Why this hatred ?

There was a time when Mauritians were eager to work for a company. Today many want a job in the public sector. Faith in government is widely held.

Faith in the private sector was at its apex during the 1980s. Now its influence is declining in as much as the industry captains have become obsequious to the political masters of the day. They have no axe to grind whatever happens to our democratic state. In order not to embarrass the government, they have since long avoided this word that is impregnated with emotions: privatisation. They have no position on it, giving free rein to old hatreds towards privatisation.

Whenever a minister drops a hint about exploring the option of “strategic partnership” for one state-owned organisation, intellectuals of all hues speak out against supposed risks of growing unemployment and dismantling of the welfare state, as if massive privatisation were in the making. Rather than being argumentative, they instil fear in the population to nip in the bud any attempt to privatise something. Confusing liberalisation of services with privatisation, they lash out at the Trade in Services Agreement although privatisation is not part of it. Their aim is to create an opinion climate in which the government always backpedals on this politically sensitive issue for want of support. It is assumed that Mauritians are not mature enough to debate the merits of privatisation.

It is therefore not surprising that the new Prime Minister, Pravind Jugnauth, did not mention privatisation in his first message to the nation. He did not even say a single word on the role of the private sector. He focussed instead on what the government can do, and he chose to impress on ordinary people the value of spending tens of billions of rupees on road infrastructure, public utilities, education and health. No doubt that more than ever the state will be omnipresent in the economy with the (ab)use of taxpayers’ money.

Sadly, throwing big figures around creates the illusion that the government has the financial means to increase salaries and jobs in the public sector. It prompts people to seek public employment even when jobs are available in the private sector. It ensures the docility of the unemployed who are hopeful of getting a public job.

Besides, the current government prides itself on having filled 8,738 job vacancies in the public service in the last two years. There were recently 57,776 applicants for 1,100 vacancies in the civil service. Young graduates want to become bureaucrats, not corporate employees or individual entrepreneurs, as work in the public administration is secured, pensionable, scheduled from nine to four, and spread over five days a week.

The public sphere is expanding whereas corporate culture and entrepreneurial spirit are dwindling. According to Statistics Mauritius, the General Government made up 24 per cent of employment in large establishments (those employing 10 or more persons) in March 2016 compared to 20 per cent in March 1989. In absolute terms, employment in that sector rose from 54,785 to 74,031 – a 35 per cent increase. In addition, there were 21,367 employees in public enterprises. The public sector thus employed 95,398 people, accounting for 30 per cent of total employment in large establishments.

The central issue in political economy concerns the optimal delineation of the sphere of government activity versus that ascribed to markets. Free enterprise runs counter to the state’s growing subjugation of private interests. Privatisation augments private interests in civil society while reducing both the scope and the intensity of governmental activity. Private property rights beget responsibility and accountability.

Critics of privatisation argue that poor performance of government corporations stems from isolation from effective competition rather than from public ownership per se. This claim seems plausible for statutory monopolies. However, in the case of the Central Water Authority and the Central Electricity Board, the tenability of this view can be questioned on empirical grounds. By charging below-market prices, public utilities encourage waste and are loss-making despite enjoying a monopoly on basic service. They are over-staffed but offer poor customer service. They are ill-equipped to manage resource scarcity.

Privatised enterprises are desirable for any sensible government because they yield tax revenues. The proceeds from sale of public assets can finance new governmental programmes and sustain the welfare state’s mandated benefits. In contrast, government-owned businesses require subsidies that divert public spending from social objectives. It is reported in the press that a Technical Committee on Pension Reforms is concerned about the ageing population putting “an additional fiscal strain on the economy due to fewer people of working age to support the swelling ranks of the elderly, increased demand for social services, higher public spending on social needs and increased tax burden on the working population”. A programme of privatisation can serve the welfare state by funding it and relieving it of some of its burdens.

Privatisation is a political choice but an economic necessity. It is a matter of domestic policy but an appropriate response to economic globalisation. The Mauritian context, its history and economic structure have nothing particular to suggest that privatisation would not work here. There are around the world many specific, historical contexts where private ownership has performed much better than public ownership. A blueprint for privatisation could provide an inkling of what workable privatisation might look like in Mauritius.