OBG talks to Chakib Benmoussa, President, Economic, Social and Environmental Council (CESE)

Interview: Chakib Benmoussa

How are labour rights protected, and what sort of flexibility is there in the labour code?

CHAKIB BENMOUSSA: Morocco has a labour code that is quite detailed and that has gone through a lengthy evolution process. Although the code took some time to develop, it has now been agreed to by all stakeholders: unions, employers associations and the government.

Today, the main issue revolves around the effectiveness of the labour code and criticism comes from various sides. For instance, the unions feel that the spirit of the code is not always respected. On the other hand, companies sometimes think the code is applied too rigidly, given the demands of the global economy.

In addressing these issues, the CESE has looked at social security charges and found that expectations in this area are very high. Up until now, social security has been jointly financed by employees and employers. However, to ensure adequate coverage and improve quality, part of the financing has to be levied through taxation. This is why the CESE has proposed that 2% of value-added tax be used to finance social security.

For certain sectors, the CESE has proposed introducing “reasonable flexibility” in labour agreements. This reflects the fact that competition is not the same across economic sectors, specifically in relation to small and medium-sized enterprises (SMEs), seasonal workers and subcontractors. The CESE has recommended that at the national level, or even at the company level, there should be the possibility to negotiate collective bargaining agreements, which could even derogate from the law. Both unions and employers agree that the idea of separate labour agreements provides a good avenue to introduce reasonable flexibility.

What challenges are inhibiting growth in the industrial sector, and how can these be overcome?

BENMOUSSA: The trade balance issue can be approached by looking at imports and thinking about what, and how much, we consume. The question of energy efficiency is important in this regard, but there is also a need to reduce resources going to waste in terms of domestic consumption. This suggests the need to improve our recycling capacities.

In relation to exports, the main issue is how to improve our competitiveness. In recent years, there has been more focus on increasing the profitability of sectors other than the industrial sector. To improve industrial capacity, attention should be focused on research and development. This could be encouraged through tax breaks, and by promoting innovative products through public procurement offers. Furthermore, tax incentives could also help to stimulate domestic production and thereby provide a substitute to imported finished goods.

In terms of sectors to promote, the agro-industrial sector has important potential, but there are fiscal distortions that put the sector at a disadvantage. The aeronautics sector, however, demonstrates that it is possible to develop an industry that responds to global demand and which takes advantage of available labour supplies. Even in the textiles sector, there are areas where we can be more innovative in order to respond more effectively to global demand. We are not competitive when it comes to mass production, so we need to look for niche markets to focus on.

To what extent is it necessary to protect domestic companies against foreign competition?

BENMOUSSA: In terms of free trade agreements, it is clear that some countries protect themselves through non-tariff barriers and it is therefore necessary to stay on guard to ensure these policies do not harm exports. At the same time, there should be protection against unfair competition, such as dumping.

SMEs in particular need to be supported by regulation, as smaller companies often do not have the means to protect themselves. However, this does not imply protecting domestic companies that prove they cannot be competitive. As is seen in many other countries, situations exist where reasonable protective mechanisms can be of benefit to both consumers and companies.