In the Moroccan labor market, many Moroccan university graduates cannot find jobs commensurate with their education and training, and employers report insufficient skilled candidates. According to the Moroccan High Commission for Planning, the unemployment rate in Morocco was 13 percent in 2023. The rate of unemployment was 6.3 percent in rural areas and 16.8 in urban areas. Youth unemployment was especially high, with around 35.8 percent of young people between the ages of 15 and 24 lacking employment. The World Bank and other international institutions estimate that actual unemployment – and underemployment – rates may be higher. Regarding women’s participation in the labor force, Morocco ranks last in the MENA region with female labor participation standing at 20 percent, according to a World Bank report in May of 2022.
A 2023 report by Morocco’s Ministry of Finance and the African Development Bank noted that 70 percent of Morocco’s labor market operates in the informal economy, the highest in the region. According to a 2021 central bank study, Morocco’s informal economy accounts for slightly below 30 percent of GDP, versus a MENA regional average of 25 percent. To address these issues, the Government of Aziz Akhannouch announced it would overhaul Morocco’s education system to achieve the UN Sustainable Development Goals (SDGs) by 2030 in line with the government’s objectives under the government’s New Development Model.
The government of Morocco has regularized the status of over 50,000 sub-Saharan migrants between 2014 and 2017. Regularization provides these migrants with legal access to employment, employment services, and education and vocation training. In addition, there are thousands of migrants working legally in Morocco after completing their education at Moroccan universities. Most legally employed sub-Saharan migrants in Morocco work in call centers and education institutes, if they have strong French or English skills. However, there are also tens of thousands of irregular migrants living and working in Morocco’s informal economy. These irregular migrants have access to the Moroccan education and health systems but have no legal right to work in Morocco. Many of these irregular migrants work in the informal economy as domestic help or in construction in major cities like Casablanca and Marrakesh.
Under Moroccan Labor Code, Law Number 65-99, there are two types of employment contracts: fixed-term and permanent. Under a fixed-term labor contract, the duration of employment ends on a defined date and early termination initiated by the employer will result in damages equivalent to corresponding wages for the remainder of the contract. A permanent employment contract can be terminated at any time through the implementation of a well-defined dismissal procedure. The law prohibits the dismissal of an employee without a valid reason and failure to follow these very strict procedure would likely result in the Labor Court ruling the dismissal to be unfair and result in damages being awarded to the dismissed employee. In the case of economic or structural layoffs, the employer must notify the employee’s union representative and seek permission from the provincial governor prior to conducting any layoffs. In the case of dismissal for misconduct, the bar of proving gross misconduct is typically high and it is common for labor courts to rule in the favor of the dismissed employee – even those who commit a blatant act of gross misconduct – if the employer does not follow the dismissal procedure properly.
Dismissals deemed as unfair carry heavy financial penalties to employers. In the case of a dismissal determined to be unfair of an employee who has worked six months or more in the same company, the Labor Code dictates the employer must compensate the dismissed employee including pay-in-lieu of notice, indemnity, damages, and other miscellaneous costs. These costs balloon as the seniority and base salary of the dismissed employee increases. Cases where employers and employees go to court are rare, as both sides typically opt for an amicable resolution settled out of court which allows employers to negotiate reduced compensation payments and quicker payouts to the employee. Businesses have the added incentive to settle outside of court since Labor Courts have a reputation of siding with the employee on wrongful dismissal lawsuits. Labor law is applicable in all sectors of employment; there are no specific labor laws to foreign trade zones or other sectors. More information is available from the Moroccan Ministry of Foreign Affairs Economic Diplomacy unit.
Morocco has roughly 20 collective bargaining agreements in the following sectors: Telecommunications, automotive industry, refining industry, road transport, fish canning industry, aircraft cable factories, collection of domestic waste, ceramics, naval construction and repair, paper industry, communication and information technology, land transport, and banks. The sectoral agreements that exist to date are in the banking, energy, printing, chemicals, ports, and agricultural sectors.
According to the State Department’s Country Report on Human Rights Practices, the Moroccan constitution grants workers the right to form and join unions, strike, and bargain collectively, with some restrictions (S 396-429 Labor Code Act 1999, 65-99). The law prohibits certain categories of government employees, including members of the armed forces, police, and some members of the judiciary, from forming or joining unions and from conducting strikes. The law allows several independent unions to exist but requires 35 percent of the total employee base to be associated with a union for the union to be representative and engage in collective bargaining. The government generally respected freedom of association and the right to collective bargaining. Employers limited the scope of collective bargaining, frequently setting wages unilaterally for most unionized and nonunionized workers. Domestic NGOs reported that employers often used temporary contracts to discourage employees from affiliating with or organizing unions. Legally, unions can negotiate with the government on national-level labor issues.
Labor disputes (S 549-581 Labor Code Act 1999, 65-99) are common, and in some cases result in employers failing to implement collective bargaining agreements and withholding wages. Trade unions complain that the government sometimes uses Article 288 of the penal code to prosecute workers for striking and to suppress strikes. Labor inspectors are tasked with mediation of labor disputes. In general, strikes occur in heavily unionized sectors such as education and government services, and such strikes can lead to disruptions in government services but usually remain peaceful.
Chapter 16 of the U.S.-Morocco Free Trade Agreement (FTA) addresses labor issues and commits both parties to respecting international labor standards.
