ELECTIONS V: So that Working People Don’t Bear the Brunt of the Crisis
21.10.2014
After the severe financial crisis of 2007, there have been a series of subsequent economic crises all over the world capitalist system. For example, in Europe, there has been a slowing in the “economic growth” that capitalism relentlessly demands. Debts have been accumulated, and there have been waves of sackings and an increase in unemployment. Even Germany is now on the brink of recession. Governments in each country, with the collusion of the bourgeoisie and the international financial institutions, have again and again imposed austerity on the broad masses of the people, the brunt of this pauperization being born by the working class. This economic crisis has, in turn, triggered political crises all over Europe. Many of the manifestations of the present crisis world-wide, in particular since 2007, reflect a structural crisis in world capitalism following the shift from investment in production towards investment in finance and speculation in the heartlands of capitalism during the past 25-30 years of so-called “globalization”.
Effects on Mauritius
In Mauritius, where the economy depends heavily on exports to Europe, the crisis has in turn hit sugar, textiles, tourism and the ICT sector. And yet Government after Government here, with the encouragement of the bosses, impose an economic strategy that increases this vulnerability. The economy they want is not in any way an alternative, let alone an anti-dote, to the world crisis. The result is that the working class and poor people are being made to suffer for this crisis, a crisis that is not of their making, not just in Europe, but here too. Basic foods, for example, increase in price as the Rupee depreciates. Secure work contracts are increasingly replaced by temporary and seasonal work. Lay-offs continue, and there is an increase in real unemployment. (This is despite the Government’s ridiculous statistics that count someone as out of work if they did less than ONE HOUR’s work the previous week.) The crisis in Mauritius has been particularly harsh for specific reasons.
From 2005, and even before, LALIT predicted this. We knew that when the WTO rules came into force, the effect would inevitably be to remove all the old protected markets for sugar and textiles, the two big employers. The Multi-Fibre Agreement effectively came to its end, and the quota and guaranteed prices for sugar were banned. The price of sugar was reduced, in the short term, by 36%. It was obvious that the fall would continue, and yet only LALIT predicted that the drop in price was likely to continue.
The effects of the world crisis on other sectors
In the sugar industry, the price of sugar is still falling, and when the quota limiting sugar from beet planters in Europe is dismantled in 2017, things will clearly deteriorate for Mauritian exporters, who will be in direct competition with beet producers who are more “efficient”.But the Government, the Bosses and even the Unions, continue promoting the sugar cane sector. Even as the sugar industry nears bankrupting itself, year after year, they persist in shouting off the rooftops that all is well. As it is, the Labour Government chose consciously to send all the “European Compensation” (Accompanying measures) capital grant into subsidizing, of all things, the restructuring of the “sugar industry”, instead of into restructuring the “economy” as a whole, as the compensation was supposed to do. Instead they put all the money into turning their pet sugar industry into their pet cane industry.
And at what cost? It was done on the backs of the working people of Mauritius as a whole. What happened was the Government and bosses just went ahead and ear-marked all the money for paying off and sacking tens of thousands of workers, in the so-called “Voluntary Retirement Schemes”, known as VRS1 and VRS 2, and for “Blue-Print” money in order to sack skilled factory workers and close down mills. A sector that had over 50,000 employed workers, now has 3,500. And all this capital from Europe was spent without forcing the bosses to use any of it in order to create jobs. They just threw it against a wall and destroyed jobs.
At the same time, the State continued to facilitate the Sugar Estate Bosses’ conversion of agricultural land into Business Centres, Shopping Malls, Integrated Resort Schemes and other gated communities, and gave substantial contracts to the sugar estates to set up Independent Power Producers and then sell electricity to the people. Now, with the fall in the sugar price, the Government is, in fact, subsidizing small planters to keep on planting cane, despite the crisis, so that they can furnish enough raw cane to the mills to keep them viable. In other words, without the subsidy, they are not viable. So, instead of subsidizing food production, the State is busy subsidizing the sugar estates as it has done since colonial times.
In textiles, the number of jobs has fallen from over 90,000 in the 1990s to around 40,000 today. Factories have just gone on and on closing down, some delocalizing to Madagascar, India and Bangladesh. Meanwhile the Mauritian Government is begging the USA to extend its AGOA law to help textile exports into the US. In return for this, there is the humiliating condition that Mauritius will not criticize US foreign policy. Talk about new forms of colonization.
In the tourism sector, the situation has worsened with the Euro zone crisis. And in Mauritius so many new hotels have been granted permits that, what has happened is that there are too many empty hotel rooms in the industry. With a capacity for 1.5 million visitors a year, Mauritius is struggling to reach the 1 million per year mark. There are hotels that have gone bust, and others close their doors on the pretext of renovation. In either case, jobs are lost.
The ICT sector has had an indirect subsidy to prop it up. Government has a Youth Employment Program, which means Government foots part of the wage bill, in order to allow the sector to survive at all. ICT is another fragile sector, depending on external markets. In 2011, Infinity went bankrupt and sacked workers without compensation.
Debt
As the crisis in different sectors worsens, debts become more and more out of control, both for companies and households. The debts are related to loans that cannot be repaid, in the case of companies, and to the increase in the cost of living, in the case of households.
In the construction sector, the bosses have run up debts of Rs77 billion now. There are unfinished buildings, and others not occupied yet. With one or two exceptions, the take-up on IRS gated communities has been slow, and there are not new projects in the pipeline, which is all to the good, but not good for the capitalists and their debts.
The tourist bosses have a debt of over Rs48 billion now, with an increase of 2 billion in the past year.
Debt in the commercial sector has hit the Rs 30 billion mark.
The financial sector has shown growth, especially as a result of the windfall gains they get as the rupee depreciates, but they too are beginning to feel the crisis as debts to the banks increase. All the other forms of debt accumulate as a problem, in the end, for the banks themselves.The private sector’s debt exposes the gravity of the crisis in the capitalist system in Mauritius, and it inevitably takes a toll on society as a whole.
Democratization of the economy or crony capitalism
The politics of “democratizing of the economy” is Navin Ramgoolam’s slogan for giving favours to a section of the bourgeoisie, helping it grow faster by means of State power. During the past 4 years of Labour Government, this State bourgeoisie has got all sorts of favours that help catapult it upwards into the big, big league: getting rights over land by the beach (that was public beach before) for businesses related to tourism; getting roads deviated so as to get more space for a hotel to expand on the beach side; all sorts of favours for private universities being set up here for a “regional market in tertiary education”; land concessions to relatives for electricity production through solar energy, favours to energy-from-coal; contracts with parastatal bodies.
MMM-PT in the camp of the private sector, while Lepep Alliance not credible
The private sector has been the driving force behind the alliance between the Labour Party and the MMM. Representatives of different kinds of capital have all been unanimous in applauding its advent: Tim Taylor, Rajiv Servansingh, Lindsay Rivière have all spoken out in favour of the alliance with its ultra-liberal program. Now with Rama Sithanen as projected Finance Minister, they are even happier. So, the private sector will continue putting on pressure to decrease the value of the Rupee, and to push for worse and worse labour laws, and more and more repression on the working class. The private sector wants a Government that is strong and an opposition as weak and as accommodating as possible, when its unpopular policies have to be imposed upon the people of the country.
And to oppose this Labour-MMM alliance, we have another alliance set up, Lalyans Lepep (MSM-PMSD-Muvman Liberater) which has the past two Labour Party finance ministers lined up as its leaders. They have both been in Government in the past 4 years, and they have implemented the same politics. Both Xavier Duval and Pravind Jugnauth have made many concessions to the private sector as Ministers of Finance since 2010. They have both favoured depreciation of the Rupee to support export sectors in crisis. Again, it has been working people who have suffered from this selfsame politics. All they have to offer, in this Alliance, is populism. Their first 12-point program certainly is this: they will increase old-age pensions to Rs5,000 per month; they will do away with the new invasive ID Cards; they will decrease the price of petrol and diesel; they will do away with the heavy fines and “license points” for speeding; they will end the monopoly of the MBC on TV broadcasts. All these points are things that the two past Finance Ministers now offering them could have put in place a few months ago.
LALIT’s Program
LALIT opposes this kind of anti-worker economic policy. And while we criticize their politics of the economy, we at the same time propose our “Program for alternative Politics of the Economy”. Our program aims to create jobs in the context of a program for food security and renewable energy production. The success of our program depends upon the linkage of agricultural production with prior creation of units to preserve and transform food produce, both for local consumption and export. It depends on developing fishing on a large scale, but with environmental safeguards built in. Our program both exposes the weakness of the capitalist system in responding to human and social needs, and also gives a glimpse of what a socialist society will be like, when equality and justice start to become the norm.
[This document is a translation of the original in Kreol, slightly updated.]
References:
* A Brief Outline of the Economic Situation (in Kreol): Extre tur dorizon politik Rada Kistnasamy-Ziyet 2014
Link websayt: http://www.lalitmauritius.org/viewnews.php?id=1623
* Mitasyon dan kontext kriz dan lekonomi Kapitalist: Papye Seminar par Rajni Lallah-Fev 2014
News section, lalitmauritius.org, page 2; Link websayt: http://www.lalitmauritius.org/viewnews.php?id=1574
* “Economic Crisis” – a Marxist perspective, by Lindsey Collen (in Kreol); Papye par Lindsey Collen- Ut 2013:
Link websayt: http://www.lalitmauritius.org/viewnews.php?id=1522
* Editoryal: Kriz Ekonomik li Moter Kriz Politik ek Sosyal, dan Revi No 109, Zin/Ziyet 2013
Link websayt: http://www.lalitmauritius.org/resources/documents/213-Magazine_revi_lalit_number_109_%28creole_version%29.pdf
* Agrikiltir, Agro-Indistri & Elektrisite - Politik Ekonomik Alternativ - An Alternative Political Economy (2005)
Booklet 20 Paz, P3 seksyon Documents, Lalitmauritius.org
Link websayt: http://www.lalitmauritius.org/documents.php?pg=3
