HCP: Morocco Must Diversify Its Economy to Tackle Rising Unemployment

Rabat – Morocco’s High Commissioner for Planning Ahmed Lahlimi Alami has underlined that job creation in the country relies on the government’s determination to diversify the national economy and increase the competitiveness of companies, particularly small and medium-sized enterprises (SMEs).

Presenting the “Morocco Job Landscape” report by World Bank and HCP on Monday, Lahlimi stated that “employment remains a complicated issue and requires long-term work.” He added “job creation in Morocco depends on the persistence in diversifying the economy and increasing competitiveness,” Morocco’s Press Agency (MAP) reported.

The World Bank (WB) released its “Morocco Job Landscape” report in april 2021, highlighting major structural issues burdening the development and growth of the Moroccan labor market.

The research is part of the first phase of the Morocco-WB joint programmatic jobs program. “It is a jobs diagnostic that analyzes data mainly from Labor Force Surveys and employs new analytical methods to identify the main trends in the labor market,” according to the World Bank website.

The study identifies four priorities, such as encouraging the formalization of the labor sector, improving job quality and increasing female labor force participation (FLFP) in Morocco.

It also supports youth in their transition from education to the labor market and accelerates the structural transformation of the Moroccan economy to counter youth unemployment and create jobs in higher-productivity sectors.

Commenting on the report, Halimi said that employment is key to Moroccan economic growth, adding that HCP will launch an employment satellite account to measure productivity by activity, gender, qualification, and economic agents, MAP stated.

Joining Halimi, the country director for the Maghreb and Malta at the World Bank Jesko Hentschel reviewed the major trends in the Moroccan labor market over the past 10 years.

Hentschel noted that the labor market, particularly small and medium-sized enterprises (SMEs), struggle to grow and create jobs due to structural issues such as youth unemployment and low female participation in the labor market.

Youth inclusion and female empowerment in the Moroccan job market are two of the biggest problems facing the country, he indicated, pointing to the need to provide women with access to quality education to increase female labor force participation (FLFP).

29% of youth do not benefit from education, employment, or training as Moroccan FLFP is below 30%, lower than some developing countries, the report argued. Yet training and education are not enough to integrate Moroccan women as cultural barriers halt the Moroccan government’s vision for a developed and inclusive Moroccan economy and labor market, as described in the country’s New Development Model.

Another major obstacle to economic development is the informality of a large chunk of the Moroccan labor market. The issue has magnified over the ongoing COVID-19 crisis, leading to “unfortunate consequences” such as “reducing the tax base, contributing to poverty and inequality, reducing productivity, and leaving a high portion of the population uninsured against health, social, and economic risks,” the study concluded.

COVID-19 impact on Moroccan labor market

Morocco registered its first COVID-19 case in March 2020. By December 2020, 581,000 formal workers and five million informal workers lost their jobs, according to estimates by the American think tank Brookings.

In August 2021, HCP reported the rise of the national unemployment rate from 12.3% to 12.8% in the second quarter of the year as the urban unemployment rate moved from 15.6% to 18.2%, marking a sharp increase.

To alleviate the impact of the COVID-19 economic crisis, King Mohammed VI launched in March 2020 a $1 billion fund to modernize health infrastructure and support social segments heavily hit by the pandemic.

Additionally, the minister of tourism, Fatim-Zahra Ammor, recently introduced a MAD 2 billion ($213 million) emergency plan to revive the tourism sector and support tourism operators. The plan comes as the sector recorded an annual loss of 20 million travelers and MAD 90 billion ($9.59 billion) in foreign exchange profits in 2019-2021.

Morocco’s Head of Government Aziz Akhannouch also officially launched the social program Awrach in January to create 250,000 direct jobs in 2022 and 2023.

The three initiatives aimed to reduce the impact of the ongoing COVID-19 pandemic on vulnerable populations. Yet the lack of quality education, job opportunities, and dominance of informal activities remain major structural issues facing the Moroccan economy and labor market today.