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65th Year -- No. 3574 Friday, May 8, 2020 www.mauritiustimes.com facebook.com/mauritius.times 16 Pages - ePaper MAURITIUS TIMES Advice is like snow - the softer it falls, the longer it dwells upon, and the deeper it sinks into the mind. -- Samuel Taylor Coleridge Time for a Great Healing Dr R Neerunjun Gopee + See Page 3 Interview: Kevin Teeroovengadum “We are anything but resilient! That's the plain truth” + See Page 8-9 Matters of The Moment Food Security and Universal Ray of Hope Basic Income: Priorities of the Moment? Over so many decades we have been able to maintain a Welfare State against all odds; we can } go further and implement Universal Basic Income before we lose the battle due to unemployment. It is for economists and the experts to provide the country with a blueprint and to tell us whether the simple idea of Universal Basic Income is practical and implementable in our context” By Sada Reddi + See Page 4 Dr Mrinal Roy + See Page 5 Mauritius Times Friday, May 8, 2020 www.mauritiustimes.com Edit Page facebook.com/mauritius.times 2 Economic recovery will come with high Mauritius: On the levels of unemployment: blacklist How should governments respond? wo key factors distinguish the eco- nomic consequences of coronavirus e were given advance notice, will carry conviction. This will not be dif- Tfrom those of previous crises. One is courtesy Reuters in a dispatch ficult to do provided we are sufficiently the catastrophic decline in employment in W dated May 05, of the European proactive to make it extremely unrewar- such a short space of time. The other is the Union’s imminent decision to include ding for operators to indulge in loose incredibly swift digital transformation which Mauritius and ten other countries to its list behaviour in defiance of codes of market has changed the way society works and con- of states that pose a “financial risk to the conduct that comply with globally accep- sumes. bloc because of anti-money laundering ted norms. In this new digital landscape, as well as a and terrorism financing shortfall”. The axe Singapore, for instance, has decided widespread shift to home working, the resur- has fallen, and in a press release made to penalize its financial operators who help gence of e-commerce and even the remote public yesterday, the EU has added The Photo - Bryan R Smith/Reuters citizens of other countries in tax evasion provision of healthcare have become facts of Bahamas, Barbados, Botswana, as if they have indulged in a money laun- everyday life. In effect, the credit for the debt often benefit business owners at the Cambodia, Ghana, Jamaica, Mauritius, dering offence. Actions like this carry con- rapid digitising of most companies does not (relative) expense of workers. But policies Mongolia, Myanmar, Nicaragua, and viction that the jurisdiction “means busi- belong with business leaders – but to the which help the poorer in society have less of Zimbabwe, considered as “high-risk third ness”. For us to be able to maintain pace arrival of Covid-19. an impact on government debt as these countries with strategic deficiencies in like this, our authorities need to be always households contribute less tax. their regime regarding anti-money laun- Any exit from the current lockdown is alert as to where exactly the shoe is pin- likely to reverse some of this digital transfor- We also found that higher spending and dering and countering terrorist financing” ching at the level of international suscepti- to its money-laundering blacklist. mation, but not all of it. And the unprece- lower taxes are particularly effective in eco- bilities. That should necessarily be fol- dented scale of what has happened will have nomic downturns. This is because house- The EU’s amended list will now be lowed up by taking timely pre-emptive a significant impact on employment levels for holds tend to spend any additional earnings, submitted to the European Parliament and action. a long time – even as economies rebuild. helping the economy to bounce back faster. Council for approval within one month In the same line of thought, without any (with a possible one-month extension). Indeed, weak employment growth has Also, when interest rates are at record doubt the EU must also be concerned Given the Coronavirus crisis, the date of been a key feature of previous economic low levels, there is a potential for what we about the soundness of the country’s go- application of today's Regulation listing recoveries – a phenomenon economists call call “fiscal free lunches”. That is, tax cuts vernance and the management of our third countries – and therefore applying “jobless recovery”. In the US, following the could raise income to such an extent that the public finances and economy. Can we new protective measures – only applies as global financial crisis of 2008, it took over six additional tax revenue generated more than honestly say that this is done with rigour of 1 October 2020. This is to ensure that years for employment to get back to its pre- pays for any initial rise in government expen- and the national interest taking priority all stakeholders have time to prepare recession peak. The recessions of 1991 diture. over all other, narrower or unethical con- (after the Gulf War) and 2001 (the dot-com appropriately, states the press release. In So policy looking to minimise the poten- siderations? If doubts are raised about bubble crash), also saw long-lasting high any case this couldn’t have come at a tial for a jobless recovery should look to election results and are followed with court levels of unemployment, with immense eco- worse time, what with the many economic increase production in the economy and cases, with allegations of rigging or bribing nomic and social consequences. challenges that the country will have to increase the marginal returns from hiring on a massive scale, what kind of signal face in the wake of the Covid-19 pande- In Europe, the effect on employment labour. For example, cuts to corporate tax does this send to international bodies mic. The bill for saving our economy and after 2008 was even more dramatic. It took rates can help by improving business profits, such as the EU on which we depend for for allowing it to get back on its feet in the the EU 11 years to return to its pre-crisis although cuts to employers’ national insur- assistance? Besides, what about the months ahead will run into billions, and the unemployment rate of 6.7%. ance contributions would be a more effective chronic and repetitive, recurrent wastages signal that the EU’s decision conveys to approach to directly addressing employment that the country’s Audit Report exposes Recovery without jobs potential global investors and foreign levels. every year and that are never addressed, Put simply, these jobless recoveries were bankers that might decide to keep away Also, while corporate tax cuts might end and other excessive expenditures (due to caused by a mixture of globalisation and from Mauritius to avoid the risk of being at up increasing income inequality (by increa- for example cost overruns on big projects), digitisation. Essentially, manufacturing jobs odds with the EU comes as a massive sing dividends for shareholders) reducing which all add further to budgetary deficits end up moving from advanced economies to blow to the country. national insurance contributions would and contribute to piling up the country’s destinations offering cheap labour, while ad- increase demand for labour, raising both We do not know at the time of writing debt which is now nearing almost 70% of vances in technology replace labour. what type of action will be contemplated in GDP? employment and wages. The government this matter by our policy makers, but there The vast scale of the digital transforma- could also look to accelerate infrastructure If we want to gain international credi- is no doubt that Mauritius will have to tion caused by coronavirus is likely to make spending, improving the productive capacity bility, besides the responses that must be show, as it has done several times in the any recovery even more jobless than in the of the economy and providing a spending provided to address the specific issues past. past that it is continuing to operate by the stimulus which targets long-term results. raised by the EU, we could begin by put- highest standards of international good This leaves politicians with the difficult Overall, the most significant impact on ting our house in order to show our governance. Strengthening of the rules or task of formulating policies that will counter- the economy and employment would come seriousness and commitment to straigh- the adoption of new rules – without act these unfavourable effects. They will from a complete structural reform to tax and tening our financial situation. This will not destroying the sector -- to amply prove to need to come up with a plan that reverses spending policy. In 2011 a comprehensive be sufficient, but at least it will send a right the countries and organisations feeling the contraction in economic activity, reduces review of UK tax structure highlighted many signal. The forthcoming budget exercise aggrieved due to the operation of offshore income inequality (or at least doesn’t worsen inconsistencies and inefficiencies, conclu- gives an opportunity to do that. operators that we are having clean hands it) and minimises impact on government ding that the system was “inefficient, overly debt. complex and frequently unfair”. On that final point, it is worth mentioning Since then, some small changes have that in the UK, national debt as a percentage been made, but these inefficiencies and Mauritius Times of income is forecast to edge towards 100% complexities persist.

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