Salary Compensation 2026: SMEs Seek Government Support

On January 1, a salary compensation of Rs 635 will be provided for employees earning less than Rs 50,000. While SMEs acknowledge this right for workers, they are sounding the alarm regarding their current situation and are requesting assistance from the government to fulfill this obligation without jeopardizing their survival.

Amar Deerpalsing, President of the SME Federation: "Entrepreneurs Need Technical and Financial Support"

Amar Deerpalsing, President of the SME Federation, explains that although the salary compensation was calculated considering inflation, the amount remains an additional burden for SMEs. “The payroll will become heavier. With the legal obligation to pay this new salary base, it is essential to find ways to increase productivity to remain competitive,” he states.

He warns of the risk of prolonged inflation, as seen in the last two to three years. “Salary increases will force operators to raise their margins to absorb these costs, leading to a spike in prices and further inflation,” he emphasizes.

To tackle this situation, Amar Deerpalsing recommends that the government assist SMEs through technical and financial support. “We need to increase productivity, not by asking employees to work more, but by working better, with modern machines and tools. The equipment purchased must enable greater production, and adequate training is essential for maintenance and optimal use of these tools. The government must play a key role in finding the necessary funding for these investments,” he suggests.

Maya Sewnath, Vice President of SME Chambers: "Help SMEs Pay Compensation Like in Previous Years"

Maya Sewnath, Vice President of SME Chambers, notes that the government has balanced the situation. “Employees will benefit from a compensation adjusted according to the inflation rate,” she recalls. However, she highlights that businesses, especially SMEs, have been undergoing an extremely challenging period for the past three years, exacerbated by the Covid crisis.

She insists that it is increasingly difficult for these companies to bear salary burdens. “The increase in minimum wage, wage relativity, the payment of a 14th month, and social contributions such as the Generalized Social Contribution (CSG) and the Portable Retirement Gratuity Fund (PRGF) weigh heavily. Many SMEs now struggle to shoulder these costs and face difficulties in paying their employees,” she states.

Maya Sewnath calls for targeted financial support from the government. “The situation remains critical. Economic actors have already contributed significantly in the past and will continue to do so in the future. It is essential that the government provides assistance to help SMEs cope with this salary compensation, as it has done in previous years,” she concludes.

Kalyanee Hurry, Founder and Director of Flavours of Mauritius: "Incentives Will Alleviate Pressure on SMEs"

Kalyanee Hurry, Founder and Director of Flavours of Mauritius, states, “The salary compensation must be paid, and we will do it. However, paying Rs 635 per month for over ten employees is a substantial sum, especially since many SMEs are currently in survival mode due to rising raw material costs and other expenses.”

She questions how to recover these costs. “If we raise prices, consumers will not buy our products. We cannot always increase prices, so we will have to adjust our margins,” she explains.

Kalyanee Hurry emphasizes the need for concrete solutions. “Of course, we agree that the cost of living is rising and that we must pay the compensation, but as SMEs, how do we recover these costs? Our profits are decreasing while our expenses are increasing, such as electricity, which is very expensive,” she points out.

The entrepreneur calls for government support: “The government must support us and find solutions to help SMEs cope with this new cost. Incentives are necessary. For example, electricity is too expensive; there needs to be a solution in that regard.”

Kalyanee Hurry also suggests other measures. “We are working with large retailers on a credit system, which incurs banking fees. If there were regulations for direct payments, SMEs would be relieved of certain burdens,” she recommends.

Dev Santchurn, Director of Julien R: "GM Should Commit to Purchasing a Certain Percentage of Local Products"

Dev Santchurn, Director of Julien R, highlights the major challenges faced by SMEs. “Even though the government has provided a 3.7% compensation, it is very difficult for SMEs. Successive salary increases, the payment of a 14th month, and the rising costs of all inputs and freight complicate the situation,” he states.

He explains that the cost of production continues to rise while sales decline, putting the survival of SMEs at risk. “Many SMEs are threatened and may disappear. Sales are declining, and it is hard to face unfair competition from Asian countries,” he adds.

Dev Santchurn thus recommends that the government provide financial support. “We ask the government to financially assist SMEs so they can pay the compensation,” he suggests. Another proposal is for the government to play a significant role by committing to purchase a certain percentage of local products. “This would support local manufacturers and provide positive discrimination for local entrepreneurs in this challenging period,” he states, adding that such a measure would also help the country retain some of its foreign currency.

Ajay Beedassee, President of SME Chambers: "Remove the Burden of the Wage Assistance Scheme"

Ajay Beedassee, President of SME Chambers, states, “There is no objection to paying the compensation. What we are asking for is a reduction of the burden, notably the removal of certain levies like the Government Wage Assistance Scheme, as was done for the hospitality sector.”

For him, these measures would alleviate the burden on SMEs: “By easing these charges, we will lift a weight and allow SMEs to manage their costs better.” He also emphasizes the difficulties faced by merchants and manufacturers: For example, in the ready-to-wear sector, stores are seeing reduced sales, which forces factories to produce less. “There is unfair competition with imported products,” he laments while regretting the slow responses from institutions like SME Mauritius and customs regarding these issues. “Our requests remain unanswered,” he expresses.

Ajay Beedassee warns of currency outflow. “Every imported product represents currency that leaves the country, weakening the local economy. It is urgent to act to support local production and preserve our currency,” he concludes.

125,000 SMEs in the Country

Mauritius has approximately 125,000 SMEs. They contribute about 40% of the country's GDP and represent 56% of jobs.

The SME Issue Will Soon Be in Parliament

Reza Uteem, the Minister of Labour, stated last Friday that the government has taken into account the grievances expressed by SMEs regarding salary compensation. “The Minister of SMEs is actively working on this file, which will be submitted to the Cabinet soon,” he indicated. The matter will be discussed in Parliament.