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Join on Telegram Rabat – Despite Morocco’s strong macroeconomic track record over the past 20 years, the growth fell short of translating into higher employment rates, said Jesko Hentschel, the World Bank’s Country Director for the Maghreb and Malta on Friday.
“Of middle-income and emerging economies over the last 20 years, Morocco stands out due to its macroeconomic stability, political stability, and long-term risk management,” Hentschel told Morocco World News (MWN) on the sidelines of an event at the Policy Center for the New South (PCNS) in Rabat.
However, he noted a lag in net job creation, resulting in a decreased activity rate over 15 years. The activity rate refers to the percentage of people aged 15 to 64 working outside the household, which has declined, leading to a long-term increase in unemployment.
Morocco has seen a sharp rise in long-term unemployment. Over the past 15 years, unemployment went from 8-9% to 14% in the first quarter of 2024.
Hentschel identified several factors contributing to this issue, including technological and trade changes that demand skilled labor, which young people possess.
In addition, the development and dynamism of the private sector play significant roles. Morocco has strong high-growth sectors like automobiles, textiles, aeronautics, agro-industrial industries, and tourism.
Panel discussion at the PCNS
Despite the growth in these sectors, they have not generated the necessary number of new jobs. This shortfall relates to the growth rate of young and small firms.
“In Morocco, fewer of these firms are ‘gazelles’—high-growth firms that create jobs. Only about one or 2% of firms in Morocco fit this category, compared to up to 10% in other countries,” Hentschel explained.
According to the World Bank director, understanding the private sector’s dynamics and growth potential is crucial for research and public policy, he concluded.
In his opening speech at the PCNS, Hentschel stressed the importance of research in understanding the trends of the labor market and how they relate to the economy at large.
“I am very happy that we now have a research base and also studies starting to come out in Morocco,” he added.
Echoing Hentschel’s view of the labor market in Morocco, Abdelaaziz Ait Ali, a principal Economist and head of the Research Department at PCNS, reckoned that Morocco is not an isolated case.
Economic growth and employment
In an interview with MWN, Ait Ali said: “there is a global trend which leads to the fact that growth is not really translating into more employment, to more jobs at the international level.”
Ait Ali further pointed out that the relationship between economic growth and employment has changed drastically in recent years. “I witnessed that along the way, along these two or three decades, growth in the past used to create around 30,000 jobs now, but it’s much lower than that. It’s almost half”
Part of the explanation is related to the dynamics of economic activity in Morocco. In the past, agriculture was the largest employment sector. Between 2004 and 2022, the share of employment in the agricultural sector took a nosedive, going from nearly 46% to 30%.
“Right now, the agricultural sector is transforming itself,” Ait Ali noted. “It’s becoming much more capital-intensive due to several policies that have been launched by the government since the green plan.”
The reforms made the sector more productive, lowering the need and demand for labor. “This is one of the explanations why growth is not creating enough employment.”
The shift within the manufacturing sector is also to blame. In the past, manufacturing sectors such as textile, and agro-industry used to be much more labor intensive, Ait Ali explained.
Even Morocco’s biggest industries – automotive, aeronautics, and fertilizers – are becoming more capital-intensive and gradually breaking away from their historical reliance on labor.
The “transformation” in the labor market is not “proper” to the Moroccan economy that is much more global, Ait Ali stressed, prompting economists to rethink the models used to understand economic policy.
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