The total percentage of labor activity in the informal sector in Morocco amounted to 77.2% up to the year 2018, according to a recent report from Policy Center for the New South.
The percentage of employment in the “shadow economy”, excluding workers in the public sector, reached 84.3% in the same period.
The report, entitled “The Informal Sector in Morocco – Rethinking the Comprehensive Structuring of Incentives for a More Inclusive and Dynamic Economy,” attributes the growth of the informal economy in Morocco to the legal perception that does not respond to a set of conditions, and also to the lack of concern for law enforcement in the presence of strong incentives that push companies to circumvent and evade applicable legislation.
According to the survey carried out by the Think Tank, there is a strong and significant preponderance of self-employed and home-based workers in the total working population in the informal private sector in Morocco, representing approximately 49%, compared to 43% of wage workers in the private sector, and only about 8.5% of the active population working in the public sector.
The report revealed that there is a large percentage of workers in the private sector who are not authorized, as only 33% of the population who receive salaries in the private sector are considered official; This reflects a huge problem of evasion by contracting companies that concerns wage workers in the private sector, as there are about 64% who should contribute to social security contributions, but they do not do so.
This also means, according to the report, that this percentage (64%) of wage workers in the private sector are not legally structured, and the companies or contractors that employ them do not register them in the National Social Security Fund, and therefore they are contractors that do not comply with the labor laws in force in the Moroccan private sector.
The same source stated that movement between public and private sector jobs is limited in Morocco, as there is a certain degree of movement in the Moroccan labor market from the formal sector towards the informal sector and vice versa. In one year, 6.7% of public sector workers left their jobs for a formal job in the private sector.
In contrast, 2.8% of those employed in the private sector left their jobs to join the public sector. About 8.7% of workers left the formal private sector to work in jobs within the informal sector.
The report indicated that what has been recorded is that employment in the public sector enjoys a degree of stability compared to the private sector. In one year, only 11.8% of public sector workers left their field of work, compared to 23% of formal workers in the private sector who left their work. It was noted that employees in the public sector tended to stay in their jobs.
According to the study, the departure of employees in the public sector from their jobs is not, in most cases, related to leaving the labor market; But for other reasons, including retirement. On the other hand, in the private sector, there is more mobility between operating sectors.
In one year, about 23% of workers in the formal private sector left this sector. Also, 8.7% of the total workforce in the formal private sector moved towards working in the “shadow economy,” while only 2.8% of wage workers in the formal private sector moved to formal jobs in the public sector.
The report considered that the informal sector has become an essential component of the Moroccan economy, as it employs an important part of the population. But it hurts productivity, government tax revenues, and economic growth, in the long run; Hence the large size of this sector is a real concern for the Moroccan economy.
The report stressed that this increase in the percentage of the informal economy has many harms, both for workers, such as instability and insecurity at work, low wages, poor working conditions, poor prospects for career development and advancement, etc.; And also for the Moroccan state in terms of large losses in terms of tax jobs.
It also has great effects on the economic fabric because of its negative effects on productivity and the unfair competition it allows in the face of the formal sector, but at the same time it remains an outlet for many workers who cannot find a job in the formal formal economy, in both its public and private forms.
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