Executive Summary 24 1.86 With regard to reducing poverty, Mauritius is no longer suffering from extreme poverty. However, relative poverty persists. Furthermore, Mauritius has not really reduced the number of poor households in the past 15 years, despite various forms of aid and subsidies. The welfare state has benefited the poor and the less poor without distinction, although its efficiency has not been proved. Obviously, Mauritius needs a targeted aid and support policy in poverty-stricken areas such as strengthening the free-education policy by providing lunches for all schoolchildren younger than 16, and providing school materials for primary school children. 1.87 Contributory social protection covers occupational accidents, disability and retirement. Mauritius extended this protection to unemployment in February 2009. The benefits for retirement and unemployment seem to be small. Retirement benefits make up one-third of average incomes after 40 years of contributions at the rate of 9 per cent, and half of average incomes for contributions of 13.5 per cent. Unemployment benefits are only paid for a maximum of one year. The rates are 90 per cent of the salary for the first quarter, 60 per cent for the second quarter and 30 per cent for the remaining two quarters. Mauritius urgently needs to review social protection to ensure better coverage. It should present all possible scenarios for contributions, benefits and sustainability to stakeholders for discussion. 1.88 Statistical data indicates some stability in income distribution for the last 20 years. However, the Gini Concentration Index shows that it has deteriorated during the past five years. The Gini Concentration Index increased from 0.371 to 0.388. The share of revenue paid to the richest 20 per cent of people increased from 44 per cent to 45.6 per cent. The share paid to the poorest 20 per cent declined from 6.4 per cent to 6.1 per cent. The percentage of households with an income equal to half the median income increased from 13.1 to 14. Two bodies implement the salary policy. The National Wage Council (NPC, or National Tripartite Forum, which comprises representatives of trade unions, employers and the government) deals with annual compensation, while the Pay Research Bureau (PRB) deals with the increases that should be granted every five years in the public sector. Annual increments were generally low throughout the past eight years. They only compensated partly for inflation, while the five-year increments (those of 2003 and 2008) were very high. The wage rate index increased from 109.7 to 128.2 in all sectors between the second and third quarters of 2008. It rose from 103.3 to 136.2 in the public service. Despite these increments, Mauritius has maintained the purchasing Executive Summary power of salaries. The productivity gains do not seem to have benefited the employees, because inflation is high. Mauritius needs another wage policy that is less erratic. It also needs to review salaries every year to protect the Mauritian economy from macroeconomic shocks and prevent salary frustrations. Social dialogue and a new social model – which considers competitiveness, the security of employees and their right to decent work – will be the key to general welfare, social peace and the successful integration of Mauritius with the world economy. 1.89 With regard to education, the enrolment rates in all cycles (from preprimary to higher education) are high and impressive for a developing country like Mauritius. Education is free and compulsory up to the age of 16. Of all the challenges faced by the country, three seem to be particularly important. The first is the thousands of school dropouts at the end of the primary school-leaving certificate examination. The second is the extra lessons that exclude schoolchildren from low- and medium-income families because they cannot afford the tuition fees. These private lessons are capturing the interest of many teachers at the expense of public school education. The third challenge is higher education, whose quality and resources are obviously inadequate. A rapidly increasing number of Mauritians pursue their studies abroad. Their numbers now exceed 10,000. A very low proportion returns to the country, creating a real brain drain. 1.90 Access to health care is universal and free in the public health institutions. They have adequate equipment and staff on the whole. Mauritius has made remarkable progress at all levels of the health sector. The country’s maternal and infant mortality rates are among the lowest in the developing world. However, the situation with regard to the human immunodeficiency virus (HIV) and acquired immune deficiency syndrome (AIDS) is an exception. The number of cases detected each year (more than 500) is not declining, despite the aggressive policy the country developed to combat this scourge. On the other hand, increasing demand confronts the public health institutions and they are noticeably saturated. Mauritians are increasingly turning away from public health. According to the last World Health Organization (WHO) World Report, private health spending in Mauritius is 51.1 per cent of total health expenditure. In fact, public health spending in Mauritius is very moderate. It makes up only 1.9 per cent of the country’s GDP. In contrast, it is nearly double that in other upper middle-income countries. Government’s 25