Unemployment on the rise

Maurtitius' economic success is being tarnished by a rising unemployment rate, which is not expected to improve in the near future, according to a senior government official. The financial services and corporate affairs director of the Ministry for Economic Development, Guy Wong So, told IRIN that the middle-income country has "on the one hand, been unable to create employment, while on the other hand losing [jobs], in particular in the export processing zone". The current official unemployment rate is 10.2 percent, nearly double the average of 5.9 percent for 2000. Since its independence from the United Kingdom in 1968, the Indian Ocean island country has developed from a low-income, agrarian-based economy, dependent largely on sugar exports, to a middle-income diversified economy, largely through the growth of the tourism and industrial sectors. However, the sharp rise in joblessness in recent years, especially among young people, was causing concern. The Economist Intelligence Unit (EIU) noted in its latest country briefing that "unemployment is highest amongst those aged under 24 who did not complete primary education, while 20 percent of those who are out of work did not achieve a secondary-level qualification". "To make matters worse, over the past decade the local workforce has, in effect, been pricing itself out of a contracting market; between 1990 and 2001, average compensation per worker increased by an annual average of 9.8 percent, more than twice as fast as the rise in productivity," the EIU said. "Consequently, many managers of export-oriented companies in relatively labour-intensive industries, such as garments and textiles, prefer foreign workers, and they now make up about 30 percent of the total, which creates social tension and political issues for the ruling coalition," the EIU commented. Wong So explained that the country had recently experienced "some problems with textile factories - a few of them are laying off people". "There are sectors where we are creating employment ... [through] civil works, etc. - some sectors are gaining and others are losing. In the meantime, the workforce is increasing, with between 10,000 to 12,000 people coming into the workforce every year, and [so] we have that unemployment [rate]," he said. According to official statistics, the export processing zone accounts for 12 percent of GDP, just over half the manufacturing sector's total contribution of 26.3 percent to GDP. The services sector, banking and financial institutions, and tourism account for 69.5 percent of GDP. Wong So noted that these and other sectors, such as information and communication technology (ICT), are "where we feel there's a future". But they are largely skills-intensive sectors, unable to create employment for those without an education. ICT created "less jobs, but of a different quality" so they "may not have a big impact on the unemployment rate, but they will have an impact on GDP". As to the country's economic outlook, he observed: "We expect that our growth will continue at about 4 to 5 percent, but in terms of job creation we will be lagging behind. We have to find innovative ways of creating jobs for the country, particularly in the informal sector ... to promote income-generating activities for the poor sector of the population." Wong So said the government was currently working on a study, together with the World Bank, which was "looking at the profile of the unemployed, the institutional set-up of wage fixing and so on, to tackle that labour problem".