Why Doesn't Morocco's Economy Create Enough Job Opportunities?

SadaNews - Despite the growth rates achieved by Morocco's economy, providing enough job opportunities to absorb unemployment, especially among youth, remains a major challenge.

The figures clearly reflect the paradox: During the first and second quarters of the year, the Kingdom achieved growth of 4.8% and 5.5% respectively, the highest rates since 2021. However, unemployment reached 12.8% by the end of the second quarter, after only five thousand new jobs were added to the labor market, compared to 282,000 new jobs in the first quarter. This disparity shows that economic growth does not sufficiently translate into job creation.

Jobs in the Kingdom's economy are concentrated in fragile sectors such as agriculture, services, and construction, where employment is often seasonal and productivity is weak, while the contribution of advanced industries and digital technology remains limited despite their potential to generate high-quality jobs.

Reasons for Weak Labor Market in Morocco

A report issued this month by the Royal Institute for Strategic Studies attributes the limited capacity for growth to create job opportunities to weak economic diversification, dependence of agricultural activity on rainfall, and the lack of alignment between education and the labor market. The Institute, established by royal decree in 2007, is responsible for studying strategic issues in the country.

The issue of unemployment, especially among young graduates, was one of the main slogans raised by the "Generation Z" movement during protests last September, the first of its kind in a decade. This movement prompted the government to increase the number of government positions by 27% to 36,895 in the 2026 budget proposal.

Decline in Growth Efficiency in Creating Jobs

Each percentage point of growth in GDP provided around 30,000 jobs in the first decade of the millennium; however, it now provides only half that number, according to the Royal Institute's report, which analyzed labor market data for more than two decades.

This decline is attributed to weak economic diversification and the dominance of low-value-added sectors in agriculture and services, according to the report. While promising industrial sectors like automotive and aerospace are growing rapidly, their contribution to employment remains limited.

Youssef Karawi, an economist and head of the Moroccan Center for Governance and Management, states, "The insufficient job creation is due to the lack of reliance on industrial and non-agricultural value-added, as the focus has been on the agricultural sector, which is affected by drought."

Unemployment in Morocco was below 10% before 2019 but continued to rise due to the COVID-19 pandemic, reverting to levels recorded at the beginning of the millennium.

The unemployment rate among youth (ages 15 to 24) stands at about 35.8% at the end of the second quarter of this year, according to data from the High Commission for Planning, the government’s statistics agency. Although the rate is slightly lower compared to the first quarter, it is high compared to the 22.9% level six years ago.

Reliance on Climate-Impacted Agricultural Sector

Morocco has experienced six years of drought that have significantly affected agriculture, the largest employer of labor, contributing about 14% to GDP. The sector is characterized by small agricultural holdings, with the majority of farmers managing less than one hectare, along with low use of fertilizers, irrigation, soil analysis, and high-yield crops.

Karawi noted that Morocco welcomes about 400,000 newcomers to the labor market annually, "which requires creating more jobs through high growth rates." He pointed out that "this challenge can be successfully addressed by achieving economic competitiveness by supporting small and medium enterprises to enhance productivity and increase employment, as these companies represent the backbone of the economy."

The country is heading towards achieving the second-best growth in the Middle East and North Africa this year, around 4.4%, according to the latest IMF forecasts, while the government aims for 4.8%, which would be the highest since 2021.

Karawi also pointed out another factor behind the gap between growth and jobs, linked to the mismatch between education and training and the needs of the labor market, stating: "We have high unemployment rates, but there is a demand for more qualified labor in precise and advanced industries, which means a supply that does not match the demand." This was also mentioned by the Royal Institute for Strategic Studies in its report.

Karawi suggested that the unemployment rate in the Kingdom could be reduced to 7% through a clear employment policy that takes into account all current weaknesses.

Morocco Aims to Reduce Unemployment to 9% by 2030

After unemployment reached its highest level since 2001 over the past two years, the government launched a plan in February that aims to create 1.45 million additional jobs by the end of the current decade, allowing for a reduction in unemployment to 9%.

The government plan linked achieving this target to favorable conditions in the agricultural sector. It includes initiatives to stimulate job creation, notably by supporting small and medium enterprises through an investment project support system ranging from one million to 50 million dirhams, as well as facilitating their participation in government contracts and exports.

Apart from agriculture, the most prominent jobs in Morocco are available in the services sector, but it is a focal point for the informal sector, according to the Royal Institute for Strategic Studies. Bank Al-Maghrib estimated the size of the "shadow economy" at about 30% of GDP and cautioned in a previous report that workers in this sector suffer from a lack of social protection, with various activities experiencing low productivity.

The Royal Institute noted that among the reasons for the weak labor market despite growth rates is the concentration of economic activity in large coastal cities, which increases the disparities between them and medium and small cities, where inland regions benefit less from investments and job opportunities.

Future Challenges Facing Morocco

In the future, Morocco faces challenges that will complicate the unemployment dilemma further, chief among them aging, as the demographic gift window is expected to close in 2038, a period when the working-age population will be larger compared to dependents, according to the High Commission for Planning, the government body responsible for statistics.

Aging affects consumption, savings, spending on healthcare and pensions, as well as supply and demand in the labor market, which means impacting overall economic output. Official forecasts indicate that the percentage of the population over 60 years old will reach 23.2% by 2050, compared to 12.7% in 2023.

In addition to the above, Morocco faces the challenge of climate change, as the country is particularly vulnerable to these risks through rising temperatures, drought, and floods, which affect both people and the land, not to mention the impact of artificial intelligence on production patterns in several economic sectors, necessitating continuous adaptation in production methods.

To address these challenges, the Royal Institute recommended redirecting investments towards high value-added sectors, encouraging small and medium enterprises, alongside enhancing education and vocational training policies and linking them to the labor market, expanding the participation of women and youth, as well as institutional reforms that reduce the size of the informal economy and provide social protection conditions.

Success in this path will allow Morocco not only to achieve high growth rates but also to ensure economic growth "rich in employment," achieving social inclusion and ensuring sustainable labor market stability, according to the Institute.