History Of Expatriates In The Development Of Mauritius Economics Essay

Given its small population, Mauritius could not accommodate for growing demand of skilled labour in emerging sector in the 1970s during the implementation of the Export Processing Zones (EPZ). Subsequently, the country opened its doors for both foreign investment and labour in order to boost its economy. In the late 1980s, the textile industry was subject to an exponential growth and already employed 600 foreign workers. This number kept increasing over the years (as shown in Table1) to meet international competition by employing more and more expatriates (cheaper less-skilled labour). Much of these expatriates were recruited from China, India, Madagascar, and Bangladesh amongst others, on a contractual basis. Today, the number of expatriates in Mauritius has exceeded 20,000. Hence, the country’s high dependence on foreign labour should be underlined. Moreover, according to the Mauritius Employers Federation “foreign workers have been beneficial to Mauritian enterprise since they have helped to maintain our competitiveness vis-à-vis our competitors”.

However, the import of foreign labour did not limit itself to the EPZ sector. With the emergence of other sectors, expatriates were seen working in nearly all sectors of the economy by 2000. In 2006, some 2,000 foreigners were also employed in the non-EPZ manufacturing sector and the services industries, primarily the construction sector, hotels and restaurants and other business activities. The following table shows the spread of foreign labour in key sectors like manufacturing, construction and others (hotels, restaurants, and other services) from 1990 to 2008.

Year

Manufacturing

Construction

Other

Total

1990

600

200

200

1,000

1992

1,200

2,000

900

4,100

1994

4,350

3,000

925

8,275

1996

6,115

1,400

700

8,215

1998

9,233

350

459

10,042

2000

13,848

300

426

14,574

2002

15,975

333

722

17,030

2004

15,575

1,411

1,076

18,062

2006

14,504

716

1,059

16,279

2008

19,812

1,571

1,433

22,816

Table 1: Foreign workers employed in different sectors form 1990-2008

Source: 2008 Central Statistical Office (CSO) -Survey of Employment and Earnings in Large Establishments

Problem Statement

The spread of expatriates bears testimony to the growing demand of skilled workforce in various sectors of the Mauritian economy. For the purpose of this assignment, we will focus on the construction sector. In this line, we should point out that people working in the construction sector are mainly masons, welders, plumbers and truck drivers. Therefore, we may infer that as the population’s educational level is rising, the number of expatriates is bound to increase given the resulting labour shortage for manual works as required in the construction field.

Unlike developed countries, the construction industry in Mauritius is particularly labour-intensive. However, it is an irrefutable fact that along with the economic expansion, the construction process has been mechanized to a larger extent. However, adverse effect on the economic situation of the country would obviously affect this sector directly.

During the period starting from year 1980 to 1984, there was a recession, where most employees found it difficult to guarantee a lifetime employment to their employees. Despite the economic expansion as mentioned above, employers became careful in their recruitment policies so as to be safe from any unpredicted and unanticipated challenging macro-economic situations in the country. Hence, along with the commencement of a new phase of expansion in 1988, where 9397 workers were employed in the construction industry as opposed to 4771 in 1985, came several changes in the mode of employment and the working conditions. Nowadays, it is normal to see employers in the construction field recruiting most of their employees on fixed term contracts are even on a casual daily basis. Moreover, subcontracting labour is a common practice because it reduces high charges with direct employment.

Research Objectives

The forthcoming research and analysis is an attempt to shed light on the following issues:

Reasons which are giving rise to the need and expertise of foreign workers in Mauritius

An evaluation on the contribution of expatriates in the construction sector so far

The pros and cons of employing expatriates in the country

An analysis on future demand for expatriates’ expertise in relation to the upcoming development in the country

Research Methodology

The Methodology used involved the collection and analysis of data from both primary and secondary sources. Primary source of information was gathered mainly through questionnaires and interviews from managers and expatriates. The managers of several construction companies were contacted so as to obtained their views and thoughts on the role of expatriates in the development of Mauritius. They were also given the opportunity to give their opinion on the fact that more expatriates are being employed in the construction than local workforce. (Add a part for expatriates) Secondary information on the other hand was mostly gathered from the Central Statistical Office and from electronic articles and website.

An overview of forthcoming chapters

In chapter two, we shall analyse the importance of International Human Resources Management (IHRM) and the HR-Literature relevant to expatriates. Chapter three gives an analysis of the trends and contribution of the construction industry in Mauritius. Furthermore, we shall study the trends in expatriates and the recruitment procedure. The Research Methodology will be explained in detail in chapter four. Moreover, in chapter five an analysis and interpretation of our own findings through questionnaires (Appendix 1 and 2) will be given and illustrated in charts where necessary. Finally, chapter six shall include conclusions and recommendations based on our research.

CHAPTER TWO: LITERATURE REVIEW

CHAPTER THREE: THE CONSTRUCTION INDUSTRY’S PROFILE

The Construction Industry in Mauritius

Since its independence in 1968, Mauritius has witnessed much progress and development. This growth sprouted from the diversification of various sectors on the island, namely the agricultural, textile and construction sectors. The latter has contributed massively in shaping the island through new roads and a panoply infrastructure. The investment in construction amount to 16.4 as a percentage of the Gross Domestic Product (GDP) at market prices in 2011 compared to 17.4 in 2010 and 12.8 in 2000. It is noteworthy to point out that the value added in this sector has increased steadily from Rs 15,341 million in 2000, Rs 52167 million in 2010 to Rs 53,135 million in 2011.

The construction sector is a saturated one. It encloses a list of both local and foreign players such as the Road Development Authority (RDA), COLAS, Sotravic Limitée, Gamma Civic Ltd, Beijing Construction Engineering Group Co Ltd among others. The huge number of investors in this sector testifies its prominence. In fact, since Mauritius is in a developing phase, more and more roads, bridges, buildings and the like need to be constructed.

Seizing this opportunity, Chinese companies have implanted their branches on the island and have embarked on the Jinfei Economic and Trade Cooperation Zone. For instance, the Sinohydro a multinational company having it’s headquarter in China engages in construction projects with local organisations such as the the Road Development Authority. For example, they signed the Quartier Militaire Road upgrading project. The Sinohydro Company also promotes the idea of ‘green activities’ and ‘harmonious homeland. ‘

Moreover, the construction of the new SSR Mauritius Airport Terminal is being done by a French company, Aéroports de Paris in collaboration with China state construction Engineering Corporation. The mall of La Croisette Grand Baie has been constructed by a joint venture between local business ECD with Construction Company WBHO South Africa. Another construction company is Beijing construction Group which employs Chinese people. The Company was responsible for the construction of apartments in Sodnac and the construction of the Free Port Administration building in Mauritius.

Labour in the Construction Industry

We should further highlight that despite the economic recession, the construction industry was subject to a growth of 6.8%. The workforce requirements have grown accordingly. In 2008, the demand for labour in the construction industry grew by 30%. The problem which arose was that there was a shortage of skilled labour. In order to bolster this shortage of skilled workforce, expatriate workers are imported from countries like China, Bangladesh and India. A recent study from the CSO (Central Statistical Office) shows that the number of expatriates working in the construction industry has already reached approximately 7,000. Main forces driving construction companies to import foreign labour include cheap and more efficient workforce so as to meet tight delivery schedules, which involve working overtime. Generally, expatriates migrate to other countries with the aim to work hard and save money for their families back home. Thus, they are more geared towards working on shift systems as well as during unsociable hours.

However, importing labour is not easy as it may seem. It should be underlined that hiring foreign workers is undertaken by two different organisms; initially, the Ministry of Labour, Industrial Relations and Employment and secondly an agency under the Ministry of Finance and Economic Development, or the Board of Investment (BoI). According to the 2012 statistics, in relation to employment, out of 45,632 foreign workers, 35,269 hold a work permit (Appendix 3) issued by the Ministry of Labour, Industrial Relations and Employment and 10,411 for an Occupation Permit (Appendix 4) issued by the BoI. Furthermore, the Ministry of Labour has allocated 14 800 of these permits to Bangladeshis, 5322 to Chinese, 9016 to Indians, 3090 to Madagascar, among others. In terms of construction, they are 6240 foreign workers.

Recruitment Procedure

Specific criteria and conditions should be adhered to in order for a foreigner to be granted a work permit. The procedure is such that the hiring demand is made by the prospective employer (Construction Company which has to be a licensed recruitment agent). The issue of a Recruitment Licence (Appendix 5) is governed by the Recruitment of Workers Act 1993 (Appendix 6) and enables construction companies to recruit foreigners to work in Mauritius. After a request to the Employment Division by form of a letter, an inspection is carried out to determine the justification to resort to foreign labour. The request and the inspection report are referred to the Work Permit Committee. Consequently upon approval, the company is granted a letter of intent authorising it to import a certain number of expatriate workers given certain conditions. The Company may then undertake its recruitment exercise. Individual applications should then be submitted to the Employment Division for consideration. An approval is then sought at the level of the Employment Division for the grant of work permit. Where approval is obtained, a work permit is issued upon payment of the prescribed fees and the statutory deposit under the Non-Citizens Employment Restriction Act 1973 (Appendix 7).

Other issues to be considered are:

A residence permit is simultaneously applied when applying for a work permit

The worker should normally be between 20 to 60 years of age

Foreign skilled workers are normally granted work permit for a maximum period of four years. They may take up employment for another term of four years provided they have spent one year abroad at the expiry of their first term of employment.

The demand should specify the work expected of the foreign worker. It should also specify that the work to be accomplished by the prospective worker cannot be done by the Mauritian worker because this work requires a special know-how or skill or because there is a lack of labour on the Mauritian market.

The procedures to be followed are strict and should be followed accordingly. However, given that the number of foreign workers in the construction industry is increasing at an alarming pace, government has decided to train Mauritians to cater for the shortage of skilled labour in this sector. In this view, the HRDC is planning to offer first level training to some 200 building workers in the Construction sector in collaboration with the Mauritius Institute of Training and Development (MITD) and the Building & Civil Engineering Contractors Association (BACECA). The training programme will eventually be extended to scaffolding workers. However, we wonder to which extent Mauritians will be able to match the performance of expatriates on the field.