Income inequality shrinking in Mauritius but challenges remain: World Bank

This World Bank report sheds light on the extent to which earnings mobility and inequality of opportunity in access to the labour market have contributed to the increase in earnings inequality in Mauritius.

World Bank released a new report today which was named "Mauritius: Earnings Mobility and Inequality of Opportunity in the Labor Market", it underscored that lower-paid workers in Mauritius are to some extent catching up to their higher-paid counterparts over time.

This report sheds light on the extent to which earnings mobility and inequality of opportunity in access to the labour market have contributed to the increase in earnings inequality in Mauritius.

"Workers who start at the bottom of the earnings distribution are seeing a larger growth in earnings than workers that start at the top, so they slowly move up the earnings ladder," said Marco Ranzani, the Bank's economist and the report's main author. "This progress over time is promising, but the rising gap in earnings between high- and low-skilled workers remains a concern."

Inequality remains high, however, and the characteristics that drive earnings inequality also keep individuals from benefitting from earnings mobility, and therefore women, young people, and less-educated workers not only face lower initial earnings, they also face more difficulty in catching up with high-paid workers during their time in the workforce.

The increase in income inequality over the past decades in Mauritius was driven by a progressive shift from traditional and low-skill sectors to services, notably professional, real estate, and financial services. This transformation has generated a considerable rise in the demand for skilled workers that the country is struggling to meet, despite higher education levels among the population. As a consequence, high-skilled workers received considerably larger wage increases compared with low-skilled workers.

Access to labour markets has become more equal over time, largely due to better education across the population, but women and youth especially tend to lag behind and are less likely to have full-time jobs. The report takes a closer look the extent and nature of earnings mobility and inequality of opportunity in the Mauritian labor market to better understand whether low-paid workers can catch up in earnings with high-paid workers who have the same characteristics, which individual characteristics foster earnings mobility, and to what extent circumstances at birth affect the ability of an individual to access certain good jobs.

The report makes three key recommendations to equalize earnings and job opportunities, especially for those left behind:

Continue with women-friendly social policies.

Recent reform efforts go in the right direction and include the introduction of paid paternity leave, the extension of maternity leave, the prohibition of dismissal of pregnant workers and of discrimination in access to credit based on gender, as well as the law on equal remuneration for work of equal value that imposes a positive duty on every employer. Going forward, developing affordable childcare and eldercare programs as well as working-time regulations that promote flexibility will be key to make further progress in closing the gender gaps in the labour market. In addition, undertaking awareness campaigns can help shift norms around the types and levels of jobs that women can have.

Strengthen policies targeted at developing skills that are in high demand.

A comprehensive assessment of current and future skills needs should be the starting point of a new skills planning strategy. This could help inform education curricula choices of future generations of workers. In addition, re-training programs for individuals who are already in the labour market can contribute to reducing the skills shortage.

Consolidate employment programs, connect them with demands from employers, and integrate them with education policies.

Programming should combine on-the-job training, short classroom training, life-skills training, and labour market intermediation services and career guidance for participants. The report identifies a reluctance among low-skilled youth to take up jobs in certain sectors because of the working conditions as well as the social status associated with being employed in these sectors. In addition, employers report difficulties in finding people with proficiency in technical skills.