The Voluntary Retirement Scheme (VRS) is one of the main components the Sugar Sector Strategic Plan 2001-2005. It is aimed at reducing the operating cost of production of sugar in Mauritius, for which labour represented 56 per cent in 2001. Its objective is therefore to rightsize the labour of the industry, reducing it by at least 30 per cent in the first instance, in order to reach a level that is more in line with its actual requirements and economic realities.
To that effect, the Sugar Industry Efficiency (SIE) Act, which is the legal framework governing sugar activities in Mauritius, as well as relevant labour and pension laws, were amended to cater for the implementation of the VRS.
The scheme offers a package to all employees of the sugar industry, wishing for an early retirement. Priority is given to those aged 50 and above. The package includes, among others, compensation in terms of cash payment as well as land entitlement (7 perches, i.e about 300m2), exemption from income tax in respect of the cash and land compensation payable and housing loans at preferential rates.
Moreover, a package of support measures has been implemented, among which, awareness campaigns, training courses for younger VRS leavers, counselling units, medical cover schemes, and scholarships awarded to children.
As at end 2002, twenty five cane growing companies and one miller company had adopted the scheme, which concerned about 7,800 employees, of which 6,084 (i.e. 78%) are agricultural workers, and representing a total reduction of about 33 per cent of the workforce of the industry.
The financing of the scheme, of the order of Rs 3 billion (100 million Euro), was effected through loans from local banks. About Rs 1 billion is destined for infrastructure works to be undertaken by sugar companies on the land sites allocated to VRS leavers and the remaining Rs 2 billion for the cash compensation. The financing will be recouped through the sale of agricultural lands as per the parameters set down in the SIE Act 2001.