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Summary of Morocco's Jobs Landscape: Identifying Constraints to an Inclusive Labor Market

Core Content

This report, Morocco's Jobs Landscape: Identifying Constraints to an Inclusive Labor Market, provides a comprehensive analysis of Morocco's labor market challenges and outlines key priorities for improving job creation and inclusivity. It is the first phase of a joint programmatic initiative between the World Bank and the Moroccan government aimed at fostering jobs-led growth.

Morocco has experienced notable economic progress over the past two decades, including a doubling of per capita income, a reduction in the poverty rate, and improvements in literacy and health. However, this growth has not translated into sufficient job creation, especially in the context of a growing working-age population. The report highlights that economic growth has been capital-intensive, leading to productivity gains within sectors rather than across them, and that structural transformation has been slow.

Main Challenges

1. Slow Structural Transformation

• Morocco has not transitioned from agriculture to more productive industrial or high-value-added service sectors.
• Job losses in agriculture have not been offset by significant job creation in manufacturing or high-productivity services.
• The services sector has grown but remains dominated by low-value-added and informal activities.

2. Informal Economy Dominance

• The informal sector is a major source of employment, with over half of wage workers still operating informally.
• Informality limits access to social protections, reduces tax revenue, and hampers overall labor productivity.

3. Low Female Labor Force Participation (FLFP)

• FLFP remains below 30%, which is low even in comparison to other countries in the region.
• Women are more likely to be inactive, especially after marriage, due to social norms and domestic responsibilities.
• Female labor force participation is low in both urban and rural areas, despite improved education access.

4. Youth Unemployment and Inactivity

• A significant portion of youth (29%) are NEETs (Not in Education, Employment, or Training).
• Youth unemployment has remained relatively stable, but inactivity has increased, exacerbating the NEET problem.
• Many young people lack access to quality education and vocational training, limiting their ability to transition into the workforce.

5. Regional Disparities

• Economic growth and job creation vary significantly across regions.
• Casablanca is driven by capital-intensive manufacturing, while Rabat's growth is fueled by high-value-added services.
• The informal sector is prevalent in many regions, particularly in the services industry.

Key Priorities for Policy

1. Accelerate Structural Transformation

• Focus on creating more and better jobs in high-productivity sectors.
• Encourage both industrialization and the expansion of formal, high-value-added services.
• Improve workforce skills and promote technology diffusion across sectors and regions.

2. Promote Formalization

• Reduce the size of the informal sector to improve labor productivity and tax revenue.
• Implement reforms to the business environment, including reducing the cost of labor and improving access to financing.
• Leverage international experience in addressing informality.

3. Integrate Women into the Labor Market

• Address persistent social norms that limit women's participation.
• Expand access to education and vocational training.
• Improve childcare and domestic support to reduce inactivity among women.

4. Support Youth Transition to the Workforce

• Lower drop-out rates and improve access to quality education and vocational training.
• Help highly educated youth transition from postsecondary institutions to the labor market.
• Align education with international standards and improve its relevance to the labor market.

Impact of the Pandemic

• The COVID-19 pandemic has significantly worsened the labor market situation.
• Over 60% of businesses temporarily or permanently shut down, leading to widespread job losses.
• By June 2020, 66.2% of workers were still on temporary layoff, with the main cause being the closure of enterprises.
• Unemployment spiked to 12.3% in July 2020, compared to 9.1% before the pandemic.

Conclusion

The report emphasizes the need for a structural transformation that creates productive jobs and fosters inclusivity, particularly for youth and women. It also calls for coordinated efforts between the public and private sectors to improve access to education, vocational training, and social welfare programs. The next phase of the program will focus on identifying concrete policy options based on further analysis of productivity, informality, and the transition from education to employment.

Key Information

• Authors: Gladys Lopez-Acevedo, Gordon Betcherman, and Vasco Molini
• Published by: World Bank
• ISBN: 978-1-4648-1678-9
• DOI: 10.1596/978-1-4648-1678-9
• Key Data Sources: Labor Force Surveys, World Value Surveys, Gallup data
• Report Objective: To identify constraints to an inclusive labor market and inform future policy formulation
• Main Themes: Structural transformation, formalization, gender inclusion, youth employment, and the impact of the pandemic

References

• Data Sources: Labor Force Surveys, World Bank, HCP, IFC
• Key Reports: World Development Report 2013: Jobs
• Themes: Productivity, employment, informal economy, education, gender, youth, regional disparities

Appendices

• Appendix A: Impact of the COVID-19 Pandemic on Households
• Boxes: Highlight key insights such as the role of education in employment, the impact of the pandemic on job creation, and regional differences in economic growth

Figures and Tables

• Figures: Show trends in economic growth, labor productivity, and employment by sector and region.
• Tables: Include data on employment growth, formalization rates, and labor market concepts.

This report serves as a critical diagnostic tool for understanding the labor market dynamics in Morocco and provides a roadmap for inclusive and sustainable job creation.