by the time of implementation, show time will be over; the political elite will have toned down its pro-worker rhetoric and we will be back to square one with a legislation that has been filled with enough of loopholes to render it ineffective. Cleverly, they have already made sure that the bills do not cover foreign workers and that the Portable Retirement Gratuity Fund (PRGF) is partly borne by the state.
But the private sector seems to have yielded ground and relented on the key labour demands. The corporates, with Business Mauritius and the Economic Development Board at the forefront, “eux-aussi font leur cinema”, conning us into believing that they are at the mercy of the political elite when it is the opposite that is true. They have already got their pound of flesh, via the lowering of the Repo rate, as compensation for allowing the Bills to go through. With debts to the level of Rs 15 to 20 billion and prompted by the favourable interest rate, it is a government-given opportunity for the indebted companies to go in for corporate refinancing and debt restructuring — securing reduced monthly interest payments, more favourable loan terms, risk reduction, and access to more cash for operations and capital investment.
This is to be accompanied by the currency manipulation in their favour by the so-called independent BOM – that is the depreciation of the rupee – which will give our corporate exporters a competitive edge and boost their profitability. Behind the façade of a disgruntled private sector grudging the political elite for its short-termism and populism, they were all smiles and congratulating each other for having turned the table in their favour once again. They have all the reasons to celebrate if you add to that the Victoria Urban Terminal PPP project which is unquestionably a jackpot for them.
The last time it was the implementation of the Minimum wage where they allowed the workers to take a minor piece of the big pie – mere crumbs at the table or leftovers – whereas they got in return a substantial reduction in corporate tax for exporters and the Speed to Market Scheme with respect to their exports to the European market. This scheme entails a 40% rebate on basic airfreight costs to Europe with Government underwriting it over a period of two years. The Compagnie Mauricienne de Textile Limitée (CMT), one of the leading apparel manufacturers in Mauritius, has exported by air to Europe goods for an export value of around Rs 2.7 billion and has been refunded the largest amount under the scheme, to the tune of Rs 52 million. Readers will recall that the CMT had expressed its intention to relocate to Madagascar and Bangladesh, thereby threatening some 5000 jobs in the textile sector. The political elite responded with alacrity to mend fences and repair the sagging bridges with the economic elite that they had dared to frustrate – an economic elite bent on not conceding much of their entrenched interests while leaving crumbs for others, aware that the political elite is more and more beholden to them and will continue to toe the line.
Who is being taken for a ride in this game of vested interests? Who is being the “dindon de la farce”? It is the taxpayer. He is subsidizing the workers’ PRGF and the corporates and bearing the cost of the increase in the cost of living as a result of the impact of the cheaper rupee. But for how long will government continue to throw good taxpayer money to cover its follies of trying to swing swathes of people with taxpayer-financed gifts, as for example the JIOI athletes, the Mauritian delegates welcoming the Pope, and maybe the GOPIO delegates welcoming Modi… They seem to be bent on emptying the state exchequer to win the elections, choosing electability over sound fiscal and good governance principles of running the country, ignoring the fact that the economy is already starting to feel the brunt of its gargantuan debt.
These gifts and pro-worker displays might favourably massage vote banks but will weaken the economy’s legs by encouraging everyone to see the government as a rescuer rather than an enabler and enhancer of one’s capabilities and talents to take care of oneself.
* Published in print edition on 16 August 2019