Crisis-hit Moroccans join ‘informal economy’ as job market shrinks

People wearing face masks sit at a cafe in the capital Rabat, after the authorities eased lockdown measures in some cities, that had been put in place in order to limit the spread of the novel coronavirus, on June 25, 2020. (File/AFP)
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Updated 14 July 2020

Crisis-hit Moroccans join ‘informal economy’ as job market shrinks

  • More than a third of Moroccan workers are already in the informal economy
  • However, the crisis is expected to expand this informal economy as people lose their jobs

RABAT: The coronavirus crisis is expected to expand Morocco’s informal economy of people who work for cash, reducing tax revenue and leaving many without social protection, the head of the state planning agency and economists said.
More than a third of Moroccan workers are already in the informal economy, doing manual or domestic labor, driving taxis or selling in the streets, accounting for 14% of gross domestic product, according to the agency.
However, the crisis is expected to expand this informal economy as people lose their jobs in companies and consumers seek the cheaper goods and services provided by workers who are not registered with the state’s pension fund.
Morocco, with 16,047 coronavirus cases, last month allowed cafes, restaurants and other services to resume activity at half capacity except in provinces where infections remain high. Last week, it extended an emergency decree giving local authorities leeway in taking restrictive measures until Aug. 10.
Unemployment is expected to surge to a rate of 14.8% in 2020 from about 9.2% before the pandemic, the agency said.
Fatima Hamdane, 53, who lost her job as a worker at a car parts manufacturing plant in Casablanca, said she would work as a cleaner even if her employer did not pay social security duties. She has diabetes and has already skipped medical checks because of her hard financial situation.
“I knocked on many doors, but couldn’t find a job,” she said. “Most have rejected me because of my age.”
Ahmed Lahlimi, the planning agency chief, told Reuters that while the number of people moving into the informal economy was expected to grow, the agency did not have any updated figures estimating the extent of the problem.
The informal economy already costs the state 34 billion dirhams ($3.4 billion) in annual tax losses, Finance Minister Mohamed Benchaaboun said.
Morocco’s fiscal deficit stood at $2.3 billion at the end of May with revenue down and spending up because of the crisis. It is expected to widen to 7.5% of gross domestic product in 2020 from 4.1% last year while the economy is expected to shrink by 5%, according to the government’s reviewed budget.
The Confederation of Moroccan Enterprises, a business group, says the informal economy puts 2.9 million jobs at risk in formal companies by undercutting their costs. In May, it recommended offering tax incentives to make more companies register officially.
“In the past, the state has tolerated the informal economy in times of social tensions such as during the 2011 pro-democracy protests,” said Rachid Awraz, of the Moroccan Institute for Policy Analysis.
But, in the long run, it leaves workers without social protection and prey to poverty in addition to its low added value for the economy, he said.
Labour Minister Mohamed Amekraz did not answer Reuters requests for comment.


Thailand finance minister: economy to recover next year with 4% growth

Updated 23 November 2020

Thailand finance minister: economy to recover next year with 4% growth

  • Economy had bottomed but recovery was not fast as the battered tourism sector hurt supply chains
  • Budget for the next fiscal year will still focus on boosting domestic activity

BANGKOK: Thailand’s economy is expected to grow 4 percent in 2021 after a slump this year and fiscal policy will support a tourism-reliant economy struggling from the impacts of the coronavirus pandemic, the finance minister said on Monday.
Southeast Asia’s second-largest economy shrank a less than expected 6.4 percent in the third quarter from a year earlier after falling 12.1 percent in the previous three months.
The economy had bottomed but recovery was not fast as the battered tourism sector, which accounts for about 12 percent of gross domestic product (GDP), has also hurt supply chains, Finance minister Arkhom Termpittayapaisith said.
“Without the COVID, our economy could have expanded 3 percent this year, he said. “As we expect a 6 percent contraction this year, there is the output gap of 9 percent,” he told a business forum.
“Next year, we expect 4 percent growth, which is still not 100 percent yet,” Arkhom said, adding it could take until 2022 to return to pre-pandemic levels.
There is still fiscal policy room to help growth from this year’s fiscal budget and some from rehabilitation spending, he said.
The budget for the next fiscal year will still focus on boosting domestic activity, Arkhom said, and the current public debt of 49 percent of GDP was manageable.
Of the government’s 1 trillion baht ($33 billion) borrowing plan, 400 billion would be for economic revival, of which about 120 billion-130 billion has been approved, Arkhom said.
He wants the Bank of Thailand to take more action short term on the baht, which continued to rise on Monday, despite central bank measures announced on Friday to rein in the currency strength.
“They have done that and they have their measures... which should be introduced gradually and more intensely,” Arkhom said.