Unemployment and SME Closures Undermine Growth Recovery for 2010 and 2011
26 October 2010
Read by 1348 persons
The negative effects of the global economic crisis continue to undermine the morale of Moroccan entrepreneurs and accelerate SME closures amid rising layoffs. Unemployment is above 10% in the first half of 2010. Discouragement is still there, as are factory closures. Inevitably, strong economic growth will not be achieved in 2010, even less so in 2011, according to experts from the Moroccan Conjuncture Center (CMC).
In the first half of 2010, nearly 60 companies closed, compared to 57 companies during the same period in 2009, according to the Moroccan Ministry of Employment. Overall, all industrial sectors, as well as services, are suffering, with a worrying increase in business closures. The textile and leather sector is struggling to recover. More than 40% of business closures and 74.5% of layoffs were recorded in the textile and leather sector. In absolute terms, this sector closed 24 establishments between January and June 2010, a figure that is certainly lower than that recorded during the same period in 2009 (38 closures). However, this data "is not exhaustive; the number of closures, in this sector as in others, may be higher," according to a labor inspector. The textile and leather sector alone accounts for the most closures and the most layoffs, with 5,699 workers laid off out of a total of 7,645, or 74.5%.
Unemployment Rate in the Red
Furthermore, several other industrial sectors are experiencing the same situation, with 20 business closures and 1,412 workers laid off, a figure that is nevertheless down 17.3% compared to that of 2009 (1,708 layoffs). And, as the global economic crisis has affected the hotel, transport, and restaurant sectors, the service sector in Morocco has also experienced difficulties, since both business closures and layoffs (387) have both increased: +50% and +21.7% respectively. On the other hand, the construction industry, with the launch of several low-cost housing projects, does not seem to have been affected by the downturn. In the agricultural sector, however, the Moroccan High Commission for Planning (HCP) estimated the number of jobs lost between June 2009 and June 2010 at 83,000. According to the HCP, in the first quarter of 2010, the unemployment rate in Morocco was even higher. In its economic outlook for last July, it indicated that the overall unemployment rate, which stood at 9.8% in 2007, fell to 9.1% in 2009. In the first quarter of 2010, the labor market lost its strength. Faced with the slowdown in job creation and the resumption of labor supply (+1%, compared to -0.2% in the fourth quarter of 2009), the national unemployment rate increased by 0.4 points in one year to reach 10%. The unemployed population increased by 4.5% year-on-year, or nearly 49,000 more unemployed.
Downward Indicators for 2011
Inevitably, with these SME closures and the increase in layoffs in the industrial and agricultural sectors, vigorous economic growth for 2011 will not be forthcoming, according to Moroccan experts. "Strong growth will not be achieved, neither in 2010 nor in 2011," recently estimated the Moroccan Conjuncture Center (CMC) in an analysis of the Kingdom's economy. For the CMC, the year 2010 will be marked by an economic downturn: there will be a decrease in public investment and a generalized decline in FDI and tax revenues of 3.5%, household consumption will be curbed and will not experience the increases of previous years, sales of cars and electronic equipment will decrease. And, on the socio-economic level, there will be a resumption of the unemployment rate, which will increase from 9% to 11% in 2010. "Employment will be particularly affected by this decline in growth," estimate experts, according to whom economic growth, even at a level of 5%, will not have a real effect on reducing the unemployment rate between 2010 and 2011. The 2010 Finance Act projects growth of slightly more than 4%, and the same rate is expected for 2011, while the IMF estimates that the growth rate should be more than 6% over at least three years to stimulate employment, investment, and a return to consumption.
Published October 20, 2010
Posted online October 26, 2010
maghrebemergent.info
In the first half of 2010, nearly 60 companies closed, compared to 57 companies during the same period in 2009, according to the Moroccan Ministry of Employment. Overall, all industrial sectors, as well as services, are suffering, with a worrying increase in business closures. The textile and leather sector is struggling to recover. More than 40% of business closures and 74.5% of layoffs were recorded in the textile and leather sector. In absolute terms, this sector closed 24 establishments between January and June 2010, a figure that is certainly lower than that recorded during the same period in 2009 (38 closures). However, this data "is not exhaustive; the number of closures, in this sector as in others, may be higher," according to a labor inspector. The textile and leather sector alone accounts for the most closures and the most layoffs, with 5,699 workers laid off out of a total of 7,645, or 74.5%.
Unemployment Rate in the Red
Furthermore, several other industrial sectors are experiencing the same situation, with 20 business closures and 1,412 workers laid off, a figure that is nevertheless down 17.3% compared to that of 2009 (1,708 layoffs). And, as the global economic crisis has affected the hotel, transport, and restaurant sectors, the service sector in Morocco has also experienced difficulties, since both business closures and layoffs (387) have both increased: +50% and +21.7% respectively. On the other hand, the construction industry, with the launch of several low-cost housing projects, does not seem to have been affected by the downturn. In the agricultural sector, however, the Moroccan High Commission for Planning (HCP) estimated the number of jobs lost between June 2009 and June 2010 at 83,000. According to the HCP, in the first quarter of 2010, the unemployment rate in Morocco was even higher. In its economic outlook for last July, it indicated that the overall unemployment rate, which stood at 9.8% in 2007, fell to 9.1% in 2009. In the first quarter of 2010, the labor market lost its strength. Faced with the slowdown in job creation and the resumption of labor supply (+1%, compared to -0.2% in the fourth quarter of 2009), the national unemployment rate increased by 0.4 points in one year to reach 10%. The unemployed population increased by 4.5% year-on-year, or nearly 49,000 more unemployed.
Downward Indicators for 2011
Inevitably, with these SME closures and the increase in layoffs in the industrial and agricultural sectors, vigorous economic growth for 2011 will not be forthcoming, according to Moroccan experts. "Strong growth will not be achieved, neither in 2010 nor in 2011," recently estimated the Moroccan Conjuncture Center (CMC) in an analysis of the Kingdom's economy. For the CMC, the year 2010 will be marked by an economic downturn: there will be a decrease in public investment and a generalized decline in FDI and tax revenues of 3.5%, household consumption will be curbed and will not experience the increases of previous years, sales of cars and electronic equipment will decrease. And, on the socio-economic level, there will be a resumption of the unemployment rate, which will increase from 9% to 11% in 2010. "Employment will be particularly affected by this decline in growth," estimate experts, according to whom economic growth, even at a level of 5%, will not have a real effect on reducing the unemployment rate between 2010 and 2011. The 2010 Finance Act projects growth of slightly more than 4%, and the same rate is expected for 2011, while the IMF estimates that the growth rate should be more than 6% over at least three years to stimulate employment, investment, and a return to consumption.
Published October 20, 2010
Posted online October 26, 2010
maghrebemergent.info
