For the Economic, Social and Environmental Council (CESE), the informal sector exacerbates the vulnerability of the labor market and loses significant tax revenues for the State, resulting in serious damage to the national economy. This is in any case one of the conclusions of an advisory opinion prepared by the Economic, Social and Environmental Council on the informal economy in Morocco, which should be at the center of discussions in the Chamber of Advisers next week.
Through this opinion, of which MoroccoLatestNews has a copy, the ESEC intends to underline the need for the public authorities to address as a priority the problem of the informal economy in Morocco, especially since a political will was clearly expressed in matter at the highest level of the State. Indeed, King Mohammed VI in his Speech from the Throne of July 29, 2020 indicated that the importance of the informal sector is one of the shortcomings revealed by the Covid-19 health crisis, stressing that “the generalization of social coverage should constitute a lever for integrating the informal sector into the national economic fabric“. The EESC noted that the informal economy in Morocco is characterized by a multiplicity of its components and categories and that the forms of the informal economy, with the exception of the subsistence one, constitute a real threat to our country.
And to quote, smuggling and hidden economic activities practiced by structured companies (incomplete declaration of the number of transactions and the number of employees, etc.), in addition to unorganized production units which compete with the organized sector and which deliberately escape their tax obligations despite the availability of the necessary resources. The above-mentioned EESC document underlined that the informal economy wasted significant resources from the state budget. As a result, this weakens its ability to finance the supply of public services, the resources lost for the State as a result of this situation are estimated at around 40 billion dirhams per year, according to a study by the General Confederation of Moroccan Enterprises ( CGEM) carried out in 2014. The ESEC has also linked the growth of the informal economy, which represents around 29% of gross domestic product (GDP).
This is incompatible with the effective implementation of the rule of law, continues the opinion, stressing the need to accelerate the development of measures to avoid the transformation of the informal sector into a factor of instability at all levels. economic, social and security. The EESC report indicates that the spread of unregulated economic activities has, until today, enabled large segments of the population to find a source of subsistence and escape unemployment, particularly the relatively active population. poorly qualified. This proliferation also allows the supply of goods and services at prices more suited to the purchasing power of the most disadvantaged groups.
On the other hand, the EESC indicates that this informal economy has mainly benefited a few groups who exploit the weakness and social vulnerability of large segments of the population. It also helps to maintain the duplication of the production system, to delay the structural transformation of the economy and to weaken the elements of the social contract between the State and the various social and economic actors.
Limited integration programs
Although the public authorities have launched numerous programs aimed at integrating the informal economy, the EESC has indicated that their impact remains limited. This is due to many reasons linked in particular to the insufficient level of rehabilitation which excludes many active residents from employment in the organized economy and the existence of a still weakly integrated social protection system. The Council also addressed the problem of the representation of actors working in the informal economy, and the presence of legal and regulatory barriers that hamper the process of integrating the informal economy, as well as the difficulty of accessing financing and at the market. On the other hand, the opinion considered that the large volume of trade and the performance of cash in transactions in Morocco are among the factors that contribute to the growth of informal economy activities and illegal activities in our economy ( money laundering, smuggling, etc.).
However, developing a national financial inclusion strategy would reduce this phenomenon in the long term. The document indicates that the persistence of the informal economy at high levels of up to 29% of GDP slows the pace of structural transformation of the economy, given the low productivity of the informal sector. The continuous increase in the number of unorganized production units reflects and at the same time perpetuates the fragility of the national productive fabric, given that the majority of these units are structures of very small size and with low capital and therefore a very vulnerable to economic shocks and the vagaries of life. Also, faced with the difficulties posed by the question of the informal economy to the various approaches which seek to combat and eradicate it, the EESC proposes the development of an integrated and realistic strategy which aims, step by step, to reduce the size of the informal economy in Morocco.
According to the constitutional institution, which exercises advisory missions on major development choices and public policies in the economic and social fields, sustainable development and advanced regionalization, this strategy should be able to gradually reduce the share of informal employment. to 20% of total jobs. This is close to the average recorded with groups from developed countries. The EESC further underlines that this desired percentage should include, in particular, subsistence activities as well as unorganized production units with limited capacities, while a stricter approach should be adopted aimed at eliminating illegal and hidden activities. and the practices of unorganized production units in competition with organized sectors.
The EESC concluded that the success of this strategy depends on the extent to which the right of everyone to equal access to quality public services is guaranteed, as an indication of the strengthening of the concept of the social state, of so that the quality of social services, provided by the state, justifies the costs resulting from integration into the organized sector and communicate in a targeted manner and through appropriate channels to the target population on the benefits and options of integration in the organized sector and around the various measures taken in this regard. The constitutional institution also called for the establishment of coherent measures at the level of other public policies, such as, rehabilitating human capital by accelerating the reform of the education sector for a good quality public school open equitably to all social groups, work systematically during the development of sectoral policies to include strategic axes directly related to the integration of the informal economy and accelerate the treatment of the deficit recorded in the field of development in rural areas, in order to reduce the exodus.
The EESC also recommended accelerating the use of mobile and electronic performances, which are in line with the objectives of the national strategy for financial inclusion. The EESC noted that the aim of these workshops is to reduce the scope of unregulated transactions which depend on the use of cash and to increase the traceability of financial flows in order to restrict and fight against fraud and the practices of non-disclosure, and others. To achieve this goal, the Constitutional Institution proposed to provide appropriate incentives to encourage commercial transactions that go through electronic wallets, and to provide financial support and technical assistance to traders and micro-proximity service providers to the widespread use of mobile payment devices or the installation of electronic payment devices. The institution also recommended supporting these efforts with an effective communication campaign with traders in order to make them aware of the importance of the desired benefits of these technologies.