OECD/Morocco’s economic situation: Work-productivity-climate, the triple challenge
«Growth is accelerating. According to our projections, it should reach 3.5% this year and 4% next year. Growth will be underpinned by rising investment and strong exports, even if unemployment will remain high”. These are the forecasts made by Mathias Cormann, Secretary-General of the Organisation for Economic Co-operation and Development (OECD), on the occasion of the closing of Country Programme II and the discussion of the Economic Survey of Morocco.
The study acknowledges the stability of the macroeconomic framework and the recovery of economic activity. But three major challenges need to be met to accelerate convergence towards high-income economies. These are the challenge of the labor market to enable the creation of quality jobs, the climate transition, and improving productivity by increasing investment and boosting the private sector. For example, productivity in the manufacturing sector is 79% lower than in the United States, while the gap between the average OECD economy and the USA is 27%!
Yes, but
“The report’s main recommendations are in line with our diagnoses, although we may differ on certain public policy recommendations or their implementation approaches”, stressed Nadia Fettah, Minister of the Economy and Finance. She added: “We very much appreciate the efforts made by the OECD secretariat in preparing this first study. However, we believe that some of the analyses and recommendations would benefit from being adapted to the specific Moroccan context”. In any case, with regard to the labor market, the measures recommended by the OECD for the integration of young people are shared. “ The Government has made the promotion of employment a strategic priority, and a roadmap is currently being put in place within the framework of the Interministerial Employment Committee, chaired by the Head of Government. It provides for an action plan spread over 5 to 10 years, with concrete measures to be implemented from the 2025 Finance Act onwards”, Fettah Alaoui points out. The Minister also points out that the measures will be aimed in particular at supporting employment in rural areas, restructuring active employment programs and supporting SMEs.
Nearly two-thirds of jobs are in the informal sector
The informal economy accounts for almost two-thirds of all jobs, and covers a wide range of activities. These include agriculture, where some 82% of women and 46% of men work. The phenomenon is also present in construction, public works, retail, and repair services.
According to the study, the high number of businesses and jobs in the informal economy is hampering productivity gains for Moroccan companies: “ the informal economy results in persistently low productivity and poor-quality jobs, while constituting a source of unfair competition for formal businesses”. Small businesses are hardest hit, and in terms of transactions, the informal sector has an estimated 20% to 40% advantage over the formal sector.
As the study underlines, the scale of the informal economy is also detrimental to tax revenue mobilization, overall growth, and competitive dynamics in the formal sector. This points to the urgent need for a plan of attack. The OECD study recommends incentives, such as the reduction of tax and social security contributions for small businesses that formalize their activities, as well as the strengthening of control and sanction mechanisms. The introduction of digital solutions, such as electronic payment and online invoicing, could also ease the transition by reducing compliance costs. At the same time, improved access to credit and support for entrepreneurship are essential to encourage workers and businesses to formalize their activities.
Khadija MASMOUDI
