Mauritius Faces a Growth Wake-Up Call as Skills Gaps and Ageing Test Its Prosperity

The World Bank’s Mauritius Country Growth and Jobs Report calls for a fresh growth strategy built around innovation, stronger competition and greater participation in work.

Mauritius built one of Africa's most remarkable economic success stories by moving beyond sugar into manufacturing, tourism and financial services, with two sustained periods of export-led growth supported by economic stability and pragmatic policies raising living standards over five decades. The foundations of that prosperity are coming under pressure as productivity slows, investment weakens, and businesses struggle to recruit people with the skills a changing economy demands. The World Bank's Mauritius Country Growth and Jobs Report calls for a fresh growth strategy built around innovation, stronger competition and greater participation in work.

The engines of prosperity are running out of steam

Investment has declined and increasingly flowed into real estate instead of activities that strengthen productive capacity, leaving the sectors that powered Mauritius's rise less able to sustain growth. Productivity improvements over the past decade have largely come from workers moving into more productive sectors, with fewer gains coming from businesses upgrading their operations or introducing innovations. Those improvements have failed to generate enough jobs, and medium-sized firms often outperform larger businesses on productivity, suggesting that obstacles to competition and business expansion are holding back stronger performers.

Industries with weaker competition account for roughly one-third of national revenue and employment, combining lower labour productivity with a strong presence of conglomerates and state involvement. The Competition Commission of Mauritius has a solid enforcement record, though gaps in the regulatory framework limit its ability to tackle threats to competition. Poor governance of state-owned enterprises also makes fair competition harder to achieve, with weak oversight and conflicting responsibilities in electricity and maritime transport discouraging private investment and reducing competitiveness in services that businesses depend on.

An ageing workforce and overlooked talent are squeezing growth

By 2033, nearly one in five Mauritians will be over 65, and the working-age population is expected to keep shrinking, putting greater pressure on employers, pensions and public finances. Growing pension costs are already being financed through an elevated fiscal deficit, making the shortage of workers a concern for the country's finances as much as its businesses. Low female labour force participation leaves considerable talent underused: nearly 60% of women outside the workforce cite household and family responsibilities, reflecting limited childcare options and increasing eldercare demands.

Young people face a difficult disconnect between qualifications and available opportunities, with high unemployment and inactivity existing alongside employers' recruitment difficulties. The release reports that 51% of young people with tertiary education are outside employment, education or training, more than twice the rate among those with lower qualifications, pointing to a serious mismatch between education and workplace needs. Businesses report shortages in artificial intelligence, cybersecurity and data science, alongside difficulty finding candidates with essential soft skills, making better connections between education, training and employment central to improving job prospects.

Digital opportunity needs practical reforms to deliver better jobs

Widespread internet access and strong digital public infrastructure give Mauritius a foundation for growth in the digital economy, though exports of digitally delivered services have stagnated and technology adoption varies considerably between firms. Citizens and businesses make limited use of online government services because registration is cumbersome, digital literacy is low, and systems remain fragmented. Shortages of advanced digital skills further restrict the country's ability to benefit from artificial intelligence and expanding global demand for digital services, leaving promising infrastructure without the widespread use needed to turn it into economic opportunity.

The report identifies three priorities: stronger institutions that support competition and efficient labour markets, investment in infrastructure and skills for a modern digital economy, and incentives that encourage businesses to innovate and adopt technology. Without reforms, potential growth could fall to around 1.2% by 2050; a bold, achievable reform programme could lift GDP by nearly 7% by that year and create more, better-paid jobs. Delivering those changes would help Mauritius regain competitiveness in an increasingly digital, knowledge-based global economy.