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Three weeks after announcing a review of the relevance of private sector wages, the Mauritius Revenue Authority (MRA) has unveiled the terms of financial support for eligible employers. The move is part of a wage adjustment decided by the government to partially compensate manufacturing companies and SMEs that are in financial difficulties. However, despite the government support, the increase has caused growing concern among SMEs, who find themselves facing major challenges.
One of the main concerns expressed by businesses is that this salary review goes beyond a simple direct salary hike. It also includes an increase in employer contributions, which could lead to increased operating costs, thereby exacerbating the financial difficulties already experienced by small and medium-sized enterprises. In fact, according to the companies, these new charges come against the backdrop of a difficult economy, characterized by a depreciating rupee, increased freight costs and higher import prices.
Concerns among business leaders continue to grow. Many economic players fear that rising wages will lead to large-scale layoffs. Ghanshyam Beekhee, director of BIO 365 Fruits and Vegetables Company Ltd, a company specializing in the cultivation and sale of fruits and vegetables such as tomatoes and bananas, noted that the working situation of the labor force in plantations is already complicated. He said that with the reduction in the labor force, the increase in production costs is an additional obstacle. He said that if the company cannot pay employees properly, it may be forced to lay off employees, which is not good for the company. Ghanshyam Beekhee added that the employment of foreign workers requires investment in housing and food, but this factor is not fully considered in government aid.
NG, a director of a company specialising in childcare and daycare services, expressed concern about the risk of frustration within her company. She said the pay gap between experienced staff and newbies could create tension. Older staff with basic qualifications such as SC/HSC may find themselves paid the same as less experienced staff, which could create a sense of unfairness. Such a situation could prompt unhappy employees to look for better opportunities elsewhere, undermining the stability of the company. She also added that if costs continue to rise, many businesses may face insurmountable difficulties, threatening their survival.
Abdool Mossadeck Carrim, director of AM CARRIM LTD, a company specialising in construction and public works, discussed specific challenges facing the sector. Abdool Mossadeck Carrim, which has around 20 employees, noted that wages paid were already above the recommended standards for the sector. He explained that having a uniform wage standard for the construction industry was problematic as it did not take into account variations in costs and working conditions. “Some companies are even considering laying off employees and running the business with their families to reduce salary costs.”he said.
Despite the government’s support measures for struggling companies, wage adjustments remain a major concern for SMEs. The increase in employer contributions, the impact on established budgets, the risk of setbacks, and challenges specific to certain sectors highlight the shortcomings and challenges of this measure as currently implemented.
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