A recent World Bank report revealed that the percentage of informal work in Morocco is around 77.3%, which is one of the highest percentages of countries in the MENA (Middle East and South Africa) region. North). The report says that informal work does not provide social security benefits and also limits the possibilities of workers to cope with the risks to which their families are exposed.
However, it is usually considered that 90% of employment in the agricultural and rural sector is informal, which leads to much more valuation of the Moroccan informal sector. The report says that informal work does not provide social security benefits and also limits the possibilities of workers to cope with the risks to which their families are exposed.
The informal sector figure is also recognized by official Moroccan institutions, the most recent of which is the Haut-Commissariat au Plan (HCP), which to a lesser degree, stated that 67.6% of the total labor force in Morocco is informal, recognizing that most of it was in the agricultural sector.
A study carried out by Bank Al-Maghrib a few years ago indicated that the informal sector contributes around 30% of the gross domestic product, which leads to negative effects such as precarious work, the absence of social protection networks and the tax evasion, hindering economic growth. But as often the Institutions agree not to agree on the figures and it is also said that the informal sector employs 39% of urban jobs and represents 17% of GDP in Morocco.
That said, if the job market in Morocco suffers from several ills and the predominance of the informal sector could not be the clearest. Today, two-thirds of the employed working population work without a contract and without social and regulatory protection. The informal sector plays an important role in the national economy, and Covid has revealed its importance. It must be said that 81% of VSMEs alone attract 60% of private sector employment.
Admittedly, the Moroccan government has put in place several measures to fight against informal work, in particular, the regularization of informal workers and a social protection program for the self-employed and liberal professions and a business support program to encourage formalization. employment, but it must be recognized that the snake has many heads.
On this subject, Abdallah El Fergui, President of the Moroccan Confederation of TPE-PME, declared to MoroccoLatestNews, “what the World Bank has revealed is an indisputable reality from which the Moroccan economy has continued to suffer in recent years, in the light of the competition policy aimed at attracting foreign investment, encouraging large and medium-sized enterprises, abandoning more 95% of the national economy which is made up of small businesses“.
El Fergui pointed out that “problems that small businesses suffer from include taxes and delays in execution, which lead to the bankruptcy of one in two small businesses, not to mention the lack of access to financing, public contracts, and the absence of assets real estate“. He added that “the Labor Code does not take into account small and medium-sized enterprises, which pushes some of them to use unauthorized employees, otherwise they will not be able to continue to operate“.
And pointing to the absence of appropriate and serious government programs to deal with this phenomenon, he explained that “the pandemic, successive years of drought and high inflation rates contributed to the prosperity of the informal sector until it represented more than 30% of economic activity in Morocco”. Also he estimated that the increase in the bankruptcy index means an increase in work in the informal sector.
Morocco has proposed several solutions to deal with the phenomenon of the informal sector, including reforming the tax system and making it a tool for integrating this sector, through a simple and progressive approach, reducing tax rates and increasing the pressure tax depending on the size of the company.
This is a policy implemented with great success in Austria, Canada, France, Germany, the Netherlands and Spain. El Fargui noted that “Erroneous and ill-conceived economic and social policies and the lack of involvement of real economic actors in the programs lead to a series of bankruptcies. This means de facto an increase in the informal sector until it becomes unfair and dishonest competition from VSEs-SMEs“.
According to figures from the High Commission for Planning, the agricultural sector embraces the largest percentage of the informal workforce, because this sector has a significant weight in determining growth, contributes 12% of the total added value and employs about 40% of the working population.
The President of the Confederation continued by qualifying “the informal sector of “cancer” in the body of the national economy“. He further indicated that this situation requires “concerted efforts to reduce it by strengthening the formal sector made up of VSEs and SMEs“.
In a previous study, the Economic, Social and Environmental Council (CESE) considered the forms of the informal economy as a real threat to the country, in particular smuggling operations and hidden economic activities, which are practiced by structured actors. The incomplete reporting of the number of transactions and the number of workers contributing to it.
Successive governments have tried to launch several programs to integrate the informal sector, but in vain because they were not carried out. Indeed, the level of qualification excluding many active workers from work in the formal economy, the lack of decent and permanent job opportunities in the rural world, the persistence of legal and regulatory barriers that hinder the transition to the organized sector , not to mention the difficulties of access to financing and real estate, and the lack of support, are all factors that have prevented their implementation.
Some consider these unregulated economic activities positive, as they allow large segments of the population to find a source of income and escape unemployment. But at the same time and on the flip side, they aggravate the fragility of the labor market, practice unfair competition for businesses and harm the economy. Faced with the failure of government programs aimed at reducing the rate of this phenomenon, the EESC has recognized that there is a kind of tolerance of unregulated economic activities in the name of a fragile social peace, which is contrary to the effectiveness of the rule of law.
To deal with this phenomenon, the ESEC has proposed several avenues, including improving the situation of self-employed entrepreneurs by raising the maximum threshold for the annual number of transactions and authorizing them to employ two or three workers.
Other proposals included the creation of economic activity zones, and the opportunity, diversification and facilitation of means of financing, provided that the Mohammed VI Investment Fund plays roles that include the integration series of the informal economy, and the proposal of financing offers for the benefit of young people and women on more preferential terms.