World Bank Exposes Morocco’s Fragility
A recent World Bank report reveals that although Morocco maintains solid macroeconomic foundations, its economy suffers from pronounced structural imbalances. These imbalances underscore persistent weaknesses in the nation’s ability to generate jobs and adequately support its workforce. The report further warns that, without decisive and coordinated structural reforms, the employment gap will likely widen, and economic growth will remain precarious.
The report notes that Morocco faced an average annual job deficit of 215,000 between 2000 and 2024, a figure that surged to 370,000 jobs per year between 2020 and 2024. According to the World Bank, this reflects a decline in the economy’s employment capacity and the weak return on achieved growth in terms of job creation.
The report indicated that the working-age population experienced an increase of 47% between 2000 and 2024, while the number of employed individuals rose by only 20.7%. In contrast, the unemployment rate saw a 19.7% increase during the same period. Consequently, the activity rate declined from 53.1% to 43.5%. The report identifies this trend as clear evidence of the Moroccan economy’s struggle to absorb the expanding workforce.
The World Bank has identified a key factor contributing to the recent economic decline: a growth model reliant on high levels of investment, which have reached nearly 30% of GDP. Unfortunately, these substantial investments have not resulted in significant productivity improvements. The contribution of total factor productivity has remained low, not surpassing 0.8 percentage points of annual growth, and has declined further in the aftermath of the COVID-19 pandemic. This situation indicates a lack of effectiveness in the investments being made and a decrease in their economic returns.
The report highlights that the public sector plays a significant role in investment, contributing to approximately 50% to 66% of total investments. This prevalence has limited growth opportunities for the private sector, especially for small and innovative businesses, due to challenges in accessing finance and a lack of competitive pressure. Furthermore, the state’s substantial involvement across various sectors has obstructed the development of more productive and efficient economic participants.
The report on Morocco’s economic structure reveals that an overwhelming 94% of its businesses are classified as very small enterprises. These businesses are largely focused on non-exportable sectors, notably trade and construction. This concentration poses significant challenges, as it restricts their ability to generate structured and sustainable employment opportunities. Additionally, it highlights a concerning trend where over two-thirds of the workforce operates within the informal sector, which undermines social protection measures and hampers overall productivity in the national economy.
The World Bank has highlighted concerns regarding the competitiveness of the Moroccan market, revealing that around 40% of industries function in a low-competitive environment. This lack of competition stems from regulatory restrictions that raise market entry costs and hinder business growth. Additionally, issues such as tax complications, delays in payments, and challenges in obtaining financing further undermine economic development in the region.
The recent labour market report highlights a concerning trend known as overskilling, indicating that about 43% of university graduates are employed in positions that do not fully utilise their qualifications. This situation points to an underutilization of human resources and underscores the market’s inability to offer adequate opportunities that align with the skill sets of these graduates.
The report highlighted that the low participation of women in economic activities is a significant weakness in the Moroccan economy. It noted a concerning decline in the female activity rate, which fell from 28% in 2000 to just 19% by 2024. This represents a gap of nearly 50% points compared to male participation rates, positioning Morocco among the countries with the largest gender disparities in the workforce globally.
The World Bank has underscored that the persistence of negative economic indicators shows the fragility of the Moroccan economy and its limited capacity to achieve inclusive and sustainable growth. The institution emphasised that addressing this crisis necessitates comprehensive reforms, which include enhancing competition, improving the governance of public investments, supporting productive enterprises, and expanding the involvement of women and youth in the labour market.