Casablanca – Morocco has the potential to generate up to 1.7 million additional jobs by 2035 and raise its real gross domestic product by around 20% above current projections, according to new assessments released by the World Bank Group. The projections are contingent on the implementation of a broad and coordinated package of structural reforms aimed at transforming the country’s growth model.

The findings are based on two complementary reports—“Growth and Jobs in Morocco” and the “Morocco Private Sector Diagnostic”—prepared in close collaboration with national authorities. Together, they outline both a detailed diagnosis of existing constraints and a roadmap for achieving stronger, more inclusive, and job-rich economic growth.

Growth without sufficient job creation

Despite steady economic progress over the past two decades, Morocco continues to face a structural imbalance between growth and employment. Between 2000 and 2024, the working-age population expanded approximately 2.5 times faster than employment. During the same period, the labor force participation rate declined significantly, reflecting a growing disconnect between economic expansion and job opportunities.

Data cited in the reports indicate that Morocco created, on average, about 215,000 fewer jobs per year than required to absorb new entrants into the labor market. This gap widened in recent years, reaching an estimated 370,000 jobs annually between 2020 and 2024, despite relatively stronger economic growth.

The reports attribute this trend in part to the nature of Morocco’s growth model. While investment levels have remained high—close to 30% of GDP—this has not translated into sufficient productivity gains. Total factor productivity has contributed only modestly to growth compared to other emerging economies, limiting the overall impact of investment on job creation.

Structural constraints on the economy

The World Bank highlights several structural challenges that continue to limit employment generation. One key issue is the relatively low level of competition in parts of the economy, with around 40% of industries operating in environments characterized by limited competitive pressure. This situation constrains firm growth, innovation, and productivity.

In addition, the structure of the private sector presents limitations. Although Morocco has a broad base of formal enterprises, the majority are very small and concentrated in low-productivity activities such as retail and construction. Informality remains widespread, with more than two-thirds of workers lacking formal employment contracts, reducing job quality and limiting social protection.

Access to finance also remains uneven, with smaller firms facing greater constraints than established companies. Administrative procedures, regulatory complexity, and delays in payments further weigh on business expansion, particularly for small and medium-sized enterprises.

Labor market challenges and inclusion gaps

The reports also underline persistent labor market challenges, especially for women and young people. Female labor force participation has declined over the past two decades and remains among the lowest globally, despite improvements in education levels. Youth unemployment and underemployment continue to be significant concerns.

A mismatch between education and labor market needs is another factor affecting employment outcomes. A substantial share of graduates are employed in positions below their qualification levels, indicating inefficiencies in skills allocation. At the same time, wage growth has remained limited, partly reflecting weak productivity gains.

A reform agenda built on four pillars

To address these challenges, the World Bank proposes a comprehensive reform agenda structured around four interconnected pillars. These include improving market efficiency and competition, strengthening business dynamism, enhancing the effectiveness of public investment, and promoting a more inclusive labor market.

Reforms aimed at boosting competition involve reducing barriers to entry, improving regulatory frameworks, and ensuring a level playing field between public and private actors. On the business side, recommendations focus on improving access to finance, simplifying administrative procedures, and supporting the growth of small and medium-sized enterprises.

Improving public investment efficiency is also seen as critical, particularly through better project selection, evaluation, and governance. At the same time, policies aimed at increasing labor market participation—especially among women and youth—are identified as essential to unlocking untapped human capital.

Investment opportunities in key sectors

The “Private Sector Diagnostic” identifies four sectors with strong potential to drive private investment and job creation: decentralized solar energy, low-carbon textile manufacturing, argan-based cosmetics, and marine aquaculture. These sectors align with Morocco’s strategic priorities in green growth, industrial development, and regional diversification.

However, investment in these areas remains below potential due to regulatory and administrative barriers, as well as gaps in infrastructure and skills. The World Bank estimates that targeted reforms—such as simplifying licensing procedures, improving access to land and renewable energy, and strengthening regulatory clarity—could unlock approximately $7.4 billion in private investment.

Such investments could generate more than 166,000 jobs over the next five to ten years, providing a medium-term boost to employment while supporting long-term structural transformation.

Long-term outlook

Looking ahead, the World Bank estimates that sustained reform efforts could result in the creation of up to 2.5 million jobs by 2050, alongside a significant increase in real GDP and improvements in real wages. These outcomes would align with Morocco’s broader development objectives and its ambition to achieve more inclusive and sustainable growth.

The reports suggest that Morocco’s economic potential remains substantial, but realizing it will depend on the consistency and pace of reforms. By linking macroeconomic policies with targeted measures to stimulate private investment and improve labor market outcomes, the country could shift toward a more dynamic growth model that delivers both higher productivity and greater job creation.