فاس نيوز ميديا جريدة الكترونية جهوية تعنى بشؤون و أخبار جهة فاس مكناس – متجددة على مدار الساعة
Rabat – The Policy Center for the New South recently released an in-depth report addressing the issue of Morocco’s informal economy, a prominent economic and social challenge facing the Kingdom. Prepared by economists Hamza Saoudi and Ahmed Ounini, the report sheds light on the scale of this phenomenon, its various negative impacts, and proposes a set of solutions to curb its prevalence.
The report benefited from the support of the World Bank and international experts, with the primary goal of providing policymakers with practical and applicable recommendations to foster a path of inclusive and sustainable economic growth in the country.
Scale of Morocco’s Shadow Economy:
- Dominance of Informal Employment: The report reveals that the informal economy absorbs approximately 77% of Morocco’s total workforce, indicating that the vast majority of workers operate outside the scope of formal social protection.
Negative Impacts of the Informal Economy:
- Low Productivity: Reduced productivity levels are partly attributed to the absence of systematic vocational training programs and limited access to modern technology within this sector.
- Erosion of Tax Revenue: The widespread informal economy leads to a shrinking of the state’s tax base, limiting the government’s ability to finance essential public services.
- Impeding Economic Growth: This sector poses a hindrance to achieving strong and sustainable long-term economic growth due to weak investment in human and physical capital.
- Social Vulnerability: Workers in the informal sector face precarious and unstable working conditions, characterized by low wages, limited opportunities for professional development, and a lack of legal and social protection.
- Forced Social Safety Net: Despite its drawbacks, the informal economy currently serves as a vital source of income for many families struggling to secure formal and organized employment opportunities.
Historical Context and Structural Challenges:
- Unbalanced Economic Growth: Despite Morocco’s GDP doubling between 2000 and 2018, the rate of informal employment decreased by only 8 percentage points, reflecting deep-seated structural challenges in the labor market.
- Challenge of Absorbing New Entrants: The formal labor market currently fails to absorb approximately 400,000 new entrants annually, pushing a significant number of them towards engaging in the informal sector.
- Limited Job Creation Capacity of the Private Sector: The Moroccan private sector faces limitations in its ability to generate sufficient job opportunities to meet the growing needs of the labor market.
- Complexity of Administrative and Legislative Procedures: The complexity of existing administrative procedures and legislation presents an obstacle to the transition of companies and workers from the informal to the formal economy.
Factors Influencing the Persistence of the Informal Economy:
- Legal and Institutional Framework:
- Absence of effective laws providing adequate protection for workers’ rights, such as setting a minimum wage or regulating hiring and dismissal processes.
- Weak enforcement mechanisms for existing laws and regulations, reducing the attractiveness of working in the formal sector.
- Economic Incentives:
- High tax costs and social contributions imposed on companies and workers in the formal sector, encouraging a preference for operating in the informal sector.
- Limited incentives offered to small and medium-sized enterprises (SMEs) to formally register and integrate into the formal economy.
- Market Conditions:
- Difficulties faced by companies in the formal registration process and in accessing the necessary financing for business development, hindering the growth of the formal economy.
- Weak economic infrastructure in some regions, particularly rural areas, limiting formal employment opportunities.
Proposed Solutions to Reduce the Informal Economy:
The report emphasizes the need to adopt a comprehensive and integrated strategy to address the phenomenon of the informal economy, encompassing a set of coherent measures and policies:
- Improving the Legal and Institutional Framework:
- Enacting effective laws that fully guarantee workers’ rights, including setting a minimum wage and ensuring decent and regulated working conditions.
- Simplifying and facilitating administrative procedures related to the registration of companies and workers in the formal system.
- Adjusting Tax Incentives:
- Providing temporary tax exemptions for SMEs transitioning from the informal to the formal sector to encourage compliance.
- Reducing the costs of social contributions payable by companies and workers to encourage registration in social security systems.
- Improving Market Conditions:
- Facilitating access for SMEs to various sources of financing through the launch of effective government support programs.
- Strengthening and developing economic infrastructure in rural areas to create more formal and sustainable employment opportunities.
- Investing in Training and Education:
- Providing comprehensive vocational training programs aimed at improving workers’ skills and raising their qualification levels to increase their chances of obtaining decent work in the formal economy.
- Developing the education system to reduce the gap between the outputs of the education system and the changing demands of the labor market, especially for new entrants.
- Adopting a Gradual Transition:
- Implementing flexible policies that take into account the economic and social realities of workers and employers in the informal sector.
- Establishing transitional programs specifically designed to help workers adapt to the requirements of formal employment without incurring significant losses in their income.
Importance of the Transition to the Formal Economy:
The report underscores that a gradual and organized transition towards the formal economy yields significant benefits across various levels, most notably:
- Enhancing Social Protection: The formal economy ensures the provision of a comprehensive social protection umbrella for workers, including universal health coverage and sustainable pensions, thereby contributing to reducing social vulnerability and improving citizens’ living standards.
