Why Our Youth Don't Have A Skills Mismatch

Simply because technology has flattened every single learning curve. So anybody who has recently graduated should be able to help push Mauritius forward provided a reasonable number of opportunities are available. This will happen only if certain conditions are met. Like energy prices -- a major building block of GDP -- shouldn't stay disconnected from their world prices. Something which unfortunately happened for way too long.

We want our youth to transform the skills they've acquired -- and will keep on acquiring -- into meaningful outcomes fast because otherwise they will lose confidence in themselves and their gifts will go to waste. And then it will be everybody's loss. This will also depend on the quality of policy-making at Government House. The latter just like the private sector -- large and small -- must make good bets. Because that's the way they will create wealth or value. Which is about getting out more than what is put in. For example the CEB can float a bond, invest into a power project and then make a reasonable profit. Or sell clean electricity at competitive prices which will help Mauritius Inc. make one. The Passport Office can get us our travel documents fast making us save time which is another name for money. Similarly private sector companies can create value by moving upmarket or into new industries which are compatible with the standards of living that Mauritians reasonably aspire to. Not with those of the cheapest foreign worker available.

The other side of the coin is that Government and private sector companies routinely destroy value. And they do that -- to be sure there are fans of Marx too in there --  in many ways. We've seen how the STC can mysteriously lose billions and then lose a couple of billions more. Bosses of private companies may also put the enjoyment of super cars before the survival of their firm. Or allow themselves to be infected with hubris and start believing that this time it's different and that crises like those that happened in South East Asia in 1997 and elsewhere can never happen in Mauritius. Because we're the land of the lazy Dodo. Of course.

A very short economic history of Mauritius

In our case proving Meade wrong has been about moving away from sugar -- along with some really thoughtful policies like population control and free education -- to make us more resilient. As the chart illustrates the weight of sugar in our economy has declined fast as we diversified our economy. It even collapsed by over 40% on two occasions: 1 after the visit of a pretty little thing called Claudette and 2 the big drought (mismanagement of water?) of 1999. Of course these two events didn't have the same kind of impact on our economy. Claudette helped put our economy into a depression big time: over three quarters of the 10% GDP contraction in 1980 was due to the disaster in our sugar industry. Nineteen years later the overall effect was about two-and-a-half times smaller. The industry obviously rebounded strongly the year following these beatings but only to resume its inexorable and almost linear decline soon after.

By 2006 when the reforms -- more of a serious mess-up of our economy than anything else -- started the old King had already become a pauper accounting for only 3.3% of our economy. Which meant that if we got another Claudette-type event or another severe drought in that particular year the most it would shave off our GDP for one year would be a little over 1%. And given that many other and larger sectors of our economy were growing a lot faster and a lot steadier it was kind of easy for any outsider with no monumental skills mismatch to know that sugar was living the final few days of the sunset of its life.

Here's where the skills mismatch is

So it was pretty surprising to hear the then Finance Minister mention from Brussels that some of the fruits of our economic diplomacy -- which is another way Government can create wealth -- would be used as subsidised loans to our sugar industry. That was definitely a silly thing to do for two reasons. One is that sugar had already at least a foot in the grave and the other is that you could put the value of that benefit to much better use elsewhere. Finally defying all common sense Government shocked the nation when it instead gave a Rs5 billion gift to the sugar industry creating a structural problem in our economy. Which is one that monetary policy cannot solve and which will hold us back. Rs5 billion is a lot of money. That's enough money to buy more than 1,000 of the Yutong semi-floor buses that RHT got itself. Just imagine how this would have made our lives a lot better and Mauritius a lot more competitive. Plus potentially generating a sustained demand for Chefs on the bus. Rs5 billion is also about 1,000 times the cost of the school-feeding program which was cancelled. Rs5 billion is over 30 times what it would cost to make the HSC-SC exams free for one year. Or a lot of money to change leaking pipes in our water distribution system. If you think that's a major problem.

This year the weight of sugar in the economy will be about 1%. So a strike in this industry cannot derail our economy by virtue of its size. It might even be a blessing in disguise if it helps some realise that our land use is not exactly world-beating. Also talk of it being in danger de mort is simply ridiculous. It's a bit like the story of that guy who is totally devastated after visiting the morgue because he couldn't find a single occupant that would respond to prolonged CPR.

© Sanjay Jagatsingh, 2014