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The World Bank recommends ending the informal sector in Morocco

In a report entitled “Morocco’s Jobs Landscape”, the World Bank makes a diagnosis of the challenges linked to employment in Morocco and recommends in particular to put an end to the informal economy and “to create more jobs in high productivity sectors”.

Building a vibrant and inclusive labor market in Morocco remains a persistent challenge, the World Bank said this week. In a new report entitled “Morocco’s Jobs Landscape”, the financial institution indicated that per capita income doubled between 2000 and 2018 and that the poverty rate in the kingdom was divided by three over the same period, the creations jobs have not followed, as the labor market is reeling from the current Covid-19 pandemic.

The study, which seals the first step in a partnership with the High Commission for Planning (HCP), diagnoses the challenges related to employment in the country. It gives rise to an in-depth analysis and assessment of concrete policy options capable of overcoming these challenges, we continue, referring to the slowdown in job creation in view of the demographic growth, the shortage of quality jobs in the industries of high productivity and the many excluded from the labor market, especially women and young people.

The report also sheds light on the labor force participation rate, which is particularly low. Indeed, 55% of adults are simply absent from the labor force in Morocco, while the region (MENA) has the lowest activity rates in the world.

“Although it has long been a persistent challenge, inactivity deserves special attention. This situation affects the well-being of individuals and their families and hinders the economic development of the country,” comments Jesko Hentschel, World Bank Director of Operations for the Maghreb. “Among young people, the high level of inactivity is particularly worrying, given the importance that the first professional experiences can represent in the search for a job, and even for the country,” he adds.

“Promote greater formalization of the economy” and “support young people”

In order to create more and better jobs and bring more young people and women into the labor market, the report suggests several priority areas. Thus, World Bank analysts recommend “to accelerate structural changes and create more jobs in high productivity sectors.” The study also calls for “promoting greater formalization of the economy”, recalling that “the existence of a large informal sector hinders labor productivity, erodes the tax base and leaves many workers and their families without adequate health and social insurance”.

For the institution, “encouraging formal jobs could require different types of measures, including reforms of the business environment, reduction of labor costs, or initiatives such as skills development to improve productivity.” It is therefore necessary to “analyze data at the company level and salary data at the company and individual level” and draw inspiration from international experience in the fight against informality.

“Although Morocco has made significant progress in the field of education, further improvements are needed to create a workforce capable of stimulating job growth and to help young people obtain highly skilled productive jobs”

“To improve employment prospects in Morocco, addressing each of these challenges is essential. This involves acting at multiple levels, with policies that take into account the context and tools of different sectors. Employment strategies must also take into account regional disparities and cultural and social factors,” the study concludes.

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