Minimum Wage Increase: Experts Warn of Economic Consequences

The recent increase in minimum wage in Mauritius to Rs 15,000 is aimed at addressing declining purchasing power, but experts warn of negative consequences.

Economist Azad Jeetun argues that higher production costs will make the country less competitive in the export sector and disproportionately affect small and medium-sized enterprises (SMEs), leading to job losses.

He also highlights that the wage increase will contribute to inflation, undermining its intended benefits.

Another economist, Eric Ng, predicts that rising prices will erode wage gains and companies will reduce their workforce and investments.

Ng criticizes the government for imposing an unaffordable wage increase and using taxpayer money to support it.

The increase is particularly challenging for struggling SMEs, who may have to lay off employees due to the additional costs.

Maya Sewnath from the SME Chambers believes the government’s support is insufficient, especially considering the rise in material prices and depreciation of the rupee.

Additionally, many SMEs rely on cheaper foreign labor.

Source: l’Express