by Juliette Keeley, Manager at Instiglio and Avnish Gungadurdoss, Managing Partner at Instiglio
Morocco has acted swiftly to fight COVID-19 by leveraging 2.7% of its GDP and creating an $3.2 billion emergency fund focused on the pandemic, making it the 4th most mobilized country in the world. The government has authorized emergency measures such as monthly cash transfers of up to $120 to citizens who have lost their jobs in the formal and informal sectors, amounts far above other similar countries (Egypt is deploying $32 a month to non-regular workers), as well as tax and loan relief for businesses.
Despite its decisive actions, like so many other countries, Morocco still faces a hemorrhaging economy. As of April 21, officially more than 800,000 formal workers have lost their jobs due to COVID-19. The tourism industry, the second largest contributor to Morocco’s economy, representing 11% of GDP and half a million jobs, is set to lose about 6 million tourists and 34 Billion Dirhams by the end of 2020. The textile, automotive and hospitality industries have been shut down. The slowdown of economic activity in Europe will deepen Morocco’s crisis as the country depends heavily on exports, tourism, and remittances. The agricultural sector is suffering from a second year of drought and will likely worsen due to the pandemic. All told, as many as 10 million Moroccans could fall into poverty due to the economic crisis caused by COVID-19, almost a third of the country’s population.
By all accounts, vulnerable populations, like Morocco’s 2.4 million informal workers, will be the first affected by and the last to recover from the pandemic, exacerbating Morocco’s economic inequality which is the highest in North Africa. When the economy finally does start to recover, companies will face an oversupply of labor and little incentive to hire the most disadvantaged.
As the long road to recovery begins, Morocco’s Ministry of Labor can make sure vulnerable populations are first in line by including them in every step of the way: aiming for outcomes in their best interest, adapting program design to their needs, and tracking results to ensure they are regaining their livelihoods.
1. Adapt outcomes towards inclusive recovery
The Ministry of Labor sets yearly formal employment objectives in training and placement, with a focus on formal jobs. The government should refocus the labor market outcomes it is aiming for from only formal employment to outcomes more adapted to the phases of the crisis.
In the short-term, the Ministry can focus on preservation of jobs for vulnerable populations, through conditional subsidies, bailouts, or tax breaks to companies to avoid layoffs for these populations, a version already being tried in Europe where countries are paying businesses not to lay off workers. For those who have already lost their jobs, the Ministry can support actions aimed at self-employment, micro-business development or entrepreneurship, support better suited to the needs of informal workers. While the context is different, investing in grants for small businesses was a widely adopted strategy in Europe after the 2008 financial crisis, and self-employment was an outsized source of employment after the crisis in the UK, accounting for more than 75% of job creation from 2008 to 2014.
In the medium to long-term, the Ministry can ensure that marginalized groups are included in the economic recovery through formal job placement and retention. Government cash transfers to individuals who have lost their jobs could be shifted to employers who hire vulnerable people, making such labor cheaper and more attractive. In a period of dramatically reduced fiscal space, this strategy will have the effect of encouraging long-term employment, reducing government social safety-net costs, and rebuilding the tax base.
2. Build a scalable delivery model for employment services
With these outcomes in mind, the Ministry should design a delivery model to address the challenges which will otherwise undermine results for poor communities: intermediation organizations ill-adapted to the pandemic, a yawning skills-mismatch, and a centralized approach that does not account for local needs.
Intermediation services. Intermediary organizations, which have traditionally provided coaching, job prep, and accompaniment services in person, will be challenged to deliver their programming at a massively different scale and under social-distancing constraints. These organizations will need to deliver their services remotely to reduce costs, all the while ensuring that they remain accessible to disconnected populations. The Ministry can incentivize innovations in service delivery through an innovation challenge to drive models that are affordable, rapidly scalable, adapted to marginalized populations and social-distancing, and demonstrably lead to improved labor market outcomes.
Intermediation services also need to be closely connected to companies willing to hire such populations. Capitalizing on its role as an aggregator, the Ministry can create a digital platform to track job opportunities and match vulnerable job seekers to employers. The government is already building a registry of informal workers through its online system to provide emergency cash transfers. While incentivizing individuals to join digital services has been challenging in the past, preliminary evidence suggests that the pandemic is leading previously digitally marginalized communities to use digital tools and services. Employers will also be incentivized to join through the promise of subsidized labor as mentioned above.
Re-skilling programs. Improved intermediation services will not solve the mismatch of worker skills to employers, a problem exacerbated by the rapid unravelling of some sectors and growth of other sectors resilient to the pandemic. Skill conversion schemes provide an opportunity for workers from affected sectors to convert their skills to match thriving sectors. By monitoring the digital jobs platform and other economic forecasts such as those provided by La Confederation Générale des Entreprises du Maroc, the Ministry of Labor can redirect resources to those sectors and encourage companies in need of local labor to subsidize trainings. Opportunities can be seen in essential health goods production, delivery services, and telecommunications services. Similar government efforts already exist for specialized industries such as offshoring, aeronautics, automotive, and electronics, but need to be expanded given the rapid changes in the economy.
Local problem-solving. The Ministry should allow regions to own the recovery process. Local governments are at the frontlines of the pandemic but their capacity to respond rapidly depends heavily on their governing and budgetary authority. Local governments can more ably identify which sectors will recover, better understand their vulnerable communities, and address local challenges. One way they can do this is through community-based programs: in post-conflict or health emergencies like Ebola, such initiatives can work quickly and cater for specific needs, including support for micro-enterprises, and have successfully promoted businesses that generate local employment. The Ministry can deploy resources to local governments to support community-developed projects that address employment challenges.
3. Track and adapt programs based on results
Only with good data and monitoring systems can the government learn quickly what is working for populations in need. Data management in times of crisis is tremendously important to inform decision-making. The Ministry should track indicators on vulnerable populations from intermediation services and re-skilling programs, including outputs such as attendance, completion, and placement, and outcomes such as three- and six-month retention, information that can be gathered through the CNSS, Morocco’s National Social Security Fund. This would enable the Ministry to quickly evaluate service providers or trainings, learn about what is working for different types of vulnerable populations, and rapidly redeploy resources towards effective programming.
The coronavirus pandemic is a time of reckoning for Morocco, laying bare the inefficiencies of outdated delivery systems and programs that often do not yield results for vulnerable populations. But it is also an opportunity for great innovation and adaptation, a time to reshape the previously immutable, and build a better, more sustainable future for Morocco’s most wanting.