Background Note for Mauritius Country Growth and Jobs Report : Review of Labor Regulations and Reform Options

Overview & Synopsis

Labor regulations in Mauritius overall are characterized by a comprehensive and well-developed legal framework. This note adopts the analytical framework of the World Development Report, which recognizes that labor regulations vary considerably across countries and that there is no single optimal regulatory model. Labor regulation involves a trade-off: overly lax regulation can leave workers - particularly low-wage workers - vulnerable to inadequate protection and bargaining power, while overly stringent regulation can hinder firm dynamism by increasing labor and compliance costs and reducing firms’ ability to adjust their workforce in response to changing economic conditions. Guided by this framework, the note reviews the main components of Mauritius’ labor regulatory framework, including the Workers’ Rights Act 2019 and the Remuneration Orders. The Workers’ Rights Act governs individual employment relationships, including contracts, working conditions, termination, and protections against discrimination and harassment, while the Remuneration Orders establish legally binding minimum wages that vary by sector, occupation, tenure, and other attributes. The note benchmarks these provisions against international labor standards and peer countries to identify areas where regulations are overly restrictive or insufficiently protective. Where data permit, the review is complemented by survey evidence and interpreted alongside the broader empirical literature to provide indicative insights into how labor regulations may affect labor market outcomes.