Morocco - Social protection note

Report No. 22486-MOR Kingdom of Morocco Social Protection Note December 19, 2002 Middle East and North Africa Human Development Group (MNSHD) Document of the World Bank  Unit of Currency = Morocc-r Dirbierns (Dlv) Period Averege 3xch-:age Rates (DIVA per US dollas) 19%9 1997 1998 1999 2000 2001 2002 8.72 9.52 9.60 9.80 10.63 11.30 11.23 '7_ ;- \ -< .' ir ir, - - :,T- ADS/SDA Social Development Agency/Agencc dc D6veloppement Social AFD French Development Agency/Agencc LFrairaise de Developpcment ANAPEC (Agence Nationale de Promotion dc l'Er-nloi et des Comrnptences) BAJ (Bamama Al Aoulaouiyat Al Ijtlmaiya) (Arabic abbreviation of the Soc:al Pricnties Program) BMCE Banque Marocaine du Commerce Ext6ricur- CAS Country Assistance Strategy CDF Compr-ehensive Dcvelopment Francwo-Ak CFS Consumer Food Subsidies CIDA Canadian Internationzl Developmen'1 Agency (A CDI) CIOPES Ceatres d' Infornamion et d'Orienta :or pour I' Emploi CMR (Caissc Marocaine de Retraite) CNCM (Comite National de la Lutte cont?e los Carences en Micronutnments) CNOPS (Caisse Nationale des Organismes dc P ievoyance Sociale) CNSS (Caisse Nationale de S6cuntr Socialc) COSEF Royal Commission on Ed.ucation Reform EN Entraide Nationale EU European Union FAO Food and Agriculturc Organization GDP Gross Domestic Product GOM Government of Morocco/GouvornQcn-r.t du MVaroc GTZ German Agency for Technical Cocpe?mtion ILO Internaticnal Labor Orgaaization JICA Japan International Coo-eration Agmoncy/Agence de Coopration intenationale Japonaise KFW IKreditanstzlt fur Wicderaufbau (crfdit pour la reconstruction) MAG Vinistry of Agriculture MDF Mediterranean Development Forumn MEDA I Mediterranean Econormic Developncnc; Assistance MEN Minist&7e de l'Education Naionale MOH Ministry of Health MSDSEVT Ministry Social Dlvelopnent, SolidErity, nmployment and Vocational Training NGO Non-governmental organization/Crganisaticn non-gouvernenentale ODECO Office ce Developpement des Coopiratives OCP Office Chenfienne des Phosphates OECD (Organisation de Coop6ration de L^veloppoment Econornique) OFPPT Public Agency fo- vocational training/Office de la Formation Professionnelle et de la Promotion du Teavail ONA Ornniurii North AMica ONE (Office National d&Electricit6) ONEP (Office National de I' Eau Potablc' ONICL (State gramn agency) PAGER Moroccan Rural Water Supply and Saritation Project/Projet Ezu Potable Et Assainissement En Milieu lural PMH (a Banlt mianccd project - Petite -t cvloycnne Hydraulique) PN Promotion Nationale PRSL/PRES Policy Reform Support LoanJlrojc: de Restruc.uration Econornique et Sociale SMAG Minimum Agricultural wage SMIG Minimum Industrial wcge SP Social Protection UNICEF United Nations Childrer's Fund/Fonds des Nations Umns pour l'Enfance USAID US Agency for Internationz Dcv-:opment USFP Union Socialist du Froat Populair VT Vocational Train-ng/Forinatzoa Frofessionnelle WBI World 3ank Institute/institut de la Banque Mondiale  ACKNOWLEDGEMENTS The paper is based on the findings of a team composed of Linda Likar, task team leader (MNSHD), Setareh Razmara (SP, MNSHD), Zafiris Tzannatos (Social Protection Sector leader, 2001, MNSHD), Ali Amahan, anthropologist and rural development NGO specialist, Abdellah Herzenni, sociologist and specialist on rural and agricultural development, Karima Kadaoui, consultant and specialist on trainmng and employment policies, Rabea Naciri, Professor of Sociology and NGO specialist. The technical audit of Promotion Nationale was prepared by Marc Van Imschoot. The paper benefited from countless interviews and site visits, substantial primary and secondary material from various researchers, donor agencies, private enterprises and NGOs. Data and information were gratefully received from the Ministrnes of Finance, Agriculture, Education, Health, Social Development, Solidarity, Employment and Vocational Training (MSDSEVT), Plan and the Directorate of National Statistics and the Observatory of Living Conditions. The paper relied on the findings of a social protection mission (February 2000) and "Poverty Update Report " (WB, Report No. 21506-MOR, March 2001) led/prepared by Setareh Razmara. The Peer reviewer was Tamar Manuelyan Atinc (EASPR). Other comments were provided by George Schieber, Karim El Aynaoui, Wally Tyner, Doug Lister, Shaha Riza, Judith Brandsma, Sonia Hammam, Maryse Pierre-Louis, Regina Bendokat, Jeffrey Waite, Yasser El-Gammal and Steen Jorgensen. Many thanks to Khadija Sebbata, Laila Moudden and Emma Etori. Special thanks is extended to Mr. Abdelaziz Adnane (Head of Social Sectors Department, Ministry of Finance) and Ms. Sabah Benchekroun (Responsible of Mission, Ministry of General Affairs of Government). Their guidance and comments were highly appreciated. Vice President: Jean-Louis Sarbib Country director: Christian Delvoie/Ted Ahlers Sector Director: Jacques Baudouy Sector Leader: Zafiris Tzannatos/George Schieber Task Team Leader: Linda Likar/Setareh Razmara   KINGDOM OF MOROCCO SOCIAL PROTECTION NOTE TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................I I. POVERTY, MACROECONOMIC PERFORMANCE AND SOCIAL PROTECTION PROGRAMS ........1 A. OVERVIEW ...............................................................................I B. POVERTY UPDATE ...............................................................................1 C. MACROECONOMIC PERFORMANCE ...............................................................................2 D. GOVERNMENT PROGRAMS AND EXPENDITURES ............................... ................................................4 E. CONCLUSIONS ................................................................................8 II. RURAL DEVELOPMENT AND SOCIAL PROTECTION .......................................................................... 10 A. OVERViEW ............................................................................... 10 B. MAINRISKS ............................................................................... 10 C. SOCIAL PROTECTION SPENDING, PROGRAMS AND POLICIES ............................................................................. 14 D. CONCLUSIONS ............................................................................... 24 m. URBAN DEVELOPMENT AND SOCIAL PROTECTION ......................................................................... 27 A. OVERVIEW .................................................... 27 B . MAIN RISKS .................................................... 27 C. SOCIAL PROTECTION SPENDING, PROGRAMS AND POLICIES ............... ..................................... 33 D. CONCLUSIONS .................................................... 44 IV. NGOS, PRIVATE ENTERPRISES AND NEW APPROACHES .................................................... 47 A. OVERVIEW .................................................... 47 B. NON GOVERNMENTAL ORGANIZATIONS (NGOS) .................................................... 47 C. PRIVATE SECTOR SOCIAL PROTECTION INITIATIVES .................................................... 49 D. CONCLUSIONS .................................................... 52 V. BANK STRATEGY AND COOPERATION WITH DONORS ....................... ............................. 54 A. OVERVIEW .................................................... 54 B. BANK STRATEGY (1996-PRESENT) .................................................... 54 C. DONOR STRATEGIES .................................................... 55 D. EMERGING LESSONS .................................................... 57 E. CONCLUSIONS .................................................... 59   KINGDOM OF MOROCCO SOCIAL PROTECTION NOTE EXECUTIVE SUMMARY I. INTRODUCTION The 1990s brought several major political changes to Morocco, marked in April 1998 with the first socialist-led coalition govermment (altemance) in the country's history. Then, in July 1999, King Mohammed VI came to the throne to lead a young population in the middle of a fast changing, "globalizing" world. Already in the early 1990s, the late King Hassan II encouraged village associations and other non governmental organizations (NGOs) to undertake community-level actions to improve their living conditions. King Mohammed VI brought a new elan to poverty reduction efforts, through his early speeches, through the mobilization of funds and through the establishment of new foundations with strong NGO representation. Particularly he has challenged the govemment, civil society, the private sector, and the whole population to collaborate and face up to these difficult issues. He and the altemance govemment have brought visible improvements to the justice system, human rights and tolerance for open discussions about social problems in the media. Despite increasing emphasis on social development dunng the 1990s, Morocco's social protection (SP) is facing many challenges. During the last decade, sluggish economic growth has been the main cause of rising unemployment, poverty and vulnerability. Although macroeconomic management has successfully ensured stability, it has neither promoted growth nor created a more favorable evolution in the structure of the economy. Labor supply is growing faster than the economy is able to absorb, and the few jobs being created are not for unskilled workers. The rural/urban divide is still large and public expenditures in social sectors, although increasing, are still (i) insufficient for lifting people out of poverty and reducing vulnerabilities; (ii) skewed toward the better-off; and (iii) inefficient. At the same time slow economic growth, increasing unemployment and weakening family solidarity have increased social demands and have put additional pressures on the SP system. Based on recent work of the World Bank,1 the proposed framework of this note expands the traditional view of social protection to include the wide array of mechanisms that reduce vulnerability by helping individuals to manage social risks. In the context of a comprehensive framework, this broader approach to social protection takes into consideration the whole set of mechanisms that assist individuals, households and communities to better-manage risks ranging from economic crises or shocks to fluctuations in weather or longevity Therefore, education and health sectors that play a major role in reducing social risk and increasing opportunities are also treated among social protection programs. The purpose of this Social Protection (SP) note is to provide a comprehensive diagnosis of the existing social protection programs (using the broader approach) in Morocco and to prepare the ground for further developing SP priorities and action plans. It (a) identifies broadly social risks faced by the Moroccan population; (b) examines all current SP measures (public, private and civil society) designed to reduce poverty and the vulnerability of people to shocks to their income and well-being; and (c) identifies different elements of an effective SP strategy. The study builds on a considerable amount of earlier sectoral work. It complements the World Bank's latest Poverty Update2 and is designed to provide input to the Country Assistance Strategy (CAS). I See: "Reducing vulnerability and increasing opportunity: Social protection In the Middle East and North Africa"; World Bank, Orientations in development series, 2002. 2 See: "Kingdom of Morocco: Poverty Update"; World Bank report# 21506-MOR; March 30, 2001. 3 See "Kingdom of Morocco: CAS"; World Bank report #22115-MOR; May 7, 2001  Because about one half of Morocco's population is considered either poor or near poor, this note places a priority on measures to improve human capital and tz reduce the rislcs and vulnerability faced by that population. There are three broad groups of programs and initiatives that help people E_age r em (i) basic health care and education programs which contribute to humar development and -2,7eve. HeI flrem flllImg iimqo pveEly by increasing their employability and productivity and mechanisms aimed at reducing iishs such as labor market policies and active laboor market programs; (ii' ccntributive social insurance schemes which aim at 1'151 thiat are likely to occur over a lifetime (siclamess and old age, effects of policy adjustments, droughts); and (iii) assistance programs (public and private) to help people cope witL risks from negative shoclcs beyond their control, e.g. mental or physical impairment, or calamities affecting specific regions. To address development and SP needs of thne population, government needs to develop new, more cest- effective approaches based on the risks various groups in both rural and urban areas are facing. There is no single solution for improving the efficiency and coverage of the social protection system. Efforts are required at all levels with close collaboration of all patners. T?he policy tools and aiffrdable social protection measures exist to promote some decentalizvtion and 'oroader based development through partnerships with the private sector and NGOs, but decisionmakers need to create an environment that stimulates such actions. Reforms in the social areas req^uire long time horizons, bu" to have positive results quite quickly, authorities should consider the following elements in designing an effective SP program: (i) setting up a coherent social protection framework that is compatible wilh the national poverty alleviation strategy; (ii) addressing the key questions conceming the financing of social protection and the coordination between the different pilyers while taking into account tHe reallocation, rationalization and optimization of available resources, (iii) ensuring cost effectiveness and financial sustainability of the intervention by making sure that programs complement ezch other; (iv) reinforcing effective programs through some new expenditures and shifts in resources while improving targeting and delivery mechanisms (program coverage, targeted population and leakages); (v) setting up priorities to try new approaches (e.g. adult literacy, training, health outreach, ncn-formal schools, small farm extension and technology, crop and water management); (vi) ensuring feasibility of implementation (politically, economically and socially); and (vii) evaluating net distributional impact of the programs. This note does not claim to taclde the issue of social protection in Morocco in-depth. Rather, its objective is to define a framework for an integrated approach to a social protection system and to propose broad strategic lines of action susceptible to help the reform of social protection systems in Morocco. HEL RHSlS 1FACED BY THE 70PUATEON RIEsks lFecedbp Dye RM?dd PoS09,910 > ClHnate (&e ht/fod1s> Morocco's endemnic vulneraoility to drought makes agriculture a highly risky endeavor for the 60-70 percent ox farmers with poor productive assets. > lDegniadzdom of the faEnd. As a result of droughits, forest resources are degraded; yields from the overly exploited; marginal lands are low; and past population growth is putting a pressrre on land. > Ieoor availlblt of water. The availability of irrigated water is uncertain. increases in salinaticn and limitations to pumping groundwater aquifers mean that by 2010 Morocco will become a water- deficient country. > Laclk of access to Emowlledge. Lack of educatior limits the rural population's access to knowledge needed to improve on-farm productivity, commercialize their products, and diversify tneir income sources. Education levels for small farmers are exceptionally low (70 percent of the rural population and 83 percent of rural females are illiterate).  > Poor health, nutrition. More than 50 percent of the rural populations does not have access to basic health services. Health insurance is virtually non-existent, and the majority of the rural population has poor access to basic health services. Infant and maternal mortality rates are comparable to low- income countries, and many children suffer from chronic malnutntion and micronutnent deficiencies. > Lack of basic infrastructure. Less than 30 percent of the rural population has access to potable water; only about 20 percent has access to electricity, and many villages have no access to roads. > Physical handicaps, old age and lack of access to Social Protection. There are no savings, pension or social security programs, and the elderly or infirm must be looked after by families. Risks Faced by the Urban Population > Unemployment and layoffs. Urban unemployment is on the rise, especially for first time job seekers (42 percent), unemployed graduates (32 percent) and household heads (10 percent). High job destruction rates, modest formal sector job creation, and growing urban labor supply are the main issues to address. > Low wages and underemployment. The poor in search of work with no family members to protect them and with limited education are obliged to take poverty-line wages in informal sector jobs. > Low education level. Nearly half the urban population is between ages 15 and 39, but the majority have little education; and many of those with training or advanced degrees find their training inappropriate for jobs offered. An estimated 40 percent of the urban workforce is illiterate, and the average years of schooling is low (2.6 years compared to 8 years in Chile, 7 in Mexico and 5 in Tunisia). > Inadequate training. Of the 2-3 million school-age children out of school, many become "apprentices", performing tedious, even dangerous tasks, for little or no pay and uncertain acquisition of know-how. On-the-job training is still quite modest, but it is growing. > Lack of health insurance and old age coverage. Health indicators are better in urban areas, though formal health insurance covers only 15 percent of the population (three-fourths of whom are civil servants) and social security covers only 23 percent of the total workforce (formal-sector workers). Those without coverage rely on family solidarity. > Inadequate housing and urban services. The influx of rural migrants to urban areas has outpaced the supply of social housing and basic services (sanitation and schools). An estimated 25 percent of urban dwellers are living in "shanty towns" and informal settlements. Access to services in shanty towns is very low, while in informal settlements it is estimated to reach about 26 percent of the households with potable water and 43 percent with sanitation. The growth of these settlements is mainly due to inflexible, costly land regulations and inadequate financing systems of social housing. > Social exclusion. Although the numbers are still relatively small, the weakening of family solidarity in urban areas has left many groups with no where to turn for assistance (unwed mothers, street children, handicapped, battered women, and AIDS sufferers). m. EXISTING PROGRAMS Public Social Development Programs: Health and Education > Health expenditure is quite low (1.1 percent of GDP compared to 2-2.5 percent in other countries of similar per capita income), and public spending heavily favors urban areas (78 percent of total recurrent expenditures go to urban hospitals and clinics). There is an oversupply of doctors in urban areas and a shortage of female nurses, midwifes, and health care visitors in rural and peri-urban areas. The system faces two challenges: (i) major shortfalls in access to basic health care for half the population (rural and peri-urban); and (ii) an older, urbanized population with chronic and degenerative type diseases that are more expensive to treat, and who are demanding more and better care. So far, the system has been more inclined to address the needs of the second group, which is  iv much smaller but rnore vocal. There is no compulsory or universal medical insurance coverage. Only 16.4 percent of the total population is covered by optional health insurance (almost exclusively formal-sector urban dwellers). Under the 3Af4, 7rrnll LzItgl2 s7l are being built. They, however, often remain under-staffed for several months, and it is difficult for women from more remote areas to access them. > Edaloimn nnrer are about average by international standards (5.9 percent of CDP in 1998) but with worse performance results than comparable or even poorer countries. Public spending also favors secondary schools and the better-off in -urbm areas. Expenditures per student in secondary school (grades 7-12) are three times greater than for primary school (compzared to only 1.4 times higher in OECD counLTies). Primary schools (grades 1-6) in urban areas are dilapidated and seriously overcrowded, and those in rural areas are oftef, remote from the actual centers of rural life. Expenditures on primary education and enrollment rates for girls in rural areas have increased, thanks in part to the BAJ program. But the-e are questions about quality, retums on investment, and the Ministry's "blueprint" approach. School constructicns (concrete classrooms that freeze in winter and bake in summer), standardized curriculum, and teaching methods do not fit every corner of Morocco. Community-based schools in Morocco show favorable cosA/enefit outcomes and demonstrate that location, simple classroom constructions, home origin of teachers, parental involvement, hours, language of instruction, and curricula all need to adept to local conditions. ?ublic schools have now been granted some flexibility in setting their timetable, and a few have taken advantage of this change to adapt to local conditions (often in emulation of a near-by cornmunity-based school). 7lllle Loy2 OCmmessnom oizon ZaLmi2anim launched in 1999 Toy the late .ing Hassan E, identified many lessons and proposed a series of ambitious education reforms that have since been endorsed by the Parliament (March 2000) and are to be implemented over the neAt decade. 2amp.g DeSgop o ge estEg