Unemployment down in Morocco, but it's still a long road

Daily News Egypt
6 Min Read

RABAT: Morocco s unemployment rate, long a concern, has dropped steadily so far this year, on the back of services and construction growth.

Further reforms to bolster competition and openness will help this trend continue.

The State High Planning Commission announced on Aug. 7 that the Kingdom s official unemployment rate dropped to 9.1 percent in the second quarter, down from 9.6 percent in the first. This leaves Morocco with some 1.03 million people still unemployed, compared to 1.06 million at the end of March. Unemployment stood at 9.8 percent at the end of 2007, up 0.1 percent from the end of 2006.

Urban areas saw particularly strong growth, and the services and construction sectors were the two leading drivers of job creation. Services generated some 152,000 new jobs, with the business process outsourcing (BPO) and telecoms sector proving particularly dynamic. Meanwhile, government infrastructure projects, as well as heavy private investment in the real estate and tourism sectors helped boost the construction sector, which created 80,000 new jobs in the second quarter.

The latest figures will satisfy both the government and international organizations, up to a point. Some will question their accuracy, as they fail to include people who are not officially registered as jobless, and therefore ignore fluctuating employment levels in the informal sector.

Nonetheless, the trend of falling unemployment rates is a positive one.

Joblessness has long been a cause for serious concern in North Africa.

Morocco has a lower rate than its Maghreb neighbors – Tunisia has a rate of around 13.9 percent, and Algeria announced a figure of 12.3 percent – but the issue is still a pressing one, for both economic and social reasons. A 2006 government report suggested that the Kingdom needed a net increase of 400,000 jobs annually for the next two decades in order to provide enough employment for its people. The document suggested that to fail to do so would risk unemployment and poverty, which could lead to social unrest, something that all countries would understandably like to avoid. It would cause particular worries in Morocco, jeopardizing the country s long-standing reputation of stability.

Moreover, with Spanish construction firms facing much leaner times, Morocco may soon face a new challenge of workers returning from across the Gibraltar Straits, potentially putting further pressure on the authorities to create jobs.

With 30.5 percent of Morocco s population of 34.3 million aged 14 or younger, according to the Central Intelligence Agency (CIA), job creation for the young is one of the government s major priorities. Figures from 2007 indicate that 17.6 percent of those in the 15-24 age group are unemployed.

This proportion rises to around one third in urban areas – rural communities often employ the young in agriculture, including on the family farm, as soon as they leave school, contributing to relatively high youth employment rates (lower levels of official unemployment registration are also a factor).

The government s efforts to cut back a bloated bureaucracy have helped trim the public sector s payroll and ease the burden on the private sector. In 2006, for example, the government introduced a voluntary retirement scheme for the public sector, under which those opting to quit are not replaced.

However, these programs have created unemployment worries among the middle classes and educated young people, who might have previously looked forward to a secure posting in the civil service as the payoff for university education.

Therefore the growth of employment in BPO and other technical fields, which tend to take on young graduates, is a very welcome trend. If the sector s growth continues, it could be a vindication of the government s policy of whittling down public sector bureaucracy, as these footloose industries tend to locate themselves in countries with a light regulatory touch and low levels of taxation. Indeed, in an increasingly competitive global economy – particularly for services like BPO – the authorities could usefully press ahead with supply-side reforms to ensure that Morocco remains an attractive location for investment, particularly in the service sector.

Countries – including Morocco – that have liberalized labor markets making it easier to hire and fire workers, have often reaped a dividend of lower unemployment. Lower taxation and easing the bureaucratic burden would further promote business startups and job creation. Meanwhile, Morocco s strong trade ties with the EU have supported the growth of export-oriented industries, but commerce across the Maghreb region remains underdeveloped – a missed opportunity, given the potential for job creation should these fast-growing economies allow intra-trade to thrive.

Morocco s liberalization has seen joblessness fall and allowed growth rebound after a tough year in 2007. Continuing the drive for competitiveness and flexibility will help the country continue to thrive – and provide jobs for its young people.

This article reprinted with permission from Oxford Business Group.

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