Assessment of the informal sector in Mauritius

The Project at A Glance

As per the International Labour Organisation (ILO), the informal economy refers to all economic activities by workers and economic units, which are part of the economy not covered or insufficiently covered by formal arrangements such as government regulations for business registration, the payment of social contributions on behalf of employees, and the payment of taxes related to business transactions.
The incidence of informality is low in Mauritius, especially in contrast to regional peers. Nonetheless, workers in the informal sector are significantly more vulnerable to risks and shocks than those employed in the formal sector, something which was severely accentuated during the COVID-19 pandemic.

International Economic Consulting Ltd., with funding from the UNDP, conducted a diagnostic assessment of the informal sector for the Government of Mauritius and delivered a set of targeted recommendations for mainstreaming informality.

What We Found

We identified and assessed the characteristics, distribution, and vulnerabilities of the informal sector. Our Team conducted a survey and assessed the different constraints or motivations that push people to remain in the sector. Econometric analysis was used to determine some of the drivers and policies that contributed to informality. Among others, it was found that low levels of educational attainment, taxes, bureaucratic procedures, and lack of awareness were important factors hindering formalisation in the country. Women have disproportionately been affected by COVID-19 and are more likely to join informal employment. Our Team also assessed the existing policies undertaken by the Government so as to curb informality in the country.

Our Strategy and Impact

Given that informality is a complex phenomenon, with numerous drivers, our Team highlighted the need for well-designed and comprehensive measures to be undertaken, aligned with the United Nations Sustainable Development Goals (SDGs), with a view to ensuring that informal workers can transition smoothly towards gaining the opportunities offered by formality. The recommendations were structured around nine key areas for addressing the policy landscape and empowering micro-enterprises and individuals namely:

Addressing COVID-induced poverty and promoting economic growth and development
Easing regulatory and tax burdens
Improving tax morale
Strengthening good governance
Improving access to finance and digital services
Improving labour regulations and market dynamics
Investing in human capital and improving labour productivity
Engaging with stakeholders
Improving statistics on characteristics and trends related to informality

Our Core Solutions

Businesses have suffered severe setbacks in the wave of the COVID-19 pandemic and the informal sector has been the most at risk. If your business or company has been affected, we can help you in reviewing your policies to develop a coordinated and coherent approach that ensures growth and development. We have considerable experience in designing effective strategies in complex environments and designing implementation modalities and strategies. We can also have your business monitor and anticipate risk so our innovative and up-to-date insights and dashboards.