Original Article by:
Linn Ternsjö, Department of Economic History, Lund University
Ellen Hillbom, Department of Economic History, Lund University
Introduction
Labour-intensive industrialisation (LII) and manufacturing activities are seen by many economists and policy organisations as a catalyst for broad-based economic growth in low- and middle-income countries (UNIDO, 2017). Proponents of New Structural Economics (NSE), for instance, contend that countries with abundant low-skilled labourers should focus on export-oriented, low-tech manufacturing while building physical and human capital to climb the ‘ladder’ of the global division of labour (Lin, 2012).
Factors such as hosting some of the world's poorest countries, having the lowest levels of industrialisation, and being the centre for future population growth make Sub-Saharan African nations good candidates for this strategy. The African Union (2015) has subsequently made LII one of its priority areas and different African countries have established, or are currently developing, industrial hubs for their manufacturing sector to create employment with the traction of foreign investments and improving human development outcomes (Gelb et al., 2020).
Mauritius stands out as an African forerunner of this approach. Its labour-intensive garment-based industrialisation from the 1970s onwards contributed to national sustained growth and structural transformation accompanied by significant social developments, such as poverty reduction and improvements in health, education, and life expectancy (World Bank, 2021). If the country’s development trajectory has long been hailed by many as an uncontested success (Meisenhelder, 1997; Subramanian and Roy 2001), others have recently raised concerns regarding growing nationwide inequalities (Bunwaree, 2014) as well as the decline of the island’s manufacturing sector as the export-oriented garment industry has become less competitive (Ancharaz, 2025).
Building a developmental coalition
In the early 1960s, Mauritius faced several structural challenges. Its economy was almost entirely dependent on sugar exports, population growth was rapid, and there were fears of ethnic conflict.
The government's solution was an Export Processing Zone (EPZ) to attract garment manufacturing. Crucially, it did not treat social welfare as merely a reward for economic growth, but as a prerequisite for it.
With the whole island designated as an EPZ, industrial estates were erected close to residential areas, thus minimising social displacement by making work available throughout the country (Ramtohul, 2020).
This strategy was held together by a unique "developmental coalition". The island's established Franco-Mauritian sugar industrialists agreed to reinvest their profits from the booming sugar industry into these new garment factories. In return, they kept their plantations and aligned with the national development project.
This created an initial synergy: a progressive tax on sugar exports was used to fund widespread social welfare, including universal pensions, healthcare, and education. These policies created a healthy, educated workforce and gave the government the public support, or legitimacy, to push its industrial plan.
Labour, Working Conditions, and Social Inclusion
The EPZ created significant job opportunities from the start with almost 23,000 employees in 1983 increasing to 91,800 in 2001 of which 81,100 were in textile and garments. This accounted for a substantial drop in male and female unemployment from around 20% in 1984 to about 3% towards the end of the decade (see Figure 1). However, this social progress came at a cost.
The 1973, the Industrial Relations Act and the following Labour Act gave EPZ employers greater flexibility to terminate employment, institutionalised extended overtime, permitted night shifts and set minimum wages lower than in other sectors. Apart for a few years in the mid-1970s which saw an increase in EPZ minimum real wage (Hein, 1988), the sectoral wage gap persisted most likely due to the high female share of EPZ labour force. The workforce was dominated by women who faced largely inequitable wages due to social norms attributing them a subordinate role (Ramtohul, 2008). As a result, in their first year of employment, women’s minimum wage was as low as 57% of that of a man (Hein, 1984). The government later abolished wage segmentation between men and women to reduce the number of unemployed men by increasing their share of EPZ employment (Hein, 1988). However, male wages declined to female wages, and women kept dominating the industry overall.
Unionization in the EPZ rarely exceeded 10 %, and the state could declare strikes illegal if deemed economically damaging. This revealed a patriarchal model where workers were made docile and productive in return for economic growth and access to global markets (Neveling, 2015). This challenged Meade’s (1961) suggestion that “low wage-rates combined with a social security system constitutes a very sensible economic framework [for Mauritius]”. To this day, average nominal earnings in the EPZ are lower than other sectors and they have developed at slow rates (see Figure 2).
Although such conditions were harsh, better employment opportunities for this segment of the population were rare with domestic work and farm labour in the sugar industry as the main alternatives. EPZ employment creation therefore acted as an implicit social policy instrument as it reduced poverty and legitimised the state’s development project.
Improvements and persistent inequities
This model, reliant on low-wage competitiveness, began to fray in the 1990s and 2000s. Global changes, including the end of the Multi-Fibre Arrangement (which had guaranteed markets) and the rise of low-cost Asian producers, eroded Mauritius's edge. In that period, EPZ jobs became socially and culturally defamed (Ramtohul, 2020) as compared to tourism – the leading alternative sector –, which offered more skilled jobs (Anker et al., 2001).
The government and industry's response were to substitute one vulnerable workforce for another. To preserve competitiveness, the government began allowing the recruitment of migrant workers in 1993. Migrants from China, Madagascar, and later Bangladesh replaced Mauritian women on the sewing lines. By 2023, close to 50% of the EPZ workforce were foreign (see Figure 3), and over 60% of those working in the garment-sector for export were foreign.over 60% of the garment-sector workforce was foreign (see figure 3).
Migrant labour and the erosion of rights
The recruitment of migrant workers transformed the social landscape of work. Most of them lived in employer-controlled dormitories, the IRA did not originally recognise their union rights, and they were subject to deportation upon any protest. This created conditions of inequality and insecurity (Rambaree, 2009).
Although the 2008 Employment Relations Act and 2019 Workers’ Rights Act recognised migrants’ right to join unions and receive a universal minimum wage, enforcement still remains weak. Precarity is exacerbated by permissible wage deduction for food and lodging costs, and recent regulations allowing third-party labour contractors render recruitment less secure. Additionally, migrants are ineligible for citizenship-based welfare schemes such as pensions. Crucially, the temporary nature of their contracts hinders collective learning and transfer of skills in production.
From women’s emancipation to feminisation of poverty
Sudden factory closures in the 2000s disproportionally affected women who were left with few options and reported psychological trauma, stress and illness (Bunwaree, 2007). Most lacked the digital or technical skills needed for the new, growing sectors like finance and tourism (Gokhool et al., 2018). Retraining initiatives favoured traditional, low-skill paths suited to micro-enterprises in the traditional informal sector over access to higher value-added industries. This approach limits upward mobility and entrenches women in low-paying, informal economic activities. Former EPZ workers, have hence ended up in vulnerable and unproductive employment (Gokhool et al., 2018; Kasseeah and Tandrayen-Ragoobur, 2011). LII initially triggered poverty reduction and improved human development. However, rates of vulnerability to poverty have almost tripled over two decades and relative poverty rose after 2001, especially among women (Bunwaree, 2007).
Thus, while LII initially advanced gender inclusion by creating mass employment, its later phases have reproduced inequality through segmentation and exclusion. Migrant men now fill the “low-end” labour niche once occupied by Mauritian women, while the latter face structural unemployment, a cycle the authors describe as social downgrading amid economic upgrading – as has also been found in other contexts (Barrientos, 2019). This suggest that Mauritius has not sufficiently rectified its structural change and development strategy over time to fit with social sustainability objectives of employment creation and inclusion.
Social Sustainability and LII
Mauritius’s early success derived from the mutual reinforcement of industrialisation and welfare where industrial profits financed social policy, and social services generated an educated workforce in line with Mkandawire’s (2007) idea of social policy as a productive investment.
However, this coherence weakened when industry no longer generated sufficient jobs or tax revenues. As manufacturing’s share of employment fell from 30 % in 2000 to 17 % in 2023, welfare funding relied increasingly on regressive taxation, relying heavily on VAT rather than wealth. The labour income share of GDP dropped from 42.2% in 2004 to 40.3% in 2020, (ILO, 2023) and growth became less wage-led. This reflects an adverse incorporation within global value chains whereby the creation of quality jobs as well as the financing of the welfare state are undermined. It reflects the view that as the government works towards achieving a high-income economy, specific social (and environmental) sustainability goals are disregarded. For instance, in Mauritius, there has been an increasing reliance on social protection provisions through dispersed communities, religious bodies, and civil society organisations (Kasseeah and Tandrayen-Ragoobur, 2011).
Social sustainability dimensions of LII and garment manufacturing are hence temporal as gains achieved during one stage of industrialisation can erode in the next if policies fail to evolve. In Mauritius, industrial upgrading outpaced social upgrading for instance regarding number of jobs and fair wages for all as investors and buyers from this product group tend to move elsewhere and replace domestic workers with migrant workers. Moreover, improvements to working conditions seem to be add-on measures to increase the industry’s resilience rather than to promote sustainable development.
Recommendation for developing economies in the Global South:
Mauritius’ labour-intensive garment-based industrialisation is appraised by many and various African countries have sent government representatives to the island to learn from its industrialisation process (EDB & UNTAD, 2023). From this study of Mauritius, three interrelated lessons emerge for countries in the global South to foster coherence in developing their LII in line with social sustainability goals.
1. Social and industrial policy should evolve in tandem to ensure meeting the wider population’s basic needs, to build production capabilities and social cohesion. Education, retraining, and labour-market policies should anticipate sectoral shifts rather than react to crises.'
2. Countries should recognise the time-bound pathway of LII which can deliver transformative outcomes in an undiversified economy but is subject to crises such as changing global trade rules.
3. Since LII and light manufacturing do not guarantee technologically advanced, capital-intensive, and diversified production left on its own, governments should craft and implement an exit strategy - also involving upgrading - early on before low-wage competitiveness collapses.
Conclusion
Mauritius’ Industrial Policy and Strategic Plan 2020-2025 envisions “repairing the industry foundations”, and the government emphasises the industry’s environmental compliance and strategic role for catering the consumption needs of a growing African middle class across the continent. But “green” strategies should not obscure the unresolved social dimensions which may foster a competitive edge in the global economy in the same way as environmental sustainability (Lebdioui, 2024). Mauritius will need further labour market adjustments and shifts into higher-end products, especially where competition in based on cheap labour.
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You can read the full article here: Ternsjö, L., & Hillbom, E. (2025). Labour-intensive Labour-intensive garment-based industrialization with social sustainability? The case of Mauritius.Competition & Change, 29(5), 696-16. https://doi.org/10.1177/10245294251329144
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