Mauritius: No paradise for foreign workers

In August/September 2001 the Centre for Research on Multinational Corporations (SOMO), located in the Netherlands, carried out research on the garment industry in Mauritius. This report is based on interviews with workers, management, governmental institutions and labour inspectors.

Madagascar and Mauritius flank the south-eastern coast of Africa, two island nations huddled together in the middle of the Indian ocean. Yet despite their geographical proximity, the countries are far apart in terms of economic development: Mauritius, hardly a speck on the map, boasts a behemoth clothing industry, while Madagascar, the fourth largest island on the planet, is still struggling to establish its garment sector. It has not helped that Madagascar's presidential elections of December 2001 left political instability in their wake. As a result, most of the big island's clothing factories stopped production and some of them moved back to Mauritius.

MAURITIUS
Mauritius's experience with industrialisation and economic development over the last 30 years has earned it international praise. Other countries, struggling through the stormy challenges of globalisation, saw in the island nation's clothing and textile industry a beacon, the how-to model to be emulated in pursuit of a home-grown manufacturing base. The people responsible for this Mauritian success story have been its workers and the productivity of their labour. But now, when the storms of globalisation have begun to batter the island's apparel economy, it is the workers who are suffering. "At a time when Mauritius' garment industry is facing problems, the workers are seen as second class people," according to a labour union organiser.

Mauritius is a small Island in the Indian Ocean, to the east of Madagascar. It has one of the strongest economies in Africa, boasting an average annual growth rate of 6% over the last 2 decades. Until the beginning of the 1970s, when Mauritius embarked on a major industrial development programme, its economy had been based almost exclusively on sugar cane (which even to this day accounts for 25% of Mauritius' export earnings). In the shift to diversify and industrialize, the motors driving Mauritius's economic development became garment production, tourism and, most recently, financial services. Certain conditions have been key ingredients in the country's success: stability, in politics, society, and macro-economics - and a coherent strategy to compete internationally in labour-intensive activities. Along the way, Mauritius has benefited from trade agreements, such as the Lomé/Cotonou conventions (which give preferential access to Mauritius exports to the European market), the Multi- Fibre Agreement (MFA) (which has allowed Mauritius to build up its garment industry by restricting the clothing exports from mostly Asian countries), and recently, the US African Growth and Opportunities Act (AGOA).

Over the past three decades, Mauritius has become a "middle-income" country. But its garment industry now faces competition from other Southern African countries and competition due to rising labour costs. It is trying to compensate enhancing efficiency and upgrading production. At the same time, Mauritius has been developing its financial services sector and looking at new growth pillars such as, for example, positioning itself as an international hub for trade and information technology for the Africa and Indian Ocean region.

Garment Industry
Most of Mauritius' garment production occurs in Export Processing Zones (EPZs). The EPZ sector in Mauritius started in the early 1970s, as a central component of the country's economic development strategy. The EPZs, which expand across the entire island, are the major factor contributing to the country's economic growth.

In 2000, there were 518 enterprises in the EPZ sector in Mauritius, out of which 251 (48%) were involved in garment manufacture. Out of the 92.666 total jobs registered in June 2001, 82.080 (89%) were in textiles and garments factories (77111 in garments alone). Most of the companies operating in Mauritius' apparel industry are locally-based, contrary to the experience of other countries which only recently began apparel production (e.g. Lesotho and Swaziland, where foreign, and especially Taiwanese, companies dominate); more than 65% of Mauritian manufacturing companies are locally-owned, according to the Mauritius Industrial Development Authority (MIDA).

According to Textiles Unlimited the value of the garments exported stood at US$ 891 million in 2000, representing 81% of the total exports of the EPZ. Of these exports, US$ 544 million (61%) went to Europe and US$ 275 million to the US. In Europe the main export destinations are France, the UK and Germany. A portion of the country's garment output goes to African countries (mainly to South Africa) and, according to MIDA, a very small amount is destined for Japan. Mauritius's US exports have grown in recent years, mostly as a result of the AGOA.

Garment trade facilitating agreements
Mauritius has benefited from a range of multilateral trade agreements. The garment industry in Mauritius started in the 1970s, after MFA quotas began to restrict the industry in other garment exporting countries. Mauritius's exemption from these restrictions encouraged the development of the EPZ sector and a large garment industry. With the phasing out of the MFA at the end of 2004, Mauritius is set to lose this advantage.

Mauritius also falls under the ACP-EU agreement, which grants it duty- and quota-free access to the European market under certain conditions. In addition, Mauritian exports are eligible for preferential access to US markets through the AGOA. According to employers and government institutions, the AGOA will greatly benefit Mauritius. Exports to the US are expected to increase in the coming years as duties are lifted. However, some people are sceptical about the AGOA's benefits, noting that competition with other AGOA-eligible countries is increasing.

Competition
Both the MIDA and several company managers worry that competition with other garment-making countries from around the world is a real threat to Mauritius apparel industry. Eastern Europe, for one, is emerging as a major competitor, especially because of its proximity to the Western European market (particularly Germany). Several Western European countries have intensified their trade with Central and Eastern European countries through Outward Processing Trade. But Mauritius is not only in competition with Eastern Europe. "The capacity worldwide has gone wild", according to the managing director of a small factory in Mauritius. Global competition is taking its toll as "retailers can push the manufacturers against the wall". In addition to other African nations, competition comes from manufacturers in South-East Asia, with their high-volume-output, low-labour-cost garment industries.

At one time, Mauritius used to have almost full employment, but this is no longer the case. Mauritius is losing business due to its relatively high labour costs (compared to much of sub-Saharan Africa) and its location. Production has been seeping away - especially in labour-intensive industries - to Madagascar and other countries in the region. Buyers can pay lower prices for the orders that are still placed with Mauritius firms, and manufacturers then complain that profits are not as lucrative as in the past.

As a result, several companies are closing down or looking for new investors or buyers. Most of these companies have declared bankruptcy and have avoiding paying workers the wages they were due. Other companies closed temporary, or cut back to partial operations. Mauritius' economic problems extend beyond the garment industry, with the sugar industry also falling on hard times. Low skilled jobs have been disappearing.

Mauritius' trade statistics hardly indicate all doom and gloom. Moreover, the government is optimistic that it will continue to attract and keep new investors by offering generous incentives. It is putting energy in having the textile industry fully develop, in order to exploit all the potential advantages opened by the ACP-EU agreement and the AGOA. Some managers interviewed were confident in the future and were even investing in their company to enlarge the production capacity.

Labour law
Labour relations in the EPZ are covered by the labour laws and by the Industrial Expansion Act of 1993. The Act states specific regulations for EPZ workers and gives employers the right to demand 10 hours compulsory overwork (on top of a 45 hour normal working week). After 45 hours, workers are entitle to overtime pay. Women are not eligible for paid maternity leave after their third child and can be asked to do night work. All of these provisions has made the Industrial Expansion Act come in for persistent criticism from trade unions, who continue to call for its amendment.

One of the problems mentioned repeatedly by union representatives is the current remuneration system. When workers retire they are denied a lump sum payment, as in other sectors , which forces employees to keep on going until they are no longer physically capable or until they are dismissed. One worker we interviewed was 67 years old. She was dismissed for not being able to make the production target any more and was not given any compensation. The trade union intervened and took the case to court, where the company finally settled on 15 days payment for every year of service.

Labour conditions

Trade unions
Mauritius, with a population of about 1.2 million people, has hundreds of active trade unions. As a whole, there is a high degree of trade union representation, with a national unionisation rate of about 20-25% among the entire working population. However, the union rate is much lower in the EPZs, where the ILO and local unions report that only between 9 -12% of workforce is unionised.

There are many obstacles to trade union activity in the EPZs. Union activists complain that it is difficult to gain access to factories and that they encounter numerous problems with employers who don't want workers to join unions. It is a common tactic for managers to threaten to close their factories if workers begin to join unions. In order to thwart union organising before it can even begin, managers sometimes ask workers to sign a promise not to join a union. Union organisers have a hard time recruiting workers outside of working hours, since some factories make homeward-bound workers board company sponsored-transportation inside factory gates.

Even after a union does succeed in gaining a foothold inside a factory, it can be excessively difficult to get the factory to recognise the union, even when the Industrial Relations commission orders this. Recognition can take two to three years and will cost the union huge amounts of money on legal expenses.

Several of the management interviewed expressed hostility towards the unions, or completely ignored their existence. The recent economic difficulties in the apparel sector have also weakened labour's strength. "With the closure of more factories the unions can't flex their muscles anymore," according to another manager.

Legal striking is virtually impossible due to the legal procedures that have to be followed. Illegal strikes do happen though, and according to one of the trade unions, they can be very effective.

Wage
The minimum wage is between 1600 and 1800 rupees (US$ 53-60) per month. Most workers interviewed earn above the minimum wage, using overtime and bonuses to boost their pay packets to between 2000 and 5000 rupee (US$ 67-167) per month. During the interviews, the workers complained that they were barely able to make ends meet on their meagre wages. One women worker asked: "This salary is very, very low. How can we support children, we can't even pay for their schools?". Lately, workers in factories which have lost orders have seen a substantial decrease in their monthly income. Without the hours of overtime they cannot make enough money for themselves and their dependents. Jobs in the garment industry are among the lowest-paying in the Mauritius economy (compared to mining, electricity and water, transport and construction), and do not offer much scope for advancement. All these factors have led to increased frustration among the textile and clothing workers.

Most workers work on "piece rate," which means their earnings depend on how many garments they produce. Some companies have a productivity bonus that "forces" workers to do overtime. If workers cannot make the production target, they will miss out on what can be a substantial bonus. When the workers fall behind the target, the bonus (or part of it) will be cut. When the workers don't make the target the bonus is cut. Because wages are so low, workers depend heavily on overtime and bonus wages for their survival.

Health and safety
There is free public health care in Mauritius. Workers reported health problems because of the dust inside factories; most workers don't get protection. Some factories are very hot and lack appropriate ventilation. Workers in one factory mentioned that they don't get time to go to the doctors, and that often the factory does not approve the required medical certificate. This results in workers not being paid for sick leave.

Working hours
Workers in the EPZ work 45 hours (normal working week) with 10 hours of compulsory overtime. Under the 1993 Industrial Expansion Act, companies have received greater flexibility, especially when it comes to calculating the hours of work for purposes of overtime. Overtime is paid 1.5 times the normal wage for the first 10 hours, than 2 times for the next 5 hours and after this 3 times.

The amount of overwork differs from factory to factory. Most workers reported that they had been doing excessive overwork in the years before. Some factories, facing a loss in orders, correspondingly lowered their overtime requirements in 2001. In other factories, where orders are still being placed, management demands long hours from workers, shifts that last well into the night and weekend work. With such a schedule, many employees complain that they have no time for a social life; workers working long overtime shifts rarely see their children. Workers receive no advance notice when overtime shifts will be required. Some factories are demanding compulsory overtime. If workers refuse this compulsory overtime, they will be denied future overtime opportunities - a severe penalty, since workers depend on some overtime wages to supplement the basic, non-overtime wage, which does not cover basic living expenses. Defiance of compulsory overtime may also result in the company cutting a worker's bonus.

There are complaints about the working pace and the rest periods. During an interview, workers reported that they were only given a 15-minute break for lunch. In several factories, workers are not allowed to go outside the gates on their lunch break to buy food, but are confined within the factory premises.

Labour inspectors
The factories are supposed to be inspected once a year, but in an interview, the labour department confessed that it lacked the human resources to carry out the inspections. Labour inspectors apparently will visit a factory when there is a complaint or a request to do so, and when they do make a visit, they claim to interview both workers and management. The union provides inspectors with the names of the shop stewards, but labour inspectors reportedly only talk to the workers nominated by the management.

Expatriate workers
During the garment industry's heyday, Mauritius faced a shortage of labour. Companies began to "import" workers from other countries so as to be able to fully exploit the production possibilities in Mauritius. Workers were imported mainly from China, India, Bangladesh, Sri Lanka and Madagascar. Almost three-quarters of the migrant workers are women and almost half of the women are married and have children. Foreign workers decide to come to Mauritius foremost for economic reasons; they were attracted by the opportunity to earn high wages. As one woman from China said: "we thought we would earn a lot of money here and therefore came to Mauritius and left our families for years".

Even though the employment rate has decreased since the booming years, factories have not stopped searching for workers outside of Mauritius, since foreign workers were seen as more docile than their Mauritian counterparts. "You can't expect local people to work in the same conditions as foreigners do here" according to the manager of a denim producing factory. The managers we interviewed mentioned that the expatriate workers willingly worked long hours without any problems and that they do not ask for holidays and sick leave. Managers also praised the skill and speed of foreign workers, preferring them to local workers, who, with their social and family obligations seem "demanding, lazy and overall less productive" in the eyes of management. It seems that for management, the ideal situation would be a workforce that was available 24 hours a day.

Most of the expatriate workers in Mauritius are employed in the garment and textile sector. Of the 15531 work permits issued for foreigners in 2000, 13451 (87%) were in the garment and textile sector. Of these only slightly more than 1% are in management and supervision positions.

While managers are eager to exploit the labour of expatriate workers, their presence in Mauritius has bred resentment among the local population. Especially since working hours - and as a result, income - has decreased with the decline in orders, local workers feel that their interests are not being taken into account. Often, if there is overtime to be done, it will be assigned to the expatriate workers.

While some expatriate workers reported that they were doing a lot of overwork, other expatriate workers complained about not being able to work enough overtime to earn what they expected to earn when heading for Mauritius. Because of protests from the side of the trade unions about the growing unemployment and their demand that priority should be given to Mauritian workers first, the government seems willing to take measures to discourage companies from employing expatriate workers.

Workers are recruited through agencies in the different countries where they come from. During the research, SOMO spoke with workers from China, India and Bangladesh. All complained about the differences in payment between what has been promised by the agencies and what was actually paid by the factories. The workers had to pay a fee so as to be able to get a job in Mauritius. Most of the workers took out loans to pay this fee. Some workers take on additional jobs at night to earn extra money, in restaurants or even as prostitutes.

Labour conditions for expatriate workers
Foreign workers live packed in dormitories, with 4 or more in one small room. Some of the dormitories are on the top floors of factory buildings. Several workers said that they had a curfew, and could not leave the building after a certain hour. They are not allowed to join unions nor engage in any union activities for fear of being deported and repatriated. One of the labour officers interviewed mentioned that the contracts often don't mention the terms of employment and that there are often problems with payment.

Overall, the salaries for foreign workers are lower than expected. One worker that was interviewed said he had to pay US$ 817 to get a job in Mauritius. Another worker had to pay US$ 2511 to a Bangladeshi agency. They both work for a factory that has been on the verge of bankruptcy. At the moment of the interview, they were not sure whether the factory would close. When coming to Mauritius, they were told that they were going to earn about 12-15.000 Mauritian Rupees (US $400-500) while in reality they can only make, even with a lot of overtime, 5000 Mauritian rupees per month (US $167). The Bangladeshi worker's employment permit is valid only for one year. So, even after paying everything he earns to the bank, he will not succeed in paying off the loan that brought him here.

Some factories pay the basic salary directly to the agency or the family in the workers' home country, leaving the workers themselves with only their overtime wages in Mauritius. When there is no overtime they do not get any money at all.

Last year several factories closed down which caused additional problems for the expatriate workers. As most took out loans to be able to come to Mauritius they are not at all too happy to return home without enough money. They had to wait to be transported home and don't get any money in the meantime. During the research we saw Chinese workers selling their personal belongings as to be able to get some money to buy food.

The problems with foreign workers came to a head in the spring of 2002, when two women workers, both Chinese, died. One worker died of pneumonia, the other of a brain haemorrhage. Spontaneous protests erupted, as expatriate workers went on strike and marched to the Chinese embassy. There, they had a sit-in which lasted five days, dispersing only after the Mauritian Minister of Labour convened a meeting between factory directors and the heads of the largest recruitment agencies. Both factory and agency managers promised to reform the system of expatriate labour.

Client inspection
According to the MIDA, retail clients are eager to inspect that factories are complying with their standards. European firms, such as H&M, do some inspections, but it is foremost the American buyers who "inspect everything". Some buyers, including the GAP, have additional compliance standards for example when it comes to expatriate workers. The GAP requires that factories employing expatriate workers cover the workers' airplane tickets to Mauritius. Factory owners resent the extra costs this entails - and also the fact it is one less cost for workers to absorb with their wages. As one employer said, "If we would pay everything, like the GAP is wanting, people would not be so committed".

Companies acknowledge that factory inspections are happening. According to one manager, "basically all the buyers check the social side of the production. If you don't comply they do not allow you to supply." The manager of a large garment company in Mauritius notes that large buyers "all have their own Code of Conduct. In relation to social conditions, they do not want child labour, they want workers to work a certain amount of hours per week." When buyers make audits, they "inspect everything, they talk to the workers, look at health and safety issues like the fire extinguishers, toilets, clean machines, chemicals in the washing department. They have teams to cover the foreign workers; they visit the dormitories, look at the contracts and special conditions within the contracts. Of course there are always issues, it is a continuous improvement process."

Most management mention that European buyers were performing fewer inspections. A jeans factory that is producing mostly for the UK for example mentioned they have never a client inspecting the factory.

The workers we interviewed mentioned that most clients don't talk with the workers when they make their often-brief inspections. Workers are also sceptical that factory inspections actually make a difference on their working conditions. Workers from one factory mentioned that the GAP interviewed a worker about the problem with overwork in the factory, but that nothing happened afterwards.