Morocco unemployment: A dark spot in an otherwise promising economy

Around 16 million young Moroccans are unemployed, costing the economy $12bn a year amid an uneven rebound that is fuelling outward migration. The upcoming budget will focus on this issue.

Morocco unemployment: A dark spot in an otherwise promising economy

Mohamed Sharki

last update on 23 Oct 2024

Youth unemployment is becoming a hot topic in Morocco as the country drafts its 2025 budget, which will be presented in parliament on 20 October. It will be the penultimate set-piece finance bill of the current parliament. The overall aim is to achieve economic growth of 4.4%, up from around 3% this year, which has been beset by strained international circumstances and the impact of climate change.

Unemployment has been surprisingly problematic for the government, defying expectations that the labour market would improve in line with a general economic rebound. The budget deficit has come down, with debt reduced and inflation lowered. International rating agencies have recently upgraded Morocco, with S&P Global taking it to “positive” from “stable” in March.

But progress has not yet reached much of the jobs market. The High Commission for Planning revealed that the unemployment rate had risen to 13.1% in the second quarter of 2024, up from 12.4% at the same point last year.

After a government pledge to create 1 million new jobs across the public and private sectors between 2021 and 2026, stubborn joblessness will be the focus of the budget. Attention will also surround policies to overcome economic and social challenges, not least to protect living standards with practical measures to adapt to challenging international conditions.

Jobs data, COVID and climate change

When the official job numbers were published in 2023, it was revelatory: Unemployment in urban areas rose from 16.3% to 16.7%, and in rural areas, it increased from 5.7% to 6.7% due to the impact of drought. The unemployment rate increased among both genders, rising from 17% to 17.7% among women and from 11% to 11.7% among men. The total number of unemployed reached 16.33 million, an increase of 90,000 new unemployed individuals, marking the highest rate since before the COVID-19 pandemic, with a rise of 6%.

Morocco’s central bank has noted that the country’s latest unemployment rate is up by four percentage points from its pre-pandemic level of 9.4%. Bank Al-Maghrib also noted that this is the highest reading since 2001, especially in urban areas, where two-thirds of the working population live.

COVID–19 cost Morocco around 500,000 jobs, many of which have not yet been fully recovered, despite the government injecting over $13bn into an economic recovery plan to save struggling companies and support sectors hit by lockdowns.

AFP — A farmer inspects his farm after it was struck by drought in Berrechid province in Morocco, February 7, 2024.

The country has also been hit by climate change. Between 2023 and 2024, the labour market lost 157,000 jobs due to a shortage of rainfall and weak agricultural production.

The share of agriculture in total jobs decreased to 27.8%, down from 37.8% in 2008 to 42.8% in 2000. And it has been worse for younger people. Central bank governor Abdellatif Jouahri described youth unemployment in stark terms, calling it " the dark spot in overall economic performance."

This remark angered the government, which believed that the economic growth rate of 3.5% was sufficient to create new jobs or at least curb the rise in unemployment, especially for first-time labour market entrants.

Successive Moroccan governments have criticised statistical institutions for interpreting economic data and its social implications, including for employment and human development. The most recent disagreement arose during a period of rising prices and inflation. Last year, the central bank raised the basic bank interest rate to 3% before lowering it to 2.75% in the first quarter of this year.

No official analysis has yet been released on the impact of bank interest rates on investment costs and the labour market. Nonetheless, the available indicators point toward economic uncertainty and a negative impact on sectors such as real estate, construction, and high-priced items like cars.

For its part, the central bank has signalled that it will take the global decline in inflation rates into account in the latter part of this year in its own deliberation on interest rates.

Geopolitical factors may also shape the wider picture. There are concerns that a military confrontation between Israel and Iran could drive oil prices up, costing Morocco an average of $15bn to $17bn.

Unemployment in Morocco rose by 6% in 2023, marking the highest rate since before the COVID-19 pandemic

Former Minister of Labour Abdeslam Seddiki wrote in the French-language Moroccan newspaper Al-Bayan that: "Emerging economies have been negatively affected by international circumstances, the succession of various crises, and weak economic growth, which has prevented labour markets from growing at the required pace to meet the demand of new entrants to the workforce."

He added: "The transition from a medium-income developing economy to a high-income advanced economy, which generates high added value, is the best framework for improving incomes and developing the youth labour market."

Unemployment and underemployment

Official statistics indicate that the unemployment rate for young people aged 15 to 24 increased from 33.6% to 36.1% between the second quarter of 2023 and the second quarter of 2024. This age group is referred to as NEET or Not in Education, Employment, or Training. According to the Geneva-based International Labour Organisation (ILO), one in five young people globally, aged 15 to 29, falls into the NEET category, which accounts for approximately 20.4% of the global population.

According to the organisation's 2023 statistics, the figure is 24.4% in the Middle East and 22.3% in North Africa. In these regions, women face particular challenges related to prevailing cultural norms, with female unemployment reaching 44%, contributing to a large informal sector.

In Morocco, the number of those working in underemployment—defined as insufficient income or a mismatch between education and job—has reached around 1 million people, most of whom are women. According to Morocco's High Commission for Planning, underemployment in the construction and public works sector has risen by 1.7 percentage points to 18.9%, while in the agriculture, forestry, and fisheries sector, it has increased by 1.9 points, reaching 11.5%.

The unemployment rate for people aged 25 to 34 has risen from 19.8% to 21.4% in one year, while the rate for those aged 35 to 44 has remained relatively stable, moving from 7.2% to 7.3%. Meanwhile, the unemployment rate for university graduates is nearing 20%.

Civil society organisations, trade unions, and opposition political parties believe that the challenges facing the labour market, through rising unemployment rates or underemployment, call for intensified efforts to provide suitable and sustainable job opportunities for young people and women.

Shutterstock — Unemployed Moroccan professors in Jemaa El Fna Square in downtown Marrakesh participate in a sit-in demanding jobs.

Non-governmental organisations blame commercial globalisation and the shift of production and supply chains for the labour market crisis in Morocco and North Africa as a whole.

A single percentage point of economic growth used to create 40,000 to 50,000 jobs ten years ago, but this has halved in recent years, while the number of people entering the labour market has doubled due to improvements in education and increased government spending.

The education budget alone reached around $7.7bn in 2024, not including the budgets for higher education, research, and private education. The government recently announced that it has made the fight against unemployment an economic and social priority, launching an ambitious plan to create 250,000 new jobs in both the public and private sectors.

It will depend on a state-backed entity called the Mohammed VI Fund for Investment to revive the economy and stimulate the labour market. The plan also includes public works programmes, support for innovative start-ups, ecological agriculture, and carbon-free industries to enhance global competitiveness.

A $12bn problem

A study conducted by Ibn Tofaïl University in Kenitra, north of Rabat, estimated the annual economic cost of youth unemployment at around $12bn per annum, borne by the state budget, in addition to the cost of the lost contribution to the economy. According to the Ministry of Education, more than 300,000 youths drop out of school each year for various reasons, especially in remote villages and mountainous areas.

The Moroccan economy expects to benefit from the demographic boom to increase growth and double wealth before transitioning to an ageing society by 2050. Economic theories suggest that "doubling national wealth requires growth of 7% over ten years or 4% over 22 years."

In 2023, the youth unemployment rate in North Africa was estimated at 22.5%, with the NEET category accounting for an average of 31.2%, due to weak oil production and the ongoing impact of international conflicts and drought.

Despite the increased employment rates in some sectors, where the improved economic growth rates have been apparent, the impact on overall unemployment has been limited, with jobless rates of 16% in Tunisia, 12.5% in Algeria, and 13% in Morocco.

According to the ILO, youth employment in the agricultural sector in the Maghreb region fell by about 10 percentage points between 2011 and 2021.

Reuters — Young Moroccans in the Moroccan economic capital Casablanca, Morocco October 29, 2023.

Job opportunities in trade, services, technology, tourism, hospitality, and manufacturing have increased, but they remain insufficient to absorb the number of job seekers in a region with uneven economic development and affected by international crises, successive droughts, and border closures.

Migration on the rise

It's rare to find a young person in these countries searching for their first job who isn't considering emigration, particularly to the nearby European Union countries.

Security and migration issues have become the primary determinants of relations between the two shores of the Mediterranean, overshadowing trade, economics, and investment. While European countries oppose the arrival of less-educated migrants, they actively recruit highly skilled individuals whose education has been heavily invested in by their home countries.

This issue is highlighted by governments facing diplomatic pressure to curb irregular, unskilled migration and repatriate undocumented migrants. Gilbert Houngbo, director-general of the ILO, noted, "Youth who don't receive a good education find it difficult to secure good jobs, and millions of young people worldwide may have limited chances of achieving a prosperous future."

The European Union links halting migration to funding development projects and facilitating trade and remittances. With the rise of far-right parties, the pressure to replace North African, Arab, or Muslim migrants with others from Eastern Europe and Latin America has increased.

Tunisia, Algeria, and Morocco face a blatant trade-off over migration as the number of people seeking better economic conditions, especially from sub-Saharan Africa, continues to rise.

Italy has proposed establishing temporary shelters within the Maghreb countries to process migration and asylum requests before allowing people to cross to the northern shore of the Mediterranean, along the lines of a project currently underway with Albania.

+ / -