Rabat – On October 2, nearly 30 journalists and NGOs, representing several African and Middle Eastern countries, gathered in Dubai for the fifth annual Citigroup Media and Community Summit.
The summit, which is usually held in London, strayed from solely focusing on the European market. Instead, the meeting highlighted Citibank’s achievements in Africa, the Middle East, China, and Pakistan.
Karim Seifeddine, head of public affairs and government relations of the Middle East and Africa at Citigroup said: “[These represent] areas of focus and growth for the bank and that is why Citigroup is present in 25 of 28 countries of the region to fulfil the needs of the different categories of consumers in the region.”
On the sidelines of the summit, Morocco World News spoke with Andrew Baird, Global CEO of Education for Employment, and David Cowan, Managing Director Economist for Africa at Citibank, on their views of Morocco’s economy and unemployment.
“The government’s role is not necessarily to create jobs. It’s to create an environment where jobs can be created to attract both foreign and local investments,” said Baird. However, Morocco’s recent unemployment experience is primarily a story of government attempts to create jobs.
For years, Morocco has struggled to strengthen its economy, but it has had difficulty overcoming high unemployment rates and increasing the quality of its poorly performing educational system.
As in most countries in the MENA region, unemployment is a major concern in Morocco, especially among university graduates. Between 2016 and 2018, the national rate of unemployment rose from 9.9 to 10.5 percent, according to Morocco’s High Commission for Planning (HCP).
Morocco’s Economic, Social, and Environmental Council (CESE) stated in its 2017 report that young people suffer the highest unemployment rates. High youth unemployment hinders economic growth through the inefficient use of human capital.
Although the economy is growing, it is not growing fast enough to match population growth and the increasing number of university graduates. “The number of degree holders increased from 43,000 in the last five years to 120,000 this year,” Government Spokesperson Mustapha El Khalfi said in August.
Morocco’s economy is characterized by small and medium-sized enterprises, many of which do not need university graduates. Fifty-two percent of the actively employed population does not hold a university degree.
The state has traditionally absorbed university graduates by hiring them into the public sector, but economic austerity measures, coupled with the growing supply of degree-holders, has prevented the state from continuing to play this role. Some university graduates have turned to the private sector; however, employment in the private sector is volatile, offering few social protections and low job security when compared with the public sector.
Those who cannot find work in the public sector and do not wish to brave the uncertainty of the private sector often leave in search of opportunities abroad. Ninety-one percent of Moroccan professionals aged 35 and younger wish to work abroad.
Brain drain has further fueled the unemployment problem by eroding talent from the supply of job seekers and contributing to a mismatch between the skills of university graduates and those demanded by the job market. CESE’s report confirmed that employers often prefer to hire experienced workers over university graduates. Young people also graduate with skills ill-suited to the needs of the market.
The report also mentioned corruption and nepotism as contributors to a system where merit is less important. Inevitably, young people lack confidence in the labor market.
The Moroccan government has sought to address unemployment through an Industrial Acceleration Plan. The plan created 89,884 jobs in 2017, with an increase of 13,657 jobs compared to 2016, according to Minister of Industry Moulay Hafid El Alamy.
Morocco’s Secretary General to the Ministry of Industry, Othman El Ferdaous, announced in June 2017 that 300,000 new jobs will be provided in the following three years with the industrial plan.
Foreign Involvement in Growing the Workforce
Morocco has attempted to create job opportunities by partially relying on foreign investments in the automotive and aeronautics industries. The country has received, in the first eight months of 2018, approximately MAD 16.5 billion in foreign direct investments (FDI). Although Morocco received a large amount of FDIs, it is still facing the mounting issue of absorbing the growing workforce.
Baird was optimistic about Morocco’s economy, predicting it would generate more jobs in the coming years.
“It’s hard to predict because it depends on a number of factors that are not in control,” Baird told MWN. “But as long as there is a more or less stable economy, I anticipate that more employment [will be] generated.” He added that “because of demographics, in order to even stay stable you have to increase the rate of job creation, more and more jobs, year after year, just to absorb what’s coming in.”
However, the BMI research group forecasted in May 2018 that unemployment would remain high throughout the next decade, due to the expanding workforce, unmet demand for technical positions, and a decline in job creation in traditional professions.
Education is Key
Baird believes that the Moroccan government should strategically wed the private sector’s needs with the educational system.
King Mohammed VI chaired a meeting with an education committee on Monday, October 2, to discuss the ways to increase youth employment through vocational training centers.
The sovereign gave the government three weeks to draft a plan to adapt training in the “traditional professions.” These professions are mostly in the fields of service, construction, agriculture, fishing, water, energy, and crafts.
Automotive Silicon Valley
In an attempt to balance its economy, Morocco has increasingly focused on developing the automotive industry. Baird recognized Morocco’s efforts to promote to cultivate its image as a hub for the industry.
The Moroccan government offers investment incentives for automotive industries, including a five-year corporate tax exemption and a 25-year exemption if most of the products are exported. The government also offers VAT exemptions, land purchase subsidies, and rebates of up to 30 percent on investment costs.
As a result, some renowned international automotive companies have built plants for producing car parts in Morocco. Companies such as PSA, Nexteer, Novares, and Fiat’s Magneti Marelli established plants in the free zones of the northern city Tangier and Kenitra, which is near Rabat.
These companies, along with Moroccan government, have set ambitious goals to increase automotive production. PSA Group’s Kenitra plant, which is expected to produce 100,000 cars in 2019, announced in September that it would double its annual production capacity to 200,000 in 2020.
“Morocco [has done] a nice job lately in the automotive sector, and that was a very concentrated, deliberate effort that needs to be replicated across other industries,” Baird commented.
BMI Research predicted in its latest report that vehicle production in Morocco will reach 468,389 units in 2018. It also predicted an average annual growth of 19.8 percent between 2018 and 2022, with an annual production of 988,477 units.
The Wall Street Journal reported that Morocco has become a continental leader in the automotive industry, surpassing South Africa with 345,000 passenger vehicles produced in 2017 above South Africa’s 331,000.
Invest in Agriculture
Cowan believes that Morocco should focus on developing agriculture across the country, especially in rural areas. “Go back to investing in agriculture. You can’t have industrial growth everywhere. You create industrial corridors,” he said.
While Morocco suffers from some water shortage, agriculture is considered one of the pillars in Morocco’s economy.
A piecemeal approach to reforming these sectors and alleviating the crushing weight of unemployment has proved unsuccessful thus far. Morocco needs to concentrate its efforts on diversifying its focuses–something that both Baird and Cowan advocate for–to allow for across the board growth, sustainable relief for the unemployed, and security for younger generations.