Report No. 7903-MOR Morocco Reaching the Disadvantag, J: Social Expenditure Priorities in the 1990s September 10, 1990 Population and H-iman Resour(es D)i\ i,ion Country ()perations [)epartrnient 11 Lurope, Niddle Last dtacd North Afti( a R-' gIOn FOR OFFICIAL USE ONLY Document of the World B3nk This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not other\ise be &sclosed without World Bank authorization. REACHING THE DISADVANTAGED: SOCIAL EXPENDITURE PRIORITIES IN THE 1990s CURRENCY EQUIVALENTS (As of September 1989) Currency Unit - Moroccan Dirham (DH) US$1.00 - DH 8.5 DH 1.00 - US$0.1176 FISCAL YEAR January 1 - December 31 MOROCCO - GENERAL COST OF LIVING INDEX (210 Items, 1972-73 = 100) 1978 176.4 19,9 191.1 1980 209.1 1981 235.2 1982 260.0 1983 276.1 1984 310.5 1985 334.6 1986 363.7 1987 373.8 1988 382.4 FOR OFFICIAL USE ONLY MOROCCO REACHING THE DISADVANTAGED: SOCIAL EXPENDITURE PRIORITIES IN THE 1990s TAILK OFY C.QErT PREFACE SUMKARY AND MAIN FINDINGS. . . . . . . . . . . . . . . . . . . . . i-xiv INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 CHAPTER I. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . 1 A. Growth and Poverty . . . . . . . . . . . . . . . . . . . . 1 B. Aggregate and Territorial Poverty . . . . . . . . . . . . . . 3 C. Structural Adjustment and its Effect on the Poor . . . . . . 3 CHAPTER II. THE CONCEPTUAL FRAMEWORK . . . . . . . . . . . . . . . . 6 CHAPTER III. ASSESSMENT OF THE POVERI'Y PROBLEM IN MOROCCO . . . . . . 8 A. Survival Indicators . . . . . . . . . . . . . . . . . . . . . 8 B. Income-Earning Indicators . . . . . . . . . . . . . . . . . . 10 C. Factors Contributing to Survival and Income-Earning Problems . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1. Characteristics of the Poor . . . . . . . . . . . . . . . 13 2. Population Growth . . . . . . . . . . . . . . . . . . . . . 15 3. Labor Market Conditions . . . . . . . . . . . . . . . . . 16 4. The Provision and Distribution of Social Services . . . . 9 CHAPTER IV. POLICY RECOMMENDATIONS . . . . . . . . . . . . . . . . . 26 A. Social Sector Strategy . . . . . . . . . I . . . . . . . . . 26 B. A Policy Framework . . . . . . . . . . . . . . . . . . . . . 28 C. General Options . . . . . . . . . . . . . . . . . . . . . . . 33 1. Better Targeting: Priority Population Groups and Territories . . . . . . . . . . . . . . . . . 33 2. Institutional and Organizational Changes . . . . . . . . 34 D. Sectoral Policy Recommendations . . . . . . . . . . . . . . . 35 E. Implications for Bank Lendi-ng in Morocco . . . . . . . . . . 41 F. Directions for Further Research . . . . . . . . . . . . . . . 46 This report was prepared by B. Pleskovic (Team Leader, Senior Economist) in collaboration with: P. Sivitanides (Urban and Regional Economist, Consultant), K. Brown (Regional Economist, Consultant), K. Laraki (Agricultural Economist, Consultant), J3S. McGu re (Nutrition Specia)ist), M. Montoliu-Munoz (Labor Economist), V. Rodwin (Health Economist, Consultant), M. Saric (Health Specialist, Consultant), J. Spratt (Education Specialist, Consultant), D. Wagner (Education Specialist Consultant), Andrew Rogerson wrote the Summary and Main Findings and Editorial Assistance was provided by E. Berg (Consultant). This document has a restricted distribution and mas be used by recipients only in the performance of their official duties Its contents may not other%ise be disclosed without World Bank authcrization. APPENDIX I: Estimation of Poverty and Ultra Poverty Thzteshold . . 48 APPENDIX II: Comparison of Moroccan Health Outcome Indicators with those of other LMI Courtries. . . . . . . . . . . . . 51 REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 LIST OF TABLES 1. Population in Poverty and Ultra Poverty, 1985 ...................... 3 2. Aggregate Survival Status Indicators ........................ 9 3. Variations in Infant Mortality and Morbidity from Infectious Diseases . .......................................... 11 4. Aggregate Income-Earning Indicators .............. I ................ 12 5. Spatial Variations in Poverty attd Ultra Poverty Rates .... ......... 14 6. Population and Demographic Indicators ............. I ............... 16 7. Distribution of Conventional Poor and Ultra Poor Households by Occupation of Household Head, 1985 ..... ............... ... 18 8. Government Social Expenditures ........ ............................ 20 9. Input and Process Survival Indicators ............................. 22 10. Aggregate Needs Assessment Table .................................. 27 11. National Input-Outpuu Table for Social Sectors ..... ............... 29 GRAPHS 1. Per Capita Social Expenditures .. ........................ ........ 20 MAPS 1. Poverty in Morocco by Subregion .................................. 54 2. Ultra Poverty by Subregion ........................................ 55 3 S.ci.al I ............ .................... 56 SECTORAL STUDIES (WORKING PAPERS, IN A SEPARATE VOLUME) HEALTH SECTOR STRATEGY FOR THE POOR NUTRITION AND FOOD SUBSIDIES EDUCATION, LITERACY AND THE POOR POVERTY AND LABOR MARKETS PREFACE This report is based on the findings of various missions to Morocco between February, 1988, and September, 1989, as well as, on earlier sector work by World Bank staff and consultants in the social sectors. The report utilizes existing national survey data and related sources, in particular the most recent household consumption, census, employment and fertility/morbidity surveys, and the statistical abstracts of the relevant line departments, listed in the references. The authors are indebted to the extensive assistance received from the Department of Statistics ar.d other specialists in the Ministries of Plan, Economic Affairs, Finance, Employment, Social Affairs, Equipment and Training, Health, Agriculture, and Education, in compiling and interpreting this data. A comprehensive multi-sector living standards survey (LSMS) was designed as a result of this work and has been launched in mid-1990, by the Department of Statistics with Bank and UNDP support. The results of the survey will provide more complete data for further analysis of the poverty issues identified in this report. MOROCCO Reaching the disadvantaged: social expenditure priorities for the 1990s Summary and Main Findings A. The UnderRrivileged and the Social Agenda 1. This report is about in.:lusion. It asks how some of the least advantaged groups in Moroccan society might best be reached and provided with the means to play a full role in the economy. It draws a profile of the underprivileged and discusses what a public social expendAiture strategy that specifically addresses their problems might look like. 2. The paradox of growth and poverty in Morocco is that average income has risen strongly, but the number of "poor" has hardly changed. They numbered about six and a half million souls, it. 1974 and 1985 and most probably still do today, though average consumption has grown by 36% over that time. This is not grounds for pessimism: on the contrary, as a proportion of the population, the poor have declined by over a quarter over the same period (to 30%), a creditable result by comparison to many other countries. But this decrease has not been as rapid as the rise in average consumption. It is hard to be indifferent tc the prcspect of a sizeable "hard core" of poverty perpetuating itself at the margin of an increasingly prosperous society. 3. The issue is important and is accentuated by the two-way relationship between growth and poverty. First, sustained growth directly improves living standards and generates more tax revenue to deliver compensatory social services. Second, a growing economy, at the gateway of Europe, needs a constantly improving human resource base and an increasingly sophisticated internal market, However, widespread illiteracy and avoidable illness on the scale found todav in Morocco will be major handicaps in an international competitive arena no longer driven only by unskilled labor costs. Jf one Moroccan in three is somehow marginalized from factor and product markets by his or her social condition, the other two are diminished thereby. Unresolved tensions originating from overcrowding, unemployment, and unequal opportunities can ultimately derail the economy. Tackling poverty, or at least some of its worst manifestations, may therefore be an economic, not just moral challenge, with a clear payback to society. 4. While these propositions are not controversial, they are not easily transformed into action by the Government. Problems of measurement, of logistics, of practical politics and of subjectivity intervene. The measurement problem -- how to identify who is vulnerable and track their progress -- is real, but often overstated. A great deal of vital knowledge, no matter how informally structured, is available within central and local administrations and voluntary groups in Morocco. Some quite striking patterns emerge, sufficient in our view to give valid orientations for action, notwithstanding legitimate technical doubts surrounding the accuracy or relevance of many individual indicators. ii 5. Establishing a "social strategy" is a vastly more ambitious undertaking than justifying a new university or factory or even choosing between them. The Government, however strongly persuaded of the need to act, lacks the luxury of reconsidering from base zero its entire pattern of social services or their share of the overall public budget. Embedded in the preseilt situation are mul. ple, loosely defined objectives, clienteles, and institutional relationships, as well as huge sunk costs. Decisions are taken incrementally, disjointedly, and cannot be fully consistent with all other decisions taken under different circumstances. Indeed, the Moroccan social agenda is being redefined continuously as the authorities assess the results of such independent decisions: this is the reverse of the economist's ideal where unique social objectives drive decisionmaking. Moreover, value judgments which imply political choices are unavoidable whenever a policy involves the distribution of resot -ces among people. Unfortunately this includes practically all social sector proposals with expenditure inplications, given Morocco's severe overall budget constraints. Different decisionmakers, even within a single Cabinet, tolerate inequality to different degrees. Opposite opinions are voiced in Morocco, as elsewhere, as to the desirable extent of State, versus private and charitable, responsibilities. 6. A well-known problem illustrates these difficulties. Scholarships, including study abroad, are provided to most university students in Morocco virtually regardless of income. Of course, it is only normal that a gifted, but needy, student benefits from state support in order to realize his/her potential. However, because of the narrow base of direct taxation, many well-off families have access to these scnolarships through income declaration exemptions. At the same time, the education budget is seriously overstretched and one-third of the primarv school-age population, who are on average much poorer, is not even in school. The Bank has argued, factually, that modest financial efforts by some categories of students, who reap high L retuins from their subsidized education, would ease the pressure on the State budget and release funds to benefit poorer students elsewhere. A highly visible, relatively rich few would stand to lose a little and an unknown, relatively poor many to gain a great deal. This tradeoff is not trivial, and needs to De appreciated in its proper political context by the Moroccan authorities, but it cannot just be ignored: to do so is equivalent to choosing to redistribute resources, by default, in the other direction. 7. This report is designed with such realities in mind. It is not an attempt to provide an ideal solution to deprivation in all its forms. Its aims are more modest than that. It tries to set some benchmarks for identifying vulnerable groups in the Moroccan context. It also considers the "ultra-poor", a subgroup whose social handicaps might be so severe as to block them from conventional income-earning oppo..tunities and other services intended to emancipate them. It tries to isolate what appear, subjectively, to be the most critical characteristics of poverty which the Government may want to tackle first. It then examines which policies may be most effective in addressing them. It uses as a tool to this selection a simplified matrix identifyirg "linkages" between actions and outcomes and gives some rough unit costs of high-impact interventions. It then revisits the recent pattern of Government social expenditures and suggests what kind of additional effort iii and/or reallocat'on appears justified, at the margin. Finally it reviews the currently planned Bank lending program from the same perspective. B. Tht Profile of vulnerability 8. Although income distribution is an important problem in Morocco, due to dat.-a limitations, the main focus of this report is on absolute, not relative poverty. We know, for example, that the share of the richest 20% of Moroccan households in national consumption is about eight times the share of the poorest 20% -- this and related inequality indicators need to be improveH, significantly in the future. Deprivation in an absolute sense, as defined in this report, refers to those who cannot command a minimum basket of goods and services, principally food, considered necessary to meet their longterm physical needs. The price of this basket can rise faster than the earnings of those below the poverty line, even when in the nation as a whole real incomes are rising. If the gap between the absolute poor group and the middle class widens, as appears to have been the case in Morocco, one can expect povercy to appear to "resist" the effects of growth to some extent. 9. The minimum-basket approach to poverty, monitored through infrequent national consumption surveys, is necessarily partial. It also undervalues certain income sources, such as charitable food gifts, and nonmonetary indicators such as health and literacy status. We have there,ore combined the consumption approach with various "direct" manifestations of wellb2irg and deprivation. A pattern emerges of tremendous gains since Independence, gains of which Morocco is justly proud, yet of opportunity for much more progress in certain key areas. In the last 20 years, Moroccan life expectancy has risen from 49 to 62 years; the death rate fell from 18 to 10 per thousand; and infant mortality almost halved to 73 per thousand. Conversely, child mortality, maternal mortality, severe malnutrition and male illiteracy remain well above comparators and the gap is not closing rapidly. Overall illiteracy, at 60%, is particularly troublesome, especially when one considers that schocl enrollments are still not keeping pace with population growth, which at 2.5% remains high. 10. Overlaps and discrepancies come out when these phenomena are mapped together. The highest incidence of poverty and ultra-poverty is in the South, followed by the Tensift and Center-South (Maps I and II), and the lowest in the Center, North and East. The South and Center-South also score worse in terms of infant mortality and education, a few provinces outstandingly so. There are also large discrepancies within sub-regions and provinces. Low medical service coverage and access to drinking water in most of the South and many interior provinces is predictably associated with both low health status and low consumption. However, low health care coverage in other areas, with below-average poverty (in particular, Center-North), is not associated with higher mortality. Such superimpositions illustrate how vital outcomes depend both on (a) underlying community and household living standards and on (b) the deployment of social services, which can reinforce as well as correct regional disparities. iv 11. The at-ri3k population is still mostly (65%) rural. This is about the same as the overall population (60% rural). Within the urban poor subgroup, major concentrations of the poor are found in parts of the Center- South (e.g. Errachidia), Tensift (Essaouir) and even the Center (Settat), which has a lower-than average rural poverty rate. Slightly over half--about 3.4 million--of the poor fall into the category of "ultra" poor, those far below (we assume, four fifths or less) the minimum living standard associated with the poverty line. They are somewhat more likely to be urbar (42%), and in five urban areas their share of the total population is over one-fifth, whilst their representation in the adjacent rural areas is much lower. However, by far the largest absolute numbers of poor and ultra-poor are found in the rural South and Tensift. Given the sharply different patterns of economic activity, population density and infrastructure involved, even this broad outline shows the futility of applying a single "antipoverty recipe" countrywide or even uniformly within certain regions. 12. What Else characterizes the poor and vulnerable in Morocco? First, large family size. Seventy percent of poor households have more than the national mean of five members: their average is 7.4 in rural and 6.5 in urban areas. Family composition matters, since we know the proportion of dependents to able-bodied adults greatly affects intrafamily nutrition possibilities, pressures for adult and child employment, capacity to undertake cash expenses for education and health, and so on, thus potentially perpetuating deprivation into the next generation. Forty-one percent of Moroccans are less than 15 years old. This share is higher in groups with higher fertility, such as the rural population generally (46%) and, most likely, very hign in poorer sections of the population. Only 36% of Moroccan women, mostly urban and probably not among the pooresc, ale current users of family planning services. 13. The second main characteristic of the deprived is their overwhelming lack of education. In 1985, 73% of poor Moroccan urban heads of household and 85% cf poor rural heads of household had no education at all. Nationally, male illiteracy is about 55%. Female illiteracy, also corJ.lated with higher fertility and lower health status, is much higher (78%), in line with lower school enrollments for girls at all levels. Low educatio:lal attainment levels among poor adults affect their ability to seek and retain productive employment, follow prudent health and nutrition practices, and use available social services to good effect. There is now a large pool of young aduits (about a fifth of the population is 15-24, slightly more are 25-44) who missed their first chance to learn but who still have a lifetime within which to affect, positively or negatively, the attitudes and earnings of whole families. They could be reached through special adult programs: literacy is contegious. However, adult literacy investments are nowhere near as cost- effective as those reaching the school-age population. 14. Their third characteristic is their lack of assets, especially title to land. We have too little information on asset holdings by income group to draw policy conclusions. The asset base of the poor largely determines the stability of their income, enabling or preventing the absorption of unexpected shocks to family earning power. From anecdotal evidence, we also know that insufficient collateral blocks many poor, especially in cities, from investment in self-employed activities, even on a v modest scale. In rural areas, the incidence of poverty is nearly twice as high in landless as in landowning rural households (48% versus 28%). In 19',, 23% of farmers were landless and 56% owned less than five hectares. Thus most of the rural population was either directly vulnerable to increases in producer prices of food staples, or stood to gain little from them as ii probably consumed most of the family farm output. We cannot speculate whetit>r- and how this pattern may have changed in the 1980s. Parallel availabilito - well-chosen public rural infrastructure (roads, electrification, irrigativ(.n water supply) is another critical constraint to emancipation of the rura. poor. Zxpenditure on such conmunity-based infrastructure would promote growth and equity. 15. There is no straightforward relationship between employment and poverty. Put simply, the poor cannot afford to be unemployed, due to the absence of Government or charitable assistance which is now unt:hinkable in Morocco given the scale it would demand. Indeed, only 10% of rural poor ar.ct 15% of urban poor household heads are reported to be inact' e. This inc the aged, severely ill and handicapped, manv of whom cannot and sho(r '., join the end of the long jobseeking line. For the vast majority of thci who do work, hardship comes instead from low-productivitv, short-dura,(:v low-paid, insecure activities, often taken at the expense of opportul '; self-improvement. Some 50% of the entire popula;.ion works as non-wc,Irta labor. In rural areas 38% of the employed, and 60% of all female work."- report working less than 40 hours per week. A full-time agricultural wocV :. 1985 was eligible for a minimum wage sufficient to buy only half of the poverty level household consumption basket. In urban areas, poor houLsc-elV heads are roughly equally distributed among unskilled work.s, off-ice ..- service employees, small retailers, other small self-emplo ed, and incec. The minimum industrial wage in 1985 b.ought 6UIX of the povertv lev(i ,l. consumption basket. 16. The relationship between education and unemployment is tl:+- not straightforward. Since poor illiterates can tolerate open un-np much less well than the educated non-poor, the illiteracy rate of the unemployed is actually lower than that cf the overall population. Univx'-. graduates lead the field of the "declared" unemployed, followed by se-C.mo.('i and vocational training graduates, and primary school leavers. 41any of ti better-educated, typically from better-off backgrounds, can wait out sl.o,t periods of une.nployment to capture better jobs in the modern, typicaliv '.. sector (the largest single employer of Moroccan baccalaureates is the M - of Education). Studies of longterTn unemplovment in Morocco find this again concentrated among a fraction of the totallv unedur^>,ted p(v 'x variety of handicaps within the competition for low-u oa+- remains a critical social handicap in its own righ.. whi st hig el.r attainment, by itself, is no guarantee of immediate employment. C. The Social Dimension of Adjustment 17. It is not easy to essess the impact of structural adjustmeents on the Moroccan economy since 1984, Farticularlv the impact on the vulnerable groups of society. An important distinction needs to be made between the "chronically" vulnerable, who are the focus of this report and vi more politically loaded target of "those affected by aLjustment", no matter what point of the social spectrum they started from. While the former also are likely to be exposed to the effects of adjustment, the two groups'concerns io not necessarily coincide in all situations. Moreover, available information is insufficient to permit an accurate assessment of adjustment effects -- the latest household survey was in 1985, when the effects of liberalizacion and stabilization programs were just beginning to make themselves felt. (A 1990 Bank- and UNDP-supported Living Standards Measurement Survey will help close this gap.) .8. We can therefore only offer an inconclusive assessment for now. Trade liberalization and Dirham devaluation, and consequent reorientation from niontradables toward exporting and efficient import-substituting activities have caused multiple, sometimes offsetting layers of change for many of the absolute poor. Workers in nontradable sectors, especially construction, utilities, services and much of the service-oriented informal sector, as aell as subsistence farmers, were probably not ini a position to take immediate advantage of this shift. Su.ch groups may have suffered, on balance, through irncreased prices of imported goods. Those who could access enough land and 'ther inputs (such as irrigation water) to shif. production towards tradables clearly gained. We can only speculate how far the positi.ve indirect effects on rural ges may have compensated for the increased prices of goods purchased y the landless. 19. Other employment effects. In the cities, the "sunrise" private sector, concentrated on apparel, textiles, leather goods and electronics, boosted wage employment in a dif'erent segment of the labor market (relatively low-skilled jobs with higher-than average female participation and loosely r gulated wage stt-uctures) from th-it in which wotkers were displaced. ProbablY neither shift inrvolved laic-e tiumhfers of the absolute poor, ol nearly- poor, at least not direct'v. To a -,reat (exent the emplovITIent effects of adjustment per e were drowned I'' the continued high rate of rural-urban migration and natural increase irn the active pa)pulation Under these circumstances, it is hard to imagine rapidlY increasing activities open to the urban poor where employment growth would not be at least partly offset by derlining real wages. 20, The scorecard is also mixed for monetary and fiscal policy. Inf'lation was crushed in the last few years to the credit of the Government and Central Bank. This creates a complex web of small gainers and losers in the short term and is most valuable for generating stable expectations for the lorng term. In general, lowering inflation hrings relativelv greater benefit to those living off fixed incomes, such as pensioners. However, such transfer pavments are much less frequent in Morocco than n developed countries and many poor are both producers and consumErs of goods affected by inflation. The main thrust of fiscal reform, being the simplification of direct taxes and the iTntroduction of VAT, h,:s multiple implications for relative income distribution, and justifies further research in this respect. Its impact on absolute poverty depends on the ext:ent to which the minimum basket is affected. We have no clear indicat:on of this, although the recent elimination of exemptions on coffee, rice, transportation and cattle feed iustifies some concern. Orn the positive side, the raising of personal income vii tax threshold may have been of great benefit to some poor with formal-sector (assessable) incomes. 21. Changes in administered prices and vages are equally complex. The progressive elimination of energy subsidies shifts resources to less energy - intensive activities which tend to be more labor-intensive, but higher energy costs can affect the absolute poor directly, for example, where there are unavoidable transportation costs. Majot shifts in producer and consumer prices for foodstaples, as indicated earlier, ha"e multiple effects on rural poor as producers and consumers, and negative, but heavily subsidy-dampened, effects on the urban poor (see para. 34). Wage policies pursued under adjustment have resulted in real wage d!eclines for the public sector in the last four years (1985-1989), though this trend was reversed in the 1989/90 round of pay revisions. However, onl' a small fraction of urban (absolute) poor household heads and negligible numbers of the rural poor are directlv dependent on civil service incomes: indirect effects through services consumed by affected public sector workers may be stronger. Lastly and most clearly, adjustment has seriously affected the capacity of the Government to finance basic social ser,ices, incliding those directed at vulnerable groups: this is examined below. D. El.ements of a New Public Social Expenditure Strategy 22. What kind of antipoverty programs are most effective? The linkage approach. We looked at evidence from Morocco and elsewhere on policies (inputs) that simultaneously affect more than one dimension of povertv (outputs). These are called forward linkages: the stronger these are. tho more benefits can be obtained from a given effort. Conversely, we 'dentit '<t cases where a single desirable output requires complementary efforts on several different inputs. These are called backward linkages: the stror,r the complementarity, the greater the waste from ignoring a complementary input. For example, the critical determinants of higher infant mortalitv inl Morocco are: higher female illiteracy; lower income-related factors; higher fertility; and lower health services coverage. Improved health services are therefore necessary but not sufficient to achieve the desired result. Tuiis condition seems self-evident, but it is seldom respected in investment planning. 23. Apparent priorities. This leads us to a strong presumption that efforts to reduce illiteracy (through formal and adult nonformal educaticn) and improved family planning services have major forward linkages on earninRs potential, on improved health, nutrition, sanitation,and access to education for other family members. Backward linkages tell us that to be fully effective, these investments need to be integrated with basic health, nutrition, and income-enhancing programs for the poor. This is a relatively simple recipe, which needs to Le adapted to the different pressure-points of each region, using much more disaggregated and up-to-date information, such as the 1990 multisectoi survey mentioned above. 24. Cost-effectiveness. None of these actions is costless, but snoe interventions are strikinglv cost-effective. Here are some orders of magnitude, based as far as possible on actual Moroccan expenditures. For viii convenience, they are expressed as a proportion, or multiple, of the monthly minimum industrial wage, SMIG, as a rough measure of the alternative cost of simply paying for about half a poor family's maintenance for one month (see para. 15): (1) ' tpplementary feeding and nutrition surveillance for one at-risk infant for two years (avoiding many years of underachievement at school and beyond, or worse): 0.5 SMIGs; (2) complete set of vaccinations against the principal causes of avoidable childhood mortality: 0.1 SMIG per child; (3) providing family planning services to an at-risk mother (poor rural mothers average over 9 pregnancies): 0.3 SMIGs per acceptor per year; (4) doubling the classroom materials available to every Moroccan child in primary school, per year: 0.1 SMIG; (5) teaching an adult to read and write through evening classes, including allowance for failure rate, about 0.3 SMIGs; (6) compare these to the annual cost of scholarships and subsidized services (not even counting the cost of teaching itself) for the average Moroccan university student, 19 SMIGs. 25. How is each tax Dirham spent on social services? Almost one third of total government expenditures in 1988, including defcnse and debt service, was used for "social" spending as defined below. As a proportion of all civilian spending after debt service, the share is well ,,,,Pr half. It amounted to 370 Dirhams per capita in 1980 and remains unchanged, adjusting for inflation, today, equivalent to 7.0% of per capita GNP. Nearly three-fifths of the "social dirham" is spent on education, a much higher proportion than in comparator countries. The next largest category is food subsidies --about one fifth of social spending-- followed by health, with about one-tenth. The remaining tenth goes to all other social programs combined: housing, employment, social and cultural affairs (including adult literacy), youth and sports, and some transport expenditures. Not recorded here are implicit subsidies, such as on electricity, and training activities appearing under the relevant "productive" sector budgets. 26. Future prospects for public social spending. In the 1990s the social budget is unlikely to outpace the overall budget unless there are substantial reductions in the shares of military expenditure, debt service or both. It is difficult to identify in the civilian budget, after debt service, logical places for very significant reductions in favor of social spending. The Government should give priority consideration to reallocating to the social sector any savings produced by debt reduction or reduced defense requirements. Failing such shifts, the most likely scenario is one where social spending, in line with overall spending, rises by no more than, say, 2.5% per year after inflation, or approximately the population growth rate. ix That means no increase overall in 1980 per capita spending (DH 680 in 1988 terms) for the rest of the century. 27. It will therefore be necessary to redouble efforts to optimize the internal allocation of the social budget, in order to favor actions which contribute strongly to the integration of the poor into the economy at the expense of other programs. The education sector, on the one hand, and food subsidies, on the other hand, which right now together absorb four-fifths of available social spending, are obviously the most likely sources of future savings. 28. Education: the social lottery? Moroccan education policies are analyzed in detail in recent Bank sector reports on higher education, vocational training, and rural primary education. The key statistic of the 1980s is this: while the population grew by 2.5% per annum, primary enrollments grew only 2.0%, but secondary rose 8.7% and higher education, 12.2%. Since in addition, the higher levels are far more expensive thsn primary, the base is being starved of funds. Unsurprisingly, it experiences efficiency and quality problems that discourage parents and raise the c3st per graduate. Today, one boy out of three in rural areas, and two girls out of three, will never go to school. Of those enrolled nationwide, only one in 3 now enters secondary school and one in twenty passes the baccalaureat. This means the cumulative share of the overall state subsidy to education captured by the privileged few who reach university is overwhelming. Moreover, pass rates by income group are not recorded, but international experience indicates the representation of the poorest groups in secondary education is likely to be slight and in tertiary, minuscule. 29. More school buildings and teachers will not be enough to spring the poverty trap. Two ingredients are missing. First, basic schools are so short of funds (97% of their budget goes to salaries) that they cannot sustain even modest standards of books, materials, sanitation, school health, meals, maintenance, teacher training, management, and inspection. All of these are known to be key ingredients in education success. Moreover the value of the education dispensed, as seen by poor parents (nine-tenths illiterate) hardly sparks enough enthusiasm to overcome the high costs they face. Second, these sacrifices are objectively prohibitive for many poor families, especially where girls are concerned. Direct cash costs of schooling for each child in Morocco can be as high as 10% of family disposable income at the poverty level. Add to this the costs of foregone child labor, especially childminding and handicrafts. Any serious effort to break the cycle of poverty, at least over a generation, has to work on both pressure-points: for example, by motivating parents by reaching them with literacy programs, subsidizing schoolbooks and providing alternatives for care of younger siblings, as well as improving conditions and the relevance of the curriculum in schools. 30. Where are the resources for this transformation? We come back to upper secondary, technical/vocational, and university education, the most expens've and fastest-growing parts of the system. They ii.ay be a critical factor in breaking the vicious circle described above. The higher education system deserves to expand - artificially restraining its growth or overcrowding it and thus emptying it further of credibility are no solutions. x But it could easily expand in ways which draw less, per graduate, on public subsidies. These involve much shorter courses, more student loans to compensate for fewer domestic scholarships based on demonstrated need, and fewer foreign scholarships. It could also involve promoting more private and semi-public institutions, run autonomously and charging regulated fees, supported on a limited basis (e.g., by tuition grants) by the State. A saving of one-tenth of the nonacademic costs of universities would ronxghly double all nonsalary expenditure in basic education. More substantial encouragement of semiprivate academic institutions could produce larger results over time without penalizing poor university students. 31. What is the right type of Vocational Training? There has been much discussion of appropriate trainir.g directed at various underprivileged groups, especially in rural areas. Vocational training for regular job market placement needs to be clearly differentiated from special social safety-net programs, which might include some vocational training elements. This will require major policy changes in three areas. First, vocational training programs should be tightly linked to economic needs r.her than being driven by the supply of school leavers. This means that employers in the productive sectors will need to be involved in all stages of planning, program development and actual training deliverv, including cost-sharing. Second, there is a need to enhance local area initiatives and spur micro-enterprise development and/or income generating activities for various disadvantaged groups in particular in rural areas. This means, among other things, making use of existing education and training structures to provide short-term, targeted training related to particular income earning activities. Third, the blurring of responsibilities between various ministries with a social service mandate has led to the multiplication of initiatives in the area of pre-employment training by institutions whose experience is primarily that of welfare assistance provided to the handicapped, and who have relatively little contact with the labor market. A consolidation of these programs to free up resources for most needed basic education and literacy programs is in order. 32. Nutrition and food subsidies are next in line. Good nutrition depends on much more than entitlement to plentiful food. Success depends equal"v on maternal training in basic nutrition and hygiene practices, on safe water, and on medical surveillance and nutrient supplements for at-risk cases. One Moroccan child in four is chronically underweight and one in twenty-five (1987) is moderately to severely malnourished. These conditions, and less obvious vitamin and mineral deficiencies, are not usually fatal, but nonetheless a major cause of developmental impairments which reduce lifetime learning and working potential. Hence investing in infant nutrition has a high social return, because whilst its costs are modest and concentrated in time, its effects may be large, irreversible and last decades. 33. Off-budget programs need permanent funding. The major Moroccan nutrition programs are the infant and child health and supplementary feeding programs of the Ministry of Health, and two other programs heavily dependent on foreign food aid, the World Food Program's support for school lunches and the USAID/Catholic Relief Services' program which is directed to pcor households through centers operated by the Ministry of Social Affairs. These programs have overall a maximum potential coverage of less than half the xi estimated number of nutritionally at-risk mothers and children. As a minimum, budgetary provision should be made to expand the infant nutrition surveillance and supplementary feeding program's reach and preserve the main benefits of the other two programs beyond the commitment horizon of the donors. 34. Careful rationalization of the generalized subsidy system. An obvious potential source of savings, and of polemics, is the national food "compensation" system, whose largest cost items are wheat flour and sugar. Much technical and political effort has been devoted recently to restructuring the system so as to release funds for more cost-effective programs. Neither subsidy, until recently, was deliberately "targeted" to the poor. They were asailable to all consumers in proportion to the quantity bought. Consequently only about 16% of the subsidy budget went into the shopping baskets of the poor, but the subsidy is nonetheless a criticaa component of the purchasing power of those households. While the Government plans to eliminate virtually all food subsidies by the early 1990s in an effort to reduce public expenditures, special case should be taken to protect the poor by alternative, smaller, but better targeted programs. Refined sugar, a cultural but not nutritional necessity, could be subsidized less without major harmful nutritional effects. Provided the new measures being contemplated do not inadvertedly reduce incomes for very small beet and cane farms, and part of the savings are channelled into targeted nutrition programs, the poor could only benefit. 35. The wheat flour subsidy has already undergone several changes. These aim at reducing outlavs, but minimizing nutritional impact on the poor, by reducing leakages to better-off consumers. in particular, the subsidizedi "national" flour is coarser, hence Iess attractive to middle class consumers, than unsubsidized "luxury" flour, and the quantities of national flour are strictly rationed. Further potential sa-vings could perhaps be obtained by marketing a cheaper but nutritionally sound pro4'uct, such as barley flour or wheat-barley flour mix, with even fewer leakagts. Other targeting options include restricting sales of subsidized flour to fewer bakeries in disadvantaged areas. The potential savings are very substantial: half the wheat flour subsidv, which could become redundant in terms of the nutritional status of the poor, would buy a doubling of most basic health services and nutrition expenditure. 36. Public health the acid test of Government social concern. The Go-ernment has recently proposed to the Bank a major ($1-0m) four-year program to rehabilitate basic health services throughout the country. This effcrt acknowledges chat public health services - the only defense for 80% of the population that have no insurance arrangements, including virtually all poor - had been gutted by inadequate funding. Health coverage remains low overall (50% in rural areas) and extremely sparse in poor regions. Health outcomes are in important respects worse than in Senegal, Sri Lanka and Pakistan, much poorer countries, and uniformlv worse than the Philippines, a slightly poorer country. Such countries spend on average nearlv twice Morocco's share (3%) of their national budgets on health. 37. Turning the corner. Under the 1984-1988 austerity period, Morocco's health budget was preempted for salaries and to sustain a minimum xii sct of hospital services. Patients and their families, including the poor, still meet most hospital food, medicine and supplies costs out-of-pocket. Meanwhile the credibility of other facilities, intended as cost-effective screens for the hospitals, declined further. Courageous recent moves to increase charges for hospital consultations (with exemptions for the poor) and reduce unnecessary subsidies from the public budget to the supposedly self- financing health insurance sector will release some of this pressure. Still, public funding will have to go up both in the short term, to optimize the existing network, and in the medium term, to at last extend that coverage to the overwhelming majority of the population. 38, Employment and Training programs. Employment programs, primarily in terms of public works schemes operated by provincial governors, are a tiny fraction of the socia'l budget. Employment is a legitimate concern of governments and a major focus of macroeconomic policy. However, views are sincerely divided, in Morocco, Europe and within the Bank, as to what the role of direct public assistance for employment should be. Some see "Employment Creation" schemes in the public sector as a contradiction in terms. They criticize both the waste that is inherent in selecting and carrying out small projects without regard to market signals and the inequities and I'i stargeting" that can arise when solely political criteria are used to dttermine need. More importantly, it is extremely difficult to design and ;ra.,ge such projects so to achieve a laLting training effect, transferable to ftruture opportunities (witness the universal skepticism as to the net ..:i _t< added of military service conscripts in peace time). There is another of view, which deserves equal respect, that what may look to outside s like "makework" in fact instills, restores or preserves dignity, self- ir2 ience, disciplined work attitudes and other priceless intangibles eroded ' .ngrterm unemployment. Sucl expenditure, arguably, is at least preferable *-Ifare support which involves no work counterpart from the able-bodied :i'Ioved . There may be alternative channels for such "productive" support tl.aT: deserve exploring in Morocco. The regional Governments are just .,cicrc-ing to experiment in this difficult area. The starting point should be .xi coiTibine a community-based environment of nonformal training for self- t:iTriovmernt with basic education skills, and judicious use of existing credit .arannels. The literacy element, which has powerful positive ramifications for * .e poor, is critical. However, the motivation should be a real economic cpportunity, such as vocational training for job upgrading for casual and io'cpaid workers on the fringe of the modern economy, and assistance for small credit for off-farm income opportunities, especially for women. A orrplementary set of programs could concern low-crst child day-care, based on community networks, so as to release female wor'-crs and jobseekers as well as oildr children who aze better off in school. FurLher research o how to Increase school retention, and address the educational needs of recent scnool dropouts is urgently needed and underway with Bank assistance. E. The Poles of Nongovernmental Organizations and the Bank 40. The non-government sector. These community- and workplace-based examples are the right place to end our search for what might be done more, xiii less, or better, and how it can be sustained. The case of nonformal adult training is quintessentially one where nongovernmental leadership and management is paramount. It simply cannot be done only through orthodox Governmental delivery systems, and not Just for cost reasons. However, the Government could provide seed-money, especially startup grants for equipment, encouragement of various kinds through media, political and technical support, detachment of small numbers of motivated professionals, and possibly tax incentives. (For example, it could ask employers to give bonuses to workers who complete literacy courses, and allow tax credits, grants or other advantages to companies who do so). Other major examples of existing and future Government-private/voluntar' sector collaboration include: voluntary childcare services, also offering nutrition guidance, under Government technical supervision, voluntary efforts for specific disease control and vaccination campaigns, and the operation and maintenance of ambulances and other basic health services via, e.g. the Red Crescent. More recently still, a major precedent has been set by the multi-million dollar rehabilitation project of a large Casablanca health district and its teaching hospital, financed in large part by local businesses and community organizations. The principle of "matching grants" from the State to local initiatives is well established in Morocco. External donors, and the Bank in particular, should welcome opportunities to extend the reach of such initiatives, but cannot improvise them. 41. The Role of the World Bank: current. We are prepared to be consistent and to put both our resources and stafftime, where we believe them to be needed for poverty reduction. We have already taken several steps. The Rural Primary Education project ($83m, 1989) focusses on expanding access, especially for underserved populations, with special facilities and incentives to encourage enrolment by rural girls. The 1989 Sixth Agricultural Credit loan through CNCA ($120m, 1989) hc1 special components for easier access to small loans for farm and off-farm activities, especially by women. The Health Sector Loan ($104m, 1990) provides for rehabilitation of basic health services and first-level referral facilities, especially for maternal and child health, nutrition, family planning and em,nrgencies. All three loans are, we hope, first phases of even longer-term commitment to these objectives. 42. Additional actions proposed. We envisage, first, a substantial followup loan for basic education in 1990, concentrated on expanding lower secondary education opportunities and improving quality for underserved populations. We have also offered support to develop a new generation of semiprivate short-duration polytechnic institutes, to help break the vicious circle of education funding. Third, we plan to incorporate in the forthcoming Structural Adjustment Loan an explicit social expenditure monitoring framework and safeguards for vulnerable groups, and safety-net programs covering both essential nutritional needs and transitional unemployment. Fourth, we propose that the next support for agricultural sector loans should address land policy issues including land consolidation and the development of an efficient land market. Also, since many of the poor are women, we are working on ways to provide training in a systematic way to ease their entry into job market. xiv + + + + 43. We stand ready to mobilize technica and fimaoial support, both from our own resources and the international donor community, for any and all of these proposals, at ovorament request, as well as to bhlp overnment materially vith the further analysis, disoussion and dissemination of the main topics discussed in this report. MOROCCO REACHING THE DISADVANTAGED: SOCIAL EXPENDITURE PRIORITIES FOR THE 1990s INTRODUCTION 0.01 Morocco has achieved considerable social progress since independence (1956), but great potential remains for improving the living standards and productivity of the poor. This study provides a social sector strategy framework to improve the effectiveness of social programs and enhance the income-earning capacity of the poor. It addresses two basic issues: the extent to which current health, education, employment, and nutrition and food subsidy policies and programs address the needs of the poor, and the effectiveness and efficiency in the production and .-stribution of these social services. 0.02 This report is organized into four chapters. The first provides the general background. The second outlines the conceptual framework. The third identifies the dimensions of poverty in Morocco and analyzes the major factors contributing to its persistence, which include the characteristics of the poor, population growth, the composition of the labor market. and problems in the provision and distriTution of social services. The final chapter presents policy options and recommendations for Bank lending strategy and future research. CHAPTER I - BACKGROUND A. Growth and Poverty 1.01 Since the early 1970's Morocco has pursued an economic growth policy which has included efforcs to meet distributional and soc.al needs. Between 1971 and 1985 real Gross Domestic Product (GDP) per capita increased 36%, while the poverty rate-' fell by 29% (from 42% to 30%) (see Table 1). The incidence of poverty declined from 38% to 287. .i urban areas and from 42% to 30% in rural areas, but the overall number e- poor2" remained approximately the same (6.6 million). In the late 1970's and early 1980's more than 10% of GDP was devoted to social policies and programs-- relatively high by international standards. ' Poverty rate is the estimated ratio of the poor compared to the lopulation. R' Persons with expenditures below the estimated poverty threshold (see appendix 1). - 2 - 1.02 During the last 20 years, as a result of GDP growth and thie provision of social services, significant improvements occurred in all social indicators. Life expectancy rose from 49 to 62 years, the death rate fell from 18 to 10 per thousand, and infant mortality dropped from 145 to 73 per thousand (see Table 2 and Appendix II). Female literacy increased from 10 in 1970 to 22X in 1985. Progress would have been even greater if it were not for L rapid population growth, which doubled in 27 years (1960-87) from 11.6 million to 23.3 million. 1.03 Despite these improvements, several social indicators remain unfavorable. The child death rate (32 per thousand) remains quite high, as does the illiteracy rate which is 60X. The maternal mortality rate is a high 585 per hundred thousand. Safe water is accessible to only 57% of the population. The incidence of poverty varies considerably among regions, provinces, and urban and rural areas. Infant mortality, child death, child malnutrition, and population per physician rates are worse in rural than in urban areas. Some indicators, such as the illiteracy rate, exhibit major gender differences; female illiteracy is almost twice as high as male illiteracy. 1.04 The relationship between the level of per capita GDP growth and the poverty rate is determined by inequality in income distribution. Reducing this inequality will help lessen poverty even if GDP does not grow. In Morocco, consumption distributionl' remains quite uneven, witn slightly greater inequality in urban areas. A mini coefficient based on consumption expenditures worsened form 0.35 in 1959 to 0.45 in 1971 and then improved to 0.41 in 1985. The ratio of the share of the wealthier 20% of households and the share of the poorest 20% was nine to one in urban areas and seven to one in rural areas. Inequality in consumption distribution continues to be a severe problem. Thus growth ana redistribution policies are required to extend the benefits of development to the poor. 1.05 In summary, despite rapid economic development in the 1970s and early 1980s, poverty reduction has not been as rapid as the rise in average consumption. To improve the present situation, additional and continuous efforts need to be devoted towards pover,y alleviation in the future. Although efforts toward poverty reduction may absorb resources valuable for short-term economic growth, such efforts, in the long run, will strengthen the resource base of the economy. First, poverty reduction would expand and improve the human capital base of the economy; second, it would increase national income; third, it would decrease government expenditures on nutrition, health care, and other welfare programs; and fourth, it would lead to a decrease in fertility and population growth rates, allowing for higher levels of per capita income. S Household income data are not available. Note that the distribution of household expenditures may underestimate the extent of income inequality, since income is usually more unevenly distributed than consumption. - 3 - B. rotate and Territorial PovertX 1.06 Povorty remains a serious problem in Morocco. In 1985 per capita GDP was US$590, or 22X percent below the average for lower middle income (LMI) countries. The aggregate poverty rate (30X) is one of the highest in the region and the rate of ultra poverty is also relatively high (16%)!J. As table 1 shows, the poverty rate is only slightly higher in rural (321) than in urban areas (28X); the ultra poverty rate is similar in both. Table 1: POPULATION IN POVERTY AND ULTRA POVERTY, 1985 (in thousands) Poor Ultra Poor Number Percentage Number Percentage Urban 4,594 28 1,436 15 Rural 3.990 32 1.985 16 TOTAL 6,584 30 3,421 16 Source: Di.rection de la Statistique. Ministry of Planning. 1.07 There are considerable variations in the incidence of ultra poverty and poverty at the regional and sub-regional level, and across urban and rural areas (see map 1 and 2). Large differences in urbanization levels and natural resource endowments among regions also exist. About two thirds of the urban population live in the central and northwest regions. Most of the country's industry is located in the center-north and northwest. Other regions are mo' ly rural; the south is 95% rural. Morocco's landscape ranges from mountainous to tropical, from coastal temperate to harsh deserts. Diverse topographical and environmental conditions and dispersed populations are partially responsible for difficulty of access to social services and poor health status in certain regions. C. Structural Adjustment and its Effect on the Poor 1.08 An analysis of poverty and requisite policies must take place within the larger context of Morocco's macroeconomic situation. Since 1983, due to severe structural problems including growing inflation, a large deficit and an increasing debt burden, Morocco has undertaken extensive stabilization and adjustment policies supported by a series of IMF standby arrangements and World Bank adjustment loans. The impact of such efforts has been the subject of several World Bank reports and will only be outlined briefly here. Instead, we will focus on the program's impact on the poor. Mowe-er, the newness of the effort and the limited availability of data specific to the poor render the analysis preliminary at best. I Ultra poor are persons in households with expenditures per person lower than an estimated ultra poverty threshold, which is defined in appendix I. The food component of this threshold represents 80X of the cost of the minimum required basket. - 4 - 1.09 Until the mid 1970's, Morocco followed a relatively cotnservative approach to economic development. Then from 1975 to 1977 the country experienced a boom in phosphate prices which coincided with rising defense expenditures and an unprecedented expansion in public investment. In the late 1970's phosphate prices plunged and the second oil shock hit; Morocco's favorable terms of trade quickly reversed. In order to maintain its higher .-ate of p hlic investment, Morocco resorted increasingly to external markets. From 1975 to 1983 Morocco's debt grew from US$1.8 to US$13.9 billion, at which point it represented nearly 120X of GDP and 355% of foreign exchange earnings. The unanticipated rise in international interest rates in the early 1980's, compounded by the declining productivity of public investment and a prolonged drought from 1980-84, adversely affected the country's balance of payments. Bereft of foreign exchange reserves, Morocco was unable .o shoulder its debt burden--the debt service ratio reached 53% in 1983 with interest payments alone accounting for 20% of exports. 1.10 In 1983, Morocco's access to international markets was sharply reduced. Under advice from the international Monetary Fund (IMF) and the World Bank, the government designed a program with dual objectives: 1) to stabilize the economy in the short run by reducing aggregate demand and the government deficit and 2) to enhance the efficiency of the economy by reforming the underlying structure of kcy economic and social sectors. Restrictive fiscal and monetary policies were employed to contain aggregate domestic demand, while structural reformon in trade and industry, agriculture. education and the public enterprise sector were initiated to augment the supply response of the economy. 1.11 In brief, the results of the progran, in Morocco have been relatively successful. The current account has turned from a deficit of 7.8% of GDP in 1984 to small surpluses in 1987 and 1988; the budget deficit has decreased, on a commitment basis, from 11 9% of GDP in 1984 to 4.2% in 1988; inflation, as measured by the CPI, has dropped from 11.5% to 2.3% over the same period. GDP growth has been increasing at an average annual rate of 3.3% since 1.984. However, severe problems continue to plague the econcmy. Per capita consumption has stagnated, public investment has fallen sharply, and foreign exchange reserves have been rebuilt at an aggravatingly slow pace. Real interest rates have risen by approximately 20 percentage points since the mid- seventies. Despite improvements, the country's balance of payments position remains precarious. Debt indicators remain high and constitute a continued impediment to external financing. In the following, we present some specific macroeconomic policies and their effects on the poor. 1.12 Trade and exchange rate liberalization have led Morocco to orient its economy away from development through import substitution with extensive state intervention to the promotion of exports and more efficient import substitution with greater reliance on the private secto:. The prescribed devaluation has benefited primarily those of the low income population employed in export activities. On the other hand, many urban poor who rely heavily on imported goods and/or are engaged in the production of non- tradables, most notably in the informal sector or working in such activities as construction, utilities and services, do not stand to benefit directly from liberalization policies in the short-run. Most of the rural poor are unable - 5 - to take advantage of the benefits of devaluation. Small (poor) farmers in Morocco do not typically own sufficient land and lack enough access to basic irrigation and transportation; thus, they can not rapidly switch into export production. 1.13 Tax reforms in Morocco aim at achieving three objectives: (1) to increase Treasury revenues; (2) to harmonize the tax system with other resource allocation objectives; and, (3) to ensure equitable qivision of the "tax burden across population groups. In general, tax policies are not a suitable instrument for poverty alleviation, however, certain aspects of Morocco's tax reforms will have an impact on the poor, For example, the introductlon of a value added tax (VAT) on goods and services in 1986 and the more recent elimination of VAT exemptions on such items as coffee, rice, cattle feed and transportation services will likely have an adverse effect on both the rural and urban poor due to the larger proportion of theil incomes spent on these consumption items. On the other hand, the zero-bracket personal income tax threshold was raised from DH 6,000 to DH 12,000 making the system less regressive in spite of the fact that it does not affect the core poor. In addition, the government intends to strengthen existing institutions and to rationalize tax administration efforts which may contribute to the improvement of equity in the long run. 1.14 Contractionary monetary and fiscal measures have been implemented to control the fiscal deficit and thus curtail excess demand in the economy. High reserve requirements and ceilings on bank credit are two examples of such restraint. Ceneral liberalization of the financial sector is also being pursued. For instance, interest rates have been allowed to rise to positive levels. It is these actions that have helped to bring dos.n inflation, which is positive for those of the poor whom high inflation tends to effect most severely. The highest cost of these measures has been the curtailment in investment. Real expenditures declined by over 50% between 1981 and 1986. While the adjustment has succeeded in encouraging higher private investment-- with the private share of Gross Fixed Capital Formation (GFCF) rising from 12.9% in 1982 to 16.6% in 1986--the level of public investment had by 1988 fallen below the minimum necessary to meet the development needs of the private sector and the social needs of the population. It should be noted that the government is aware of the deleterious long-term effects of these trends and the increase in the level and efficiency of public investment expenditures is a major component of its continued adjustment program. 1.15 Reforms in administered prices through the reduction in subsidies and price controls are also an integral component of the Moroccan adjustment program. For instance, the reduction and eventual elimination of energy subsidies is planned to curtail inefficient energy use, which would in turn improve the foreign reserve position of the country. A positive outcome for the poor derive from the fact that shifting the resource bias away from energy intensive (labor-saving) technology has led to more labor-intensive employment. 1.16 With respect to wage reforms, Morocco has directed wage control measures to the public sector in an effort to reduce the budget deficit. The government has limited salary increases to the lower end of the scale, resulting in declining real incomes for government workers during 1985-1988. This trend was reversed in 1989/90 round of pay revisions. Another outcome is a decline in productivity and lower quality of services as it has become difficult to attract and retain competent public employees. In 1983, the Government introduced a law to eliminate education sector jobs vacated by retirement which has since been extended to other sectors. In the long run, these changes should improve the efficiency of public resource allocations, but in the short run, hardships may be imposed on the poor through reductions in service quality, the loss of employment and reductions in real wages of public employees, many of whom fall into the poorest 30Z segment of the population. 1.17 Agricultural pricing policies are also subject to major reforms. In terms of consumer subsidies, the government aims to remove virtually all food subsidies by the year 1990. Since the subject of this report is government social expenditures, this topic will be discussed in detail later in the report. As for input subsidies, two major policy reforms are a reduction in sugar production (a heavily subsidized crop) and a reduction in input subsidies, particularly for fertilizer. These cuts will adversely affect many farmers. But, thzv will also lead to a reduction in the production of fertilizer-intensive crops and the freeing of government resources. Thus, poor farwers may end up benefiting to a greater degree from such resources depending on their eventual allocations. CHAPTER II - THE CONCEPTUAL FRAMEWORK 2.01 In this section we present the conceptual framework and methodology of this study. The purpose of this framework is to integrate and advance existing poverty concepts and resolve some methiodological issues in addressing poverty. The approach includes: the classification of the numerous needs of the poor into survival and income-earning categories, the introduction of the concept of comparative indicators, the division of the poor into two categories, the ultra poor and conventional poor, and the introduction of backward and forward linkages as useful tools for policy analysis. 2.02 First, we distinguish two main dimensions of poverty--survival needs and income-earning needs. Survival needs relate to basic health, nutrition, sanitation, water, and shelter. Income-earning needs cover human capital development and employment opportunities. To assess these needs two types of indicators are used: aggregate indicators and territorial indicators. The former are national averages; the latter represent regional, sub-regional, or provincial averages 2.03 Following Cornia (19S7), survival and income-earning indicators are classified into status, process, and input. Status indicators are used to determine the magnitude of income-earning and survival problems, while input and process indicators are used to identify major factors contributing to poverty. As examples, child mortality is a status indicator; government expenditure per capita is an input indicator; while the number of hospital visits is a process indicator. 2.04 Second, in assessing poverty, we introduce the concept of comparative indi:ators to allow for the quantification of the deviation of Moroccan living conditions from international norms and standards. We use comparative indicator~s to identify high-risk population groups (infants, children, women), critical social sectors (health, nutrition, education, and employment), and territories (regions and urban and rural areas). We then investigate causes for these deviations to determine whether they indicate priority areas for policy intervention. 2.05 Several approaches are used to define relevant comparative values for survival and income-earning indicators. Our first choice is to use existing international standards (for instance child labor, unemployment). When international standards are not readily available, we use a proxy based on a comparison of Moroccan indicators to respective averages for lower middle income (LMI) countries or to average values of indicators for a group of countries similar to Morocco in terms of per capita GNP, poverty rate, and/or region. 2.06 International norms or standards can be employed as policy goals to improve Moroccan poverty conditions. LMI or other similar country indicators, on the other hand, represent a starting point for a more systematic assessment of poverty conditions in Morocco. The major limitations of these indicators as a basis of .mparison are differences in the quality and reliability of statistical 3. ta, variations i-, deiivery costs of social services, and country-specific cultural and environmental conditionr. Despite these limitations, comparisons are useful for identifying priority poverty problems, particularly important given Morocco's limited financial resources. This comparative method can then be used by the government to determine mediurn- and long-term goals that reflect both resource constrainus and political preferences. 2.07 Third, we distinguish two subgroups, the ultra poor and the conventional poor. According to empirical evidence provided by Lipton (1988), the ultra poor are severely malnourished, handicapped or sick individuals as a direct result of their extremely low income levels. In addition, as noted by Wagner and Spratt (1989), this group suffers from educational poverty, i.e., cross-generational lack of basic literacy and numeric skills'". As a consequence of these characteristics, the ultra poor are unable to take full advantage of employment opportunicies as well as basic health, education and other welfare services accessible to the rest of the population. Thus, this group requires special targeting of social services. Given the limited availability of data in Morocco on the ultra poor as defined above, we use a proxy, also suggested by Lipton (1988), which identifies the ultra poor I/ For information on "educational poverty", see working paper or Education, Literacy and the Poor. according to their expenditure level'1. In turn, we define the conventional poor .: those households which have incomes higher than the ultra poverty threshold yet below the poverty threshold (see appendix 1). 2.08 Fourth, we introduce the concepts of linkages and spatial integration for identifying priorities among policy alternatives. Following Hirschman (1968), we classify linkages between poverty policies into two types: backward and forward. Backward linkages refer to direct and indirect input requirements for satisfying the needs of different members of poor households. An example of a backward linkage is adequate preschool nutrition, without which lifetime learning ability may be impaired. Forward linkages refer to output linkages or how the satisfaction of one need contributes to the satisfaction of other needs. For example, in the long run education may contribute to reductions in mortality, fertility, illiteracy, and unemployment. 2.09 The concept of linkages can be used to improve and broaden the analysis of costs and benefits in calculating returns to investment. While it adds to the complexity of analysis, since many linkages are har to quantify, it better reflects the indirect and induced effects of social tor expenditures. The identification of backward policy linkages can help identify sectoral and spatial integration requirements. On the other hand, forward policy linkages can be used to identify positive externalities and thus, cost-effective policy packages. Overall, linkage analysis can contribute to a more svstematic approact to decision-making in social planning. CHAPTER !II - ASSESSMENT OF THE POVERTY PROBLEM IN MOROCCO A. Survival Indicators 3.01 An analysis of survival indicators provides useful insights into the survival status of the poor. As shown in table 2, most Moroccan health and nutrition indicators are positive with respect to their comparators, reflecting improvements achieved over the last two decades. Two important examples are life expectancy (62 years) and daily calorie intake (2,729 per capita). However, several indicators do reveal negative deviations. Children seem to be the highest risk group: child mortality is 32 per thousand, or 156% higher than its comparative indicator and moderate to severe child malnutrition is 28%, or 27% higher than comparator levels. The maternal mortality rate is 585 per 100,000, or 106% higher than its comparative indicator. A more appropriate definition of the ultra poor should be based on their health and nutrition status. However, the data are not available, but will be sought as part of the forthcoming Living Standards Measurement Survey (LSMS). Therefore, our current analysis of the ultra poor is based on expenditure level, as well as, indirect evidence (see Table 3). . 9 - Table 2: AGGREGATE SURVIVAL STATUS INDICATORS, 1984-85 Survival Needs Existing Comparative Percentage GrouDs Related Indicator Value Indicator Deviation 1. CHILDREN Child death rate per 1,000 IV 32 12.5 s -156 2. CHILDREN Severe child malnutrition (X) 4 4 V O 3. CHILDREN Underweight prevalence (X) 28 22 V -27 4. INFANTS Infant mortality rate p/l,OOO 73 83 f +12 5. INFANTS Low birth weight (X) 9 13 "/ +31 6. WOMEN Maternal mortality p/100,000 585 284 V -106 7. WOMEN Fertility rate (1986, X) 4.5 4.7 V +4 8. WOMEN Birth rate per 1000 33 35 i +6 9. ALL GRPS Access to Safe vater (X) 57 62 W -8 10. ALL GRPS Population growth (1980-86, X) 2.5 2.6 V/ +4 11. ALL GRPS Life expectancy (years) 62 58 / +7 12. ALL GRPS Daily calories per capita 2,729 2,511 V +9 13. ALL GRPS Death rate per 1,000 10 11 ' +9 af' This indicator is particularlv unreliable due to the mode of measurement. b/ Average value of indicator for group of countries similar to Morocco in terms of per capita GNP, poverty rate, or region. c/ Lower Middle Income (LMI) countries' average. d Median value of indicator for countries with high mortality rates for chilldren under five. Note: Positive sign indicates a better position relative to the comparative indicator. Sources: World Bank 1987; UNICEF 1990; Enquete nationale population et sante, 1987. 3.02 haese patterns merit further review with an emphasis on evaluating the underlying causes for indicators exhibiting negative deviations. The major causes of morbidity and mortality for all groups continue to be the prevalence of communicable diseases, such as respiratory infections and diarrheal diseases. Underlying causes for many of these diseases are relatively low access to safe water (57X), poor sanitation, and the limited availability of basic health care services. 3.03 Also, high morbidity and mortality rates are linked to poor nutritional status, especially for infants and children. While some measures of preschool nutritional status appear to have improved in the past 10-20 years, particularly in urban areas, chronic undernutrition has remained virtually unchanged. Nationwide, a quarter of the children under three years old are chronically undernourished, about 15% are underweight, and 4% are too thin. Overall, 17% of Moroccan children exhibit some form of protein-calorie malnutrition. The causes of these persistent problems are due to the insufficient, non-nutritious, and often contaminated food provided to infants and children which in turn derive from insufficient family earnings, lack of basic health education and unsanitary living conditions. - 10 - 3.04 Less critical indicators also merit attention, as they can reveal useful information about other social sector problems. As an example, calorie intake per person is relatively high, but underweight prevalence and malnutrition remain serious problems -- thus, the solution to nutritional problems in Morocco lies beyond simply providing sufficient calories per capita. Further analysis indicates that intra-familial food distribution in addition to a generally poor health environment and lack of access to health facilities, proper maternal and child health care, and education are determining factors of the nutritional problems faced by vulnerable groups. 3.05 While an analysis of the health and nutrition indicators on an aggregate basis is informative, it overlooks considerable variations in the incidence of survival problems in urban and rural areas and between provinces and regions (see map 3). In terms of nutrition, problems are twice as severe in rural areas compared to urban areas: although 56% of the population lives in rural areas, 75% of undernourished cnildren are found there. Nutritional status is the worst, measured according to the percentage of undernourished and underweight children in Tensift, Sud, and Centre-Sud. As shown in table 3, infant mortality is higher than the national average in 16 out of 47 provinces, most notably in Chefchaouen, Tata, and Ouarzazate. The incidence of morbidity from infectious diseases, which is higher than average in 18 provinces, varies slightly from the incidence of infant mortality. The provinces with the highest morbidity rates are Tata, Ouarzazate, Boujdour, Errachidia, and Figuig. It is worth noting that these provinces are located in subregions which have the highest rates of ultra poverty. B. Income-Earning Indicators 3.06 There has been considerable effort on the part of the Government in terms of human capital development during the last two decades. However, human capital development and income-earning status in Morocco do not compare well to international standards or other LMI countries, as shown in table 4. To begin with, Gross National Product (GNP) is $590 per capita, significantly lower than in other LMI countries which average S750 per capita. Both male and female illiteracy rates deviate considerably from their comparators by 72% and 56% respectively. It is interesting to note that although female illiteracy is much higher, male illiteracy shows the larger deviation, reflecting similar gender discrepancies in comparator countries. Primary school enrollment rates, particularly for girls, are also low compared to the LMI average. 3.07 Unemployment" rates are relatively high as compared to the accepted structural unemployment rate of 5%. As is usually the case in developing countries, recorded open unemployment is considerably higher in urban areas, especially amoiig females. In rural areas, the rate is lower but this hides the fact that 58% of the rural active population (three million, of which two million are women) is engaged in non-wage activities. " Unemployment is defined by the Moroccan Direction de la Statistique to be people ages 15 and over who have not worked during the 30 days preceding a survey, but who have been looking for a job during that period. - 11 - Table 3: ESTIMATED VARIATIONS IN INFANT MORTALITY AND MORBIDITY FROM INFECTIOUS DISEASES, 1987 A Province Sub region Infant Morbidity k' Ultra-poverty mortality from infectious rate (per thousand) diseases (X) (per thousand) Chefchaouen Nord-Ouest 3 140 4.5 18 Tata Sud 2 130 74.4 28 Ouarzazate Sud 2 128 26.1 28 Taounate Centre-Nord 2 122 5.2 10 Errachidia Centre-Sud 2 117 23.1 2V Marrakech Tensift 1 116 7.4 19 Azilal Centre 5 116 4.0 15 Boulmane Centre-Nord 1 113 5.9 16 Taroudant Sud 1 110 10.4 15 Sidi Kacem Nord-Ouest 2 109 2.5 17 Tiznit Sud 2 106 5.0 28 Tetouan Nord-Ouest 3 105 2.6 18 Essaouira Tensift 2 105 2.4 15 Figuig Oriental 1 105 12.6 17 Agadir Sud 1 95 6.2 15 El KelaA Sraghna Tensift 1 95 3.6 19 Taza Centre-Nord 2 92 5.3 10 Guelimit Sud 2 87 11.8 28 Oued-Eddahab Sud 2 NA 11.8 28 Beni-Mellal Centre 5 69 7.9 15 Ifrane Centre-Sud 1 72 6.9 22 Sale-Temara Nord-Ouest 1 65 6.4 10 National Totals 92 4.6 16 y/ Includes the provinces with infant mortality or morbidity rates higher than national averages. b/ Calculated on the basis of reported cases of typhoid fever, measles, conjunctivitis, trachoma, poliomyelitis, leprosy, tetanus, scarlet fever, diphtheria, and meningitis. Source: Annuaire Statistique du Maroc 1988. - 12 - Table 4: AGGREGATE INCOME-EARNING INDICATORS Type of Current Comparative Percentage indicator value indicator a/ deviation GNP (per capita, 1986, US$) $590 $750 -21 Illiteracy (age 15+, X, 1985) Males 55 32 -72 Females 78 50 -56 Primary school enrollment (X of age group, 1984-86) Males 96 107 -10 Females 62 85 -27 Urban open unemployment (X, 1987) 14.7 51 -194 Males 13.4 5 -168 Females 18.5 5 -270 Rural open unemployment (X, 1987) 5.6 5 -12 Males 8.4 5 -68 Females 1.5 5 +70 Rural child labor (Z of rural employed, 1986) 13.5 0S' - Males 10.2 0 - Females 17.5 0 - Urban child labor (Z of urban unemployed, 1986) 2.9 0 - Males 1.9 0 Females 5.9 0 - a/ LMT average. Comparative indicator for unemployment represents the structural rate under full employment (5X). C/ Comparative indicator for child labor represents accepted international standards. Sources: World Deve'opment Report, 1988. Direction de la Statistique Population Active Rurale, Vol. I, 1986-87; Population Active Urbaine, 1984-87; Annuaire Statistique du Maroc, 1988. - 13 - 3.08 With regard to wages, information is scant in Morocco. According to the World Bank Trade Liberalization and Industrial Adjustment Report (1988), real wages for several key industrial sectors have been declining steadily in recent years. Minimum wages fall below the poverty level for an average household (assuming one worker per household) by 40% for industrial workers and by 50X for agricultural workers.'/ However, there is evidence that minimum wages are seldom enforced; thus, providing further evidence of low real wages for many workers. Finally, child labor is high, especially in rural areas, which is partially attributable to the insuf.iciency of the wage levels of other family members. 3.09 Disparities in income-earning indicators across regions are evident in sub-regional poverty and ultra poverty rates. Since the estimation of poverty incidence is based on household expenditure/person, the poverty rates primarily reflect variations in income-earning capacity across different geographical areas. As indicated in table 5, the patterns of incidence of rural/urban poverty and ultra poverty across subregions are similar. It shows that rural poverty is worst in Sud 2 (50%) or 56% higher than the national rate, followed by Sud 1 and Nord-Ouest 3. Urban poverty is highest in Centre-Sud 1 (38%), followed by Tensift 2, and Centre 4. In absolute terms, rural poverty is highest in Sud 2 and urban poverty is most severe in Nord-Ouest 3. Similarly, rural ultra poverty is twice as high as the national rate in Sud 2 (32%), followed by Oriental 1, and Centre-Sud 2. Urban ultra poverty, on the other hand, is highest in Centre-Sud 1 (26%), followed by Centre-Nord 1, and Centre-Nord 2. The absolute numbers of rural poor are highest in Sud 2; for urban poor in Nord-Ouest 3. C. Factors Contributing to Survival and Income-Earninz Problems 3.10 The factors contributing to the unfavorable living standards and low-income earning status of poor households can be classified into four broader domains: the characteristics of the poor, population growth, the structure of the labor market, and the suboptimal provision of social services. 1. Characteristics of the Poor 3.11 As defined in the conceptual framework, the poor are divided into two artificial categories, "conventional" poor and ultra poor. This disaggregation enables an assessment of the nature and severity of poverty issues afflictir.g different segments of society and accordingly, the better targeting of social sector policies and programs. The Conventional Poor 3.12 In Morocco, most surveys and studies have not disaggregated the population according to poverty levels. As such, limited information is '/ On average, there appear to be slightly more than one full-time member per household, but exact data are not available. 14 Table 5: SPATIAL VARIATIONS IN Fr'RTY AND ULTRA POVERTY RATES, 1985 (In thousands) Urban Areas Rural Area Total All Poor Ultra Poor Total All PCr,U1trorPoo REGION Subreglon Urban Number Rate Number Rate Rural Number Rate Numbr Rat. Population Population SUD Sud 1 341 77 23 40 12 534 347 37 154 16 Sud 2 301 72 24 55 18 996 495 50 314 32 TEVSIFT Tensift 1 598 183 37 10S 18 1,350 474 35 265 20 Tensift 2 335 122 37 90 21 851 236 27 110 13 CENURE Centre 1 919 158 17 55 05 23 2 07 0 00 Centre 2 573 112 19 71 12 51 10 19 5 10 Centre 3 865 245 28 118 14 108 26 24 10 09 Centre 4 382 139 37 71 18 1,363 356 28 140 10 Centre 5 567 198 35 118 21 945 246 25 106 11 NORD-OuEST Nord-Ouest 1 973 176 18 86 09 161 52 32 28 17 Nord-Ouest 2 626 193 31 107 17 1,246 433 35 206 17 Nord-Ouect 3 800 246 31 141 18 793 284 36 138 17 CUTRE-NORD Centre-Nord 1 602 220 36 129 21 392 110 28 34 09 Centra-Nord 2 208 60 29 43 21 1,311 306 23 117 09 ORlENTAL Oriental 1 524 130 25 55 12 384 139 36 93 24 Oriental 2 128 17 13 8 05 485 169 35 81 17 CENTRE-SUD Centre-Sud 1 454 175 38 119 26 317 91 29 53 17 C-ntre-Sud 2 224 72 32 37 16 639 216 34 133 21 MOROWD 2.21 2.594 28 1.43641 12.355 3& J ,8 Source: Direction de la Statistique. Ministry of Plannlng. - 15 . available specifically about poor households. The forthcoming LSMS survey should help to address this deficiency, but in the meantime, some characteristics are apparent. One notable feature of both urban and rural poor households is large household size: 70% have more than five members. On average, conventional poor households are larger in rural than in urban areas with an average of 7.4 and 6.5 members, respectively. 3.13 Poor families suffer from low human capital development. In 1985, 73% of the heads of urban households and 85X of those of rural households had ng education. Also, female illiteracy is much higher than male illiteracy (78X vs. 551) nationally. Low educational levels severely restrict income and productive capacity, as well as, the ability to follow prudent health practices or use available social services. 3.14 Another observed characteristic is a lack of assets; this reduces the ability of the poor to earn a stable income. In urban areas, this deficit means that the poor do not have the means or collateral to obtain credit for home ownership or small business endeavors. In rural areas, the incidence of poverty is higher in those households which do not olin land than in those which do (48% compared to 28%). In 1974, 23.4% of farmers were landless and 56.5% owned less than five hectares. The Ultra Poor 3.15 Even less information is available with regard to the composition of ultra poor households. No data on asset holdings is provided on this subcategory of the poor. However, some information is available on household composition and human capital development. These households, both in urban and rural areas, are larger than conventional poor households. Additionally, wages of female workers are considerably lower than wages paid to their male counterparts. In terms of human capital development, about 90% of heads of the poorest households, both rural and urban, reported no formal schooling whatsoever. This exceptionally low level of education not only affects economic productivity, but may be assumed to affect younger generations as well, through educationally impoverished environments in the home. 2. Population Growth 3.16 The aggregate and territorial poverty problems faced by Morocco must be considered in the context of existing and future demographic pressures. Since independence, Morocco's population has more than doubled. As mentioned, death rates have fallen and life expectancy has risen and a small decrease in birth rates has been achieved. These combined factors have led to a virtually stable, but relatively high, population growth rate over the last three decades (around 2.5% per year). Through this period, Morocco's population has become increasingly young due to emigration and reduced infant mortality rates. Only 15% of the current population is over 44 years old, while 62% is less than 24 years old (see table 6). 3.17 As a result, the labor force has been expanding at a rate significantly higher than population growth. From 1984-1987, the active population grew at a rate of 6% compared to 2.6% overall. Territorial differences are also observed between rural and urban areas. Rural-urban - 16 - migration accounted for 42.8S of all urban growth between 1971 and 1982. The number of urban centers (cities with over 100,000 people) has doubled in the last 22 years. Table 6: POPUIATION AND DEMOGRAPHIC INDICATORS 1965 1973 1983 1986 1988 Total Population 13.3 16.4 20.9 22.7 24.0 (in millions) Fertility Rate ) per 7.1 6.7 4.9 4.9 6.1 Crude Death Rate) thous- 18 15 10 11 9 Crude Birth Rate) and 49 44 38 36 35 Infant Mortality) 145 120 91 90 90 Life Expectancy (years) 49 53 59 59 62 Less than 24 years (%) 59% 62% 63% 62% 62% Source: Ministere du Plan, Centre d'Etudes et de Recherche Demographique 3.18 The government projects the population to reach over 30 million people before the end of the century. It is important to note that these projections are based on declining growth rates. Such declines can only occur if current family planning programs, which now reach approximately 36% of the female population, are expanded. While no data on population growth are available according to income status, poor families tend to be the largest and the last reached by family planning efforts. Therefore, future family planning, as well as, other social services should incorporate specialized policies to meet the needs of the poor. Overall, such a large population and the fast pace of urbanization have and will put great pressure on per zapita social expenditures and should be considered carefully in policy plaaning. 3. Labor Market Conditions 3.19 The open unemployment rate in Morocco in 1985 was about 14% in urban and 5% in rural areas. Urban unemployment has consistently been above 10% over the last 30 years, while rural open unemployment has remained around 5%. This disparity is common in less-developed countries, both due to data collection problems in rural areas and to increased market participation in urban centers. High unemployment levels in urban areas tend to depress wage levels, especially among the least skilled workers. In rural areas where measured unemployment levels are lower, underemployment, unstable jobs, and low earnings represent the most severe labo'~ issues. In rural areas, 38% of the employed work less than 40 hours a week; this figure is close to 60% for - 17 - female workers. Overall, 50X of rural employed population works as non-wage family labor. 3.20 One major contribution to low income levels is the composition of labor activities. In rural areas, the majority of the conventional poor (in 1985) were in households headed by farmers (531), followed by agricultural workers (131), and nonagricultural workers (81). About 101 were in households headed by inactives (see table 7). 3.21 The low income of poor farmers is attributable to ownership of small, unproductive plots, lack of basic inputs, such as irrigation and fertilizer, and a limited use of technology. Crop productivity for small farms is so low that a large number of farmers are unable to cover their baiic needs without additional income from raising livestock. The low income of conventional poor agricultural workers is due to low rural wages in combination with limited employment. In 1985, the minimum agricultural wage was DH 20.32 a day. This means that an agricultural worker emp_oyed at the minimum wage level was making only DH 4,877 per year if he/she was employed full time, or 40% of the income required at the poverty level for the average household. 3.22 In urban areas, conventional poor household heads are found across low-skill and low-wage occupations, such as nonagricultural workers (23%), office and service employees (21%), merchants (17%), industrial non-agricultural employers (15%), and inactives (15%). The primary factors contributing to urban poverty are low wages, temporary employment, and unemployment. In 1985 the minimum full-time industrial wage was DH 7,546 a year, or only 50% of the income required at the poverty level for the average household. 3.23 Another major factor contribu
Группа Всемирного банка · Pre-2003 Economic or Sector Report
Morocco - Reaching the disadvantaged : social expenditure priorities in the 1990s
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