for the
12th All Workers’
Conference
to be held at the
Auditorium, MGI, Moka
on 4th December,
1998
When the government starts talking about problems
that will raise their head in 30 years’ time, and not just in the next two or
three years before general elections, then we must be suspicious and believe
that there is a hidden agenda of some kind. The question of “ageing population”
is one of these issues that hides a hidden agenda.
There are five main attacks against pension rights
in Mauritius at the moment. All five attacks are often mixed up together.
The Government and the employers are running an
ongoing propaganda campaign, supported by the IMF and World Bank to the effect
that there is “an ageing population” and the newly published Battersby Report
says that by the year 2035, the National Pensions’ Fund will be in serious
trouble, because there will be too many older people relative to the number of
“productive” workers, the present ratio of 7 ½ to one, falling to 3 ½ to 1.
“Expenditure,” the Battersby Report says, “is expected to exceed contributions
income within the next 20 years.”
The Government and the employers are also running a second campaign, once again supported by the IMF and World Bank, to the effect that in general the Government is spending too much money, and that the country can no longer afford universal pensions for those who reach 60 years onwards. This is a specific attack on universal rights to old-age pensions for all citizens, a right acquired in 1957.
The local bourgeoisie, as well as the international
finance capitalist lobby, want to get their hands on the Pension Funds
controlled by the state. This happens in all countries where there is an
IMF/World Bank push to privatize. In November, 1998, in Kenya, there was a
campaign to discredit the management of their National Pensions’ Fund.
The 4th attack against pensions is hidden
inside the fiscal policy itself: gradually successive governments have shifted
the burden of tax from the rich to the poor, including pensioners. Year after
year company taxes and income tax on the rich have both been cut, while
indirect taxes, like VAT have been introduced. This is the equivalent of
eroding the value of pension payments.
The monetory policy that the International Monetory
Fund is imposing on all third world countries, which aims at the constant
depreciation of the local currency, and from time to time a devastating
devaluation, also constitutes an attack on pension rights.
What the Government and the bosses want is clear,
because they are running an overt campaign to say what they want. Their
speeches in the National Assembly and in the press make it clear. The Battersby
Report (commissioned by the NPF) is no exception.
1.
On
the question of contributory pensions they pretend that there are only four
possibilities:
a) Either workers’ contributions are increased, or
b) Workers and the employers’ contributions are increased, or
c) The amount of pension money paid out is reduced, or
d) The age at which one is entitled to draw pensions is raised.
The All Workers’
Conference has already rejected the narrow-minded concept that these are
the only these possible “solutions” to the problem. There are about one hundred
ways of solving this “problem”, some of which will be suggested in this
discussion paper, and others will be thought up by delegates present, and we
will continue to think up ideas after the Conference.
The Government and also want to “close” thousands of
public sector manual workers jobs, and to help in this, they want to set up a
“portable pension points” scheme.
2.
On
the question of old-age pensions, the government and the bosses are clear. They
say that:
a)
Either
the age at which people can draw pensions ought to be raised, or
b)
Pensions
are to be “means tested”; i.e. government inspectors come around to check that
someone is poor enough to merit a pension, and if not no pension is granted, or
c)
Pension
payments be lowered.
3.
On
the question of the existing nationalized pension fund, the local and the
international finance capitalists are eagerly trying to get this type of fund
to be forced on to the stock exchanges. The Mauritius
Employers’ Federation President actually announced that the whole of the
private insurance sector of Mauritius (Rs8.5 billion) is equalled by the NPF
Fund (Rs 8.5 billion). [Latest figures put this fund at Rupees 12.5 billion] He
would like this NPF capital to be available to the capitalists. World-wide,
pension funds controlled by government and unions are a substantial part of
productive capital (as opposed to purely speculative capital).
4.
Taxes
have been shifted intentionally on to the backs of the poor. The bosses,
government, IMF and World Bank believe that if you de-tax the rich, that this
money will go into production, and then when there is more production, the
crumbs that workers and the poor get will be more. This is called the “trickle
down effect”.
5. The
national currency is losing value. This process has been accelerated by the
decision of government to give the foreign exchange that the government gets
paid under the Lome Agreements & the Sugar Protocol, to be given direct to
the sugar estates. They have, in turn, begun to hoard the foreign exchange, and
to speculate in currency.
Faced with the attacks on pension rights and the
arguments of the private sector thinkers and the government, it is important to
take a wide-angle view and to ask “What are pension?” and “What is the
philosophy behind them?”
In the context of United Nations “Human Rights Day”,
10th December, and in the context of the 50th anniversary
of the UN Universal declaration, the first thing that we need to consider is
old-age pensions as a right.
The philosophy of universal old-age pensions as a
basic fundamental human right is based on the following set of concepts:
Ø
Society has a duty to take care collectively of the basic needs of all
those of its people who are past a certain age: Society needs to assure
housing, food, clothing, medical care, transport costs as well as modern-day
necessities like glasses to see, hearing aids to hear with and a telephone for
keeping in contact with people.
Ø
Citizenship of a country entitles everyone to basic care from when we are born until
we die; a society’s capacity to care for the young, the old, the ill and the
handicapped is a measure of its civilization.
Ø
Pension rights are part of the pay of the working class in its broad sense, pay
deferred until retirement age.
Ø
Private pension schemes have been totally discredited historically. Since there were
private pension schemes, some people held that each worker should be
responsible for taking care of his own future retirement by contributing to his
own private insurance payements; this philosophy got completely discredited as
a fraud when the “crash” of the 1930’s wiped out the entire pension
contributions of a whole generation of people in Europe and the USA. The
destruction in the 1990’s of South East Asian, Russian and Latin American
economies has done the same thing once again in those few places where the
individualist ideology still held.
Ø
Humans who have lost access to the land, who have own no means of
production, have a right to live in society.
Ø
Pensions rights for all are important in any conditions where there is
high unemployment, casual work, insecure work, or a large informal sector for the simple reason that
people in these sectors are not in a position to make regular contributions to
a scheme, whether state or private. At present housewives, the unemployed,
handicapped people, contract workers, seasonal workers, casual or day
labourers, weak or sickly people are not able to contribute.
Ø
The “family” as an institution is very weak and is only able to look
after family members on condition that there is support for the family from the
state to do so: hospitals, day-care centres, subsidised transport, pension
payments, free education. In addition there are old people without family at
all, or whose family have rejected them. In addition, the family is stronger if
each individual within it has some independence from the family; total
dependency leads to grave abuse.
Old Age Pensions, as a universal right, were gained in one country after another as countries became more developed. In New Zealand some 100 years ago, the first pensions were paid. And this tendency to pay pensions as a right increased all over the world after the 1930’s crash of all private pensions investments and savings’ schemes. With the development of the concept of universal human rights, and with the advent in 1948 of the United Nations Universal Declaration of Human Rights, pensions became more and more entrenched as rights. The Covenant on Social, Economic and Cultural Rights in 1967 formalised the right to pensions.
In Mauritius the first time we heard of old-age
pensions was immediately after the 1937 strike and rebellions on the sugar
estates. IN the Report of the Commission on Unrest on Sugar Estate in Mauritius
1938 at p. 168 it says: “In general we
are in favour of old age pensions and sickness insurance. Such schemes must
obviously apply to all sections of the population and not merely to persons
employed in the sugar industry.”
In 1940, The Governor set up a Committee under the
Chairmanship of Lord Twining and it was this Committee that first mentioned the
words “contributory pension scheme”.
The Committee thought that contributive pensions should be paid to workers from
the age of 56-years-old. The bosses were against, and the Chamber of
Agriculture representative who was nominated by the “Central Committee of the
Sugar Estates” expressed reserves.
The first contributory pension scheme set up was for
“l’etat major” of the sugar estates, and it was introduced by a private Bill in
1945. (It was only in 1956, this was broadened by an Ordinance for all sugar
factory workers – “Pansyon Commarmond”.)
A non-contributive system was in fact set up first.
That was in 1950. It was on the basis of a means
test. However, the means test was
so unpopular and loathed by the people that it was abolished in 1957. Which
means that we have had universal old-age pensions in Mauritius from 1957.
By 1960, The Titmuss and Abel-Smith report came and
proposed that “on top of the basic
pension … a contributory scheme of wage related pensions for all employed
persons above a specified level of yearly earnings”. And this was later to
become the National Pension Scheme.
The philosophy of the NPF includes the idea that one ought to earn a reasonable proportion after pension age of what one earned during one’s working life. (If you have contributed to the NPF and built up your pension points, you will get a pension which, when added to your old-age pension will be a reasonable The bosses contribution to NPS 6%, when it was introduced in 1978, did not represent any new contribution. It merely replaced the 15 days’ severance allowance per year by only 8 days per year, and reduced Workmen’s Compensation payments (lamoné lasirans)to just the first two weeks of leave, whereas previously employers had to have private insurance cover. The employees contribution of 3% was a new contribution.
We note that any contributive pension depends on secure employment, usually in the civil service, para-statals or large companies, whereas employment in Mauritius is at present become increasingly precarious.
There are basically two ways of looking at
contributive pensions, and often the “government ideologues” move around
between these two ways as it suits them.
proportion of your wages.)
Does each worker save his own money, and put it in a fund, so that he gets it back again with interest when he goes on retirement? This is the way the “capitalist” ideologues look at the question, under usual circumstances.
Do all workers today contribute to paying the
pension of all retired people right now? This is the way the “capitalists” look
at the question only when they want
to increase contributions or lower pensions. By this way of looking at
pensions, the ratio of workers to pensioners is at present in Mauritius at 7½:1
and will in 35 years time to be 3:1.
Non-contributive earnings-related pensions are paid
to all civil service workers and this forms part of the basic “work conditions”
in the sector. The government intends to cut the size of this whole sector, and
will use “portable pension points” as part of its means.
In some sectors there are still private sectorial
pension schemes, and there is also a whole business of private pension schemes
run by insurance companies for profit. Through the tax system (deductions
allowed), the government is effectively subsidising these private indurance
schemes.
The real defenses that we must build up to the five attacks on pensions include:
·
Funds to pay for the
increase in pension payments should be taken directly from those sectors of the
economy that hoarding or speculate in capital. A tax on off-shore would be
useful, in particular for the old-age pension, which should be increased.
·
The
so-called “ageing population” problem is nothing more than the successful
adoption of family planning. The economic “success” of Mauritius has relied on
women adopting contraception strategies (& dangerous illegal abortion):
women thus averted a population explosion
in Mauritius, and this generation of women freed themselves from house-work to
go out and become the largest single work sector in terms of employment – the
free zones.
·
The
question of “ageing population” is only a relative one – when taken next to
levels of productivity through new machinery, or less unemployment. Trade
unions must keep the “subject” on full employment, stable employment for all.
·
We
must work to increase the contribution of the employer. This would be
justifiable on many grounds: in 1978 the employers did not have a completely
new contribution; the employers have been greatly de-taxed since 1978. The
employers have also benefitted from massive productivity increases per
employee.
·
We
can when necessary use real wages (take
home pay not basic wage) for
calculating the contributions of workers and of employers (i.e. include
overtime, piece-rate, bonus, commissions, etc).
·
Old-age
pensions should be maintained at 60 years of age for all; this for two reasons,
workers in most big sectors are exhausted
by the age of 60 (free zone, agriculture, construction, hotels), and this
“cushions” unemployment. The sum payable should continually be increased, as
the economy develops.
·
Introduce
measures to make sure all employers are
paying NPF contributions. Bi-annual returns, instead of just annual? Increase
fines on employers drastically if their returns are late? Should employers with
less than 10 employees fill in their returns monthly, instead of annually?
Create a system of “putative employees” – where NPF assumes that all businesses
employ a minimum of x number of employees, and the NPF makes a relatively high
cut (as if this were their contributions per putative employee). If an employer
thinks he should have less cut, he has to come and register.
·
The
upper ceiling on NPF contributions can at any time be removed, while the upper
ceiling on pension payments retained (even if raised). The higher earners
(because they are higher earners, but also they are mainly men) thus contribute
to pay the cost pensions & of hard work at population control (taken charge
of mainly by women).
·
The
tax system must be opposed for its
eating into pension rights; on the one hand VAT is paid by old-age pensioners,
and on the other hand the Government is indirectly financing private schemes by
giving income tax deductions.
·
As
corporate and income taxes have decreased, the capitalists have made money and
there is no reason why they should not contribute directly into a fund like the
NPF. This fund could be used for development projects to benefit society as a
whole.
·
As
productivity has increased, the ratio of workers to pensioners need not stay
static. The sugar industry has increased its production while lowering the
number of people employed. The port has multiplied its handling capacity
five-fold with less workers. There is no reason for perpetuating the monoply on
who benefits from this. They could contribute part of their windfall gains into
pension funds of all kinds.
· We must ask ourselves questions: * Which sectors in the Mauritian economy have grown most? What allowed women to go out and work in factories & hotels? What have been the effects on the health and life-expectancy in these work sectors? * Is a “fund” needed? Can all the money not just circulate directly? As for civil service pensions? * What is the fund’s main purpose? To cover times of ageing population? Must the fund primarily serve socially important ends (housing for the poor, preventing illness, creating public works) or must the fund be financially efficient, investing in anything, however exploitative of workers, so long as it has a good return? *What is the relationship between pensions and the health of an economy itself? * What system helps pensioners to face increases in the cost of living better? *What pension system respects human rights best?