Employment: The State Fails to Meet its Commitments
17 January 2011
Read by 1402 persons
It was supposed to create 250,000 jobs per year.
Create at least one million jobs in five years! While Driss Jettou innovated by presenting the first detailed and quantified government program on November 22, 2002, he refrained from providing a job creation forecast, merely mentioning an annual deficit of around 30,000 to 40,000 jobs to be filled. A legislature later, in his governmental statement before the joint Houses of Parliament, Abbas El Fassi - whose party, the Istiqlal, had just won the September 2007 legislative elections - provided more detail by setting as a "priority objective" the creation of "more than 250,000" jobs per year during the legislature's term, or 1,250,000 new jobs by 2012. To achieve this, he explained, annual growth needed to reach 6%, "instead of the 5% recorded in the previous five years," considering that 98% of job creation was due to the economic fabric. Very clearly, the new Prime Minister established a strong correlation between the level of economic growth and job creation! In theory, and generally speaking, this correlation is true; in the case of Morocco, it is not so obvious.
The fact is that in three years (between 2007 and 2009), less than 119,000 net jobs were created each year: 128,000 jobs in 2007, 133,000 in 2008, and 95,000 in 2009, according to data from the High Commission for Planning (HCP). In other words, the number of annual creations did not even reach half of the objective (125,000). And as things stand, the year 2010 would not be different from the previous ones. According to the HCP's latest survey on the labor market situation, covering the third quarter of 2010, only 93,000 net jobs were created by the end of September, year-on-year. Whatever the results for the fourth and last quarter of 2010 - which will be published soon - it is almost certain that the target of 250,000 jobs will not be reached!
However, economic growth during those years cannot be described as poor: 4.9% in 2009, 5.6% in 2008, and 2.7% in 2007. While the 2.7% growth in 2007 was less vigorous, let's not forget that the added value excluding agriculture, which is the "real" growth in reality, had increased by 6.2% in 2007. What pulled down overall growth was the poor performance of the primary sector (agriculture and fishing), whose added value fell by 20%.
Jobs are being lost in industry
This is proof, if any were needed, that job creation depends less on the level of growth across all sectors than on the good performance of agriculture. Although it is declining, agriculture's contribution to employment still represents 40%, while that of industry is decreasing (13% in 2009 compared to 14% in 1999). Construction and services have, in the meantime, improved their contribution to employment, increasing from 6.3% to 9% and from 33.4% to 37.2% respectively; however, it is known that in these two sectors, particularly in construction, jobs are rather precarious and primarily target less skilled labor. This is why we are only talking about net job creation here; gross creations do not have much meaning, except to highlight job losses which are sometimes very significant and which confirm the precarious nature of certain activities (agriculture and construction, in particular) as well as the improvement in productivity in other sectors.
Before 2007, an average of just over 200,000 jobs were created each year; the peak was reached in 2003 with 426,000 net jobs. The years 2004 and 2006 were also "rich" in jobs: 338,000 and 300,000 jobs created respectively. It is certainly in view of this employment trend that the El Fassi government believed it could achieve an average of 250,000. A somewhat... naive vision, since so far, and pending more significant impacts from sectoral strategies, one of the main engines of the "employment" machine remains agriculture, and this depends on the vagaries of nature.
When we look at the statistical series concerning economic growth and employment growth, we realize that the years with the highest number of jobs created are those where both agricultural and non-agricultural GDP grew significantly. This was the case, for example, in 2003 with an increase in agricultural (including fishing) and non-agricultural added value of 20.3% and 4.5% respectively.
Conversely, in 2005, with an 11.1% decrease in agricultural added value, only 91,000 jobs were created even though non-agricultural sectors had a remarkable performance (+5.8%). In 2009, despite an excellent agricultural year, tens of thousands of jobs were destroyed in industry, particularly in the textile sector, negating overall progress.
Low growth of the active population, less pressure on the labor market
How can this distortion, this weak correlation between economic growth and job creation, be explained? Lahcen Achy, professor at the National Institute of Statistics and Applied Economics (INSEA) in Rabat, and researcher at Carnegie Middle East (Lebanon), explains this phenomenon by the increase in average employment productivity of 3% since the beginning of the 2000s; which, he notes, is "an exceptional performance in the country's history." However, he adds that these productivity gains are confined to a number of sectors such as telecommunications, financial services, transport, and real estate, sectors open to competition.
Recruitment agencies questioned on the subject confirm this desire of companies to employ first, if not only, well-trained, experienced, and versatile individuals.
But if there has been less job creation since 2007 than in previous years, how can we explain that unemployment has not increased? It has even slightly decreased: 9.1% in 2009 compared to 9.7% in 2006. Two main reasons: the increase in underemployment, which is now around 11%, but above all the low increase in the active population (aged 15 and over). This phenomenon has already been highlighted in the Carnegie Middle East study on employment in the Maghreb (see La Vie éco of December 17, 2010). More simply, the slowdown in the growth of the active population (a consequence of the decline in fertility) leads to less pressure on the labor market. According to HCP data, the active population aged 15 and over grew by 5% and 3.6% in 2003 and 2004 respectively. These rates are 1.5% in 2006, 1.4% in 2007, 1.1% in 2008, and 0.4% in 2009. As a result, the activity rate, which was 54.5% in 1999, fell to 49.9% in 2009 (elsewhere, this rate exceeds 70%, the world average being 64%).
We can therefore say that, faced with the relative "sterility" of economic growth (in terms of job creation), the government has benefited from the effects of the demographic transition: fewer jobs created, but no more unemployment. With all this, it is almost certain that the objective of 1,250,000 jobs to be created by 2012 will not be achieved.
Published January 17, 2011
Posted online January 17, 2011
lavieeco.com
Create at least one million jobs in five years! While Driss Jettou innovated by presenting the first detailed and quantified government program on November 22, 2002, he refrained from providing a job creation forecast, merely mentioning an annual deficit of around 30,000 to 40,000 jobs to be filled. A legislature later, in his governmental statement before the joint Houses of Parliament, Abbas El Fassi - whose party, the Istiqlal, had just won the September 2007 legislative elections - provided more detail by setting as a "priority objective" the creation of "more than 250,000" jobs per year during the legislature's term, or 1,250,000 new jobs by 2012. To achieve this, he explained, annual growth needed to reach 6%, "instead of the 5% recorded in the previous five years," considering that 98% of job creation was due to the economic fabric. Very clearly, the new Prime Minister established a strong correlation between the level of economic growth and job creation! In theory, and generally speaking, this correlation is true; in the case of Morocco, it is not so obvious.
The fact is that in three years (between 2007 and 2009), less than 119,000 net jobs were created each year: 128,000 jobs in 2007, 133,000 in 2008, and 95,000 in 2009, according to data from the High Commission for Planning (HCP). In other words, the number of annual creations did not even reach half of the objective (125,000). And as things stand, the year 2010 would not be different from the previous ones. According to the HCP's latest survey on the labor market situation, covering the third quarter of 2010, only 93,000 net jobs were created by the end of September, year-on-year. Whatever the results for the fourth and last quarter of 2010 - which will be published soon - it is almost certain that the target of 250,000 jobs will not be reached!
However, economic growth during those years cannot be described as poor: 4.9% in 2009, 5.6% in 2008, and 2.7% in 2007. While the 2.7% growth in 2007 was less vigorous, let's not forget that the added value excluding agriculture, which is the "real" growth in reality, had increased by 6.2% in 2007. What pulled down overall growth was the poor performance of the primary sector (agriculture and fishing), whose added value fell by 20%.
Jobs are being lost in industry
This is proof, if any were needed, that job creation depends less on the level of growth across all sectors than on the good performance of agriculture. Although it is declining, agriculture's contribution to employment still represents 40%, while that of industry is decreasing (13% in 2009 compared to 14% in 1999). Construction and services have, in the meantime, improved their contribution to employment, increasing from 6.3% to 9% and from 33.4% to 37.2% respectively; however, it is known that in these two sectors, particularly in construction, jobs are rather precarious and primarily target less skilled labor. This is why we are only talking about net job creation here; gross creations do not have much meaning, except to highlight job losses which are sometimes very significant and which confirm the precarious nature of certain activities (agriculture and construction, in particular) as well as the improvement in productivity in other sectors.
Before 2007, an average of just over 200,000 jobs were created each year; the peak was reached in 2003 with 426,000 net jobs. The years 2004 and 2006 were also "rich" in jobs: 338,000 and 300,000 jobs created respectively. It is certainly in view of this employment trend that the El Fassi government believed it could achieve an average of 250,000. A somewhat... naive vision, since so far, and pending more significant impacts from sectoral strategies, one of the main engines of the "employment" machine remains agriculture, and this depends on the vagaries of nature.
When we look at the statistical series concerning economic growth and employment growth, we realize that the years with the highest number of jobs created are those where both agricultural and non-agricultural GDP grew significantly. This was the case, for example, in 2003 with an increase in agricultural (including fishing) and non-agricultural added value of 20.3% and 4.5% respectively.
Conversely, in 2005, with an 11.1% decrease in agricultural added value, only 91,000 jobs were created even though non-agricultural sectors had a remarkable performance (+5.8%). In 2009, despite an excellent agricultural year, tens of thousands of jobs were destroyed in industry, particularly in the textile sector, negating overall progress.
Low growth of the active population, less pressure on the labor market
How can this distortion, this weak correlation between economic growth and job creation, be explained? Lahcen Achy, professor at the National Institute of Statistics and Applied Economics (INSEA) in Rabat, and researcher at Carnegie Middle East (Lebanon), explains this phenomenon by the increase in average employment productivity of 3% since the beginning of the 2000s; which, he notes, is "an exceptional performance in the country's history." However, he adds that these productivity gains are confined to a number of sectors such as telecommunications, financial services, transport, and real estate, sectors open to competition.
Recruitment agencies questioned on the subject confirm this desire of companies to employ first, if not only, well-trained, experienced, and versatile individuals.
But if there has been less job creation since 2007 than in previous years, how can we explain that unemployment has not increased? It has even slightly decreased: 9.1% in 2009 compared to 9.7% in 2006. Two main reasons: the increase in underemployment, which is now around 11%, but above all the low increase in the active population (aged 15 and over). This phenomenon has already been highlighted in the Carnegie Middle East study on employment in the Maghreb (see La Vie éco of December 17, 2010). More simply, the slowdown in the growth of the active population (a consequence of the decline in fertility) leads to less pressure on the labor market. According to HCP data, the active population aged 15 and over grew by 5% and 3.6% in 2003 and 2004 respectively. These rates are 1.5% in 2006, 1.4% in 2007, 1.1% in 2008, and 0.4% in 2009. As a result, the activity rate, which was 54.5% in 1999, fell to 49.9% in 2009 (elsewhere, this rate exceeds 70%, the world average being 64%).
We can therefore say that, faced with the relative "sterility" of economic growth (in terms of job creation), the government has benefited from the effects of the demographic transition: fewer jobs created, but no more unemployment. With all this, it is almost certain that the objective of 1,250,000 jobs to be created by 2012 will not be achieved.
Published January 17, 2011
Posted online January 17, 2011
lavieeco.com
