A recovery policy for employment?
21 July 2015
Read by 2702 persons
The National Employment Strategy aims to reduce the unemployment rate to 3.9% by 2025. This would require creating 200,000 jobs per year on average.
The government should have started with this, but, as they say, it is never too late to do well: tackle the issue of employment in Morocco head-on. And this not because the country has an exceptionally high unemployment rate (it has been below 10% for the past ten years), but because existing employment is largely precarious, therefore only very imperfectly meeting the conditions of decent work developed and promoted by the International Labour Organization (ILO) for the past fifteen years. However, with the cumulative effect of unemployment and underemployment (the rate of which exceeds 10%), the situation is indeed worrying. But, let's say it straight away, the government, as if to make up for this issue, intends to put in place a very ambitious project since the National Employment Strategy (NES) it proposes for the country will not only correct the dysfunctions of the labor market, but even more so promote macroeconomic recovery policies, combining, among other things and in particular, budgetary and monetary measures at the same time.
Let's not be afraid of words, this is a Keynesian-inspired policy, the title of which is already revealing: National Strategy "for" employment and not "of" employment. And this should not be surprising, on the contrary, it is coherent that such a project is prepared by a minister belonging to a party claiming progress and socialism.
But more than a question of ideology, it seems established that in economies like that of Morocco, public intervention still makes sense; a fortiori on issues, such as employment, where the social aspect is significant. Pure-bred liberals can always reply that employment is a strictly economic affair. It remains nonetheless true that where the active population is largely (60%) non-graduate, or even without any school level except primary school (57.5%), and where there are no social safety nets capable of cushioning the shocks that the labor market may experience, employment is also, in these conditions, everyone's business; that is to say, essentially that of businesses, but also of public authorities. This is why the team responsible for formulating the NES, in consultation with economic, social and civil society actors, has operated a "paradigm shift" on the issue of employment, placing the latter "at the center of public action". In doing so, employment is now a concern, even a "cross-cutting responsibility", involving all ministerial departments, including their local branches. In other words, all public action must have as its primary objective the creation of jobs in quantity and quality.
Lowering mandatory levies would encourage businesses to recruit
Concretely, the NES is broken down into four axes (see table) and each axis into operational objectives, with each time a battery of measures proposed to achieve the said objectives. If this NES is implemented under optimal conditions, it should be able to generate the creation of 200,000 jobs per year over the next decade. There is no need to go back over the quantification of such an objective; previous experiences, here and elsewhere, have already largely proven the inefficiency, not to say the danger, of such an exercise. However, if we have read the terms of this NES correctly, the 200,000 jobs in question are the objective to be achieved if we want to increase the employment rate and lower the unemployment rate (see box). In other words, the 200,000 jobs in the NES are not an objective strictly speaking, but the volume of jobs that would have to be created each year, on average, if we want to substantially reduce the unemployment rate by 2025.
Without going into the tedious details of the many operational objectives for each strategic axis and the accompanying measures, let us nevertheless retain some of the proposals considered likely to improve growth and its job content. We can first mention the necessary restoration of budgetary room for maneuver. For the designers of the NES, the action being taken by the government in this respect should be continued in order to free up the means to finance employment. They propose, in this regard, to continue the reform of compensation, considering that social transfers, so far, have not been implemented optimally. It is not specified (in the document in our possession at least) which products should be concerned by the decompensation, however, this avenue is considered interesting in order to be able to direct public resources towards actions and programs that generate jobs and income. A well-known Chinese proverb better conveys this idea: "When a man is hungry, it is better to teach him to fish than to give him a fish."
The other use to be made of the budgetary savings to be achieved would be to lower or lighten the mandatory levies on businesses in order to allow them to recruit without excessively increasing their costs. In short, according to the NES, it would be necessary to free up budgetary margins that would allow substantially influencing job creation. Public action, at the macroeconomic level, in favor of employment would be to put in place an exchange rate policy "favorable to growth and employment". Unless otherwise advised, this is a somewhat new proposal, even if the IMF and the World Bank have regularly, for several years, recommended in their reports on Morocco a necessary adaptation of the exchange rate regime. The NES document does not explain the relationships that may exist between an exchange rate policy and employment (this may not be the place for such developments), it nevertheless seems that what is aimed at is a certain...devaluation of the dirham which would make the Moroccan product competitive for export, and thus, a more significant development of the export sector and therefore jobs. In any case, the idea is to put monetary and exchange rate policy at the service of growth and employment. If only at the level of intellectual debate, the avenue deserves to be examined.
Another measure advocated by the NES, which is akin to a "flexibilization" of the labor market, is the revision of severance pay. The Minister of Employment and Social Affairs, Abdeslam Seddiki, in the interview he gave to La Vie éco (see page 14) considers it necessary to make a distinction between severance pay and damages and interest, considering that the cumulative effect of the two, as is currently the case, "constitutes a very high compensation scheme compared to international standards". It is not certain that the unions will appreciate it…
What exchange rate policy for employment?
The NES considers it a priority to introduce macroeconomic policies aimed, on the one hand, at restoring public room for maneuver, in particular budgetary room for maneuver, and, on the other hand, at sustainably stabilizing employment growth. Two specific measures have been advocated in this respect: one, to continue the reform of compensation, two, to put in place a real exchange rate policy favorable to growth and employment.
The unemployment rate divided by 2.5 in ten years!
According to the voluntarist scenario on which the NES is based, the employment rate, which is currently 43.3%, should increase to 46.2% in 2025, and the unemployment rate fall to 3.9% by that time, instead of 9.9% in 2014. It is very good to believe it and above all to implement the means to achieve it, but to divide the current unemployment rate by more than 2.5 in ten years, this has practically never been seen...Whatever the means mobilized for this purpose!
Salah Agueniou.
Lavieeco.com
Published on July 21, 2015.
Posted online on July 21, 2015.
The government should have started with this, but, as they say, it is never too late to do well: tackle the issue of employment in Morocco head-on. And this not because the country has an exceptionally high unemployment rate (it has been below 10% for the past ten years), but because existing employment is largely precarious, therefore only very imperfectly meeting the conditions of decent work developed and promoted by the International Labour Organization (ILO) for the past fifteen years. However, with the cumulative effect of unemployment and underemployment (the rate of which exceeds 10%), the situation is indeed worrying. But, let's say it straight away, the government, as if to make up for this issue, intends to put in place a very ambitious project since the National Employment Strategy (NES) it proposes for the country will not only correct the dysfunctions of the labor market, but even more so promote macroeconomic recovery policies, combining, among other things and in particular, budgetary and monetary measures at the same time.
Let's not be afraid of words, this is a Keynesian-inspired policy, the title of which is already revealing: National Strategy "for" employment and not "of" employment. And this should not be surprising, on the contrary, it is coherent that such a project is prepared by a minister belonging to a party claiming progress and socialism.
But more than a question of ideology, it seems established that in economies like that of Morocco, public intervention still makes sense; a fortiori on issues, such as employment, where the social aspect is significant. Pure-bred liberals can always reply that employment is a strictly economic affair. It remains nonetheless true that where the active population is largely (60%) non-graduate, or even without any school level except primary school (57.5%), and where there are no social safety nets capable of cushioning the shocks that the labor market may experience, employment is also, in these conditions, everyone's business; that is to say, essentially that of businesses, but also of public authorities. This is why the team responsible for formulating the NES, in consultation with economic, social and civil society actors, has operated a "paradigm shift" on the issue of employment, placing the latter "at the center of public action". In doing so, employment is now a concern, even a "cross-cutting responsibility", involving all ministerial departments, including their local branches. In other words, all public action must have as its primary objective the creation of jobs in quantity and quality.
Lowering mandatory levies would encourage businesses to recruit
Concretely, the NES is broken down into four axes (see table) and each axis into operational objectives, with each time a battery of measures proposed to achieve the said objectives. If this NES is implemented under optimal conditions, it should be able to generate the creation of 200,000 jobs per year over the next decade. There is no need to go back over the quantification of such an objective; previous experiences, here and elsewhere, have already largely proven the inefficiency, not to say the danger, of such an exercise. However, if we have read the terms of this NES correctly, the 200,000 jobs in question are the objective to be achieved if we want to increase the employment rate and lower the unemployment rate (see box). In other words, the 200,000 jobs in the NES are not an objective strictly speaking, but the volume of jobs that would have to be created each year, on average, if we want to substantially reduce the unemployment rate by 2025.
Without going into the tedious details of the many operational objectives for each strategic axis and the accompanying measures, let us nevertheless retain some of the proposals considered likely to improve growth and its job content. We can first mention the necessary restoration of budgetary room for maneuver. For the designers of the NES, the action being taken by the government in this respect should be continued in order to free up the means to finance employment. They propose, in this regard, to continue the reform of compensation, considering that social transfers, so far, have not been implemented optimally. It is not specified (in the document in our possession at least) which products should be concerned by the decompensation, however, this avenue is considered interesting in order to be able to direct public resources towards actions and programs that generate jobs and income. A well-known Chinese proverb better conveys this idea: "When a man is hungry, it is better to teach him to fish than to give him a fish."
The other use to be made of the budgetary savings to be achieved would be to lower or lighten the mandatory levies on businesses in order to allow them to recruit without excessively increasing their costs. In short, according to the NES, it would be necessary to free up budgetary margins that would allow substantially influencing job creation. Public action, at the macroeconomic level, in favor of employment would be to put in place an exchange rate policy "favorable to growth and employment". Unless otherwise advised, this is a somewhat new proposal, even if the IMF and the World Bank have regularly, for several years, recommended in their reports on Morocco a necessary adaptation of the exchange rate regime. The NES document does not explain the relationships that may exist between an exchange rate policy and employment (this may not be the place for such developments), it nevertheless seems that what is aimed at is a certain...devaluation of the dirham which would make the Moroccan product competitive for export, and thus, a more significant development of the export sector and therefore jobs. In any case, the idea is to put monetary and exchange rate policy at the service of growth and employment. If only at the level of intellectual debate, the avenue deserves to be examined.
Another measure advocated by the NES, which is akin to a "flexibilization" of the labor market, is the revision of severance pay. The Minister of Employment and Social Affairs, Abdeslam Seddiki, in the interview he gave to La Vie éco (see page 14) considers it necessary to make a distinction between severance pay and damages and interest, considering that the cumulative effect of the two, as is currently the case, "constitutes a very high compensation scheme compared to international standards". It is not certain that the unions will appreciate it…
What exchange rate policy for employment?
The NES considers it a priority to introduce macroeconomic policies aimed, on the one hand, at restoring public room for maneuver, in particular budgetary room for maneuver, and, on the other hand, at sustainably stabilizing employment growth. Two specific measures have been advocated in this respect: one, to continue the reform of compensation, two, to put in place a real exchange rate policy favorable to growth and employment.
The unemployment rate divided by 2.5 in ten years!
According to the voluntarist scenario on which the NES is based, the employment rate, which is currently 43.3%, should increase to 46.2% in 2025, and the unemployment rate fall to 3.9% by that time, instead of 9.9% in 2014. It is very good to believe it and above all to implement the means to achieve it, but to divide the current unemployment rate by more than 2.5 in ten years, this has practically never been seen...Whatever the means mobilized for this purpose!
Salah Agueniou.
Lavieeco.com
Published on July 21, 2015.
Posted online on July 21, 2015.
