MOROCCO'S SKILL SHORTAGE THREATENS ECONOMIC GROWTH

UNCLAS SECTION 01 OF 02 CASABLANCA 000006

SIPDIS
SENSITIVE

STATE FOR NEA/MAG, EB/IFD/OIA
COMMERCE FOR NATHANIEL MASON

STATE PASS TO USTR

E.O. 12958: N/A
TAGS: ECON EAID PREL EINV ETRD EFIN PGOV MO
SUBJECT: MOROCCO'S SKILL SHORTAGE THREATENS ECONOMIC GROWTH


1. (SBU) Summary: Morocco's leading CEOs agree that the country's
education system has failed to produce graduates fit for the work
place. The skill shortage, specifically in the technical and
engineering field, threatens the Kingdom's economic growth and
competitiveness, the CEO's warned. Public and private sector
efforts to improve the gap between graduates' existing skills and
the demands of modern jobs have done little to quell anxiety among
Morocco's high-technology sectors, which are key pillars in the
Kingdom's efforts to create a modern and out-looking services
sector. End Summary.

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The Skills Gap
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2. (SBU) EconOff recently met with students from Morocco's most
prestigious business and management school, the Higher Institute for
Commerce and Business Management (ISCAE),to elicit their thoughts
on the growing disillusionment among the country's youth regarding
employment prospects. One of the leading causes to this phenomenon,
the students said, was the schools failure to prepare students to be
competitive in the work place. "Our country's universities and
training centers have failed to properly educate a generation of
young people who simply cannot meet the expectations of modern day
firms", one student said.


3. (SBU) In separate discussions, Morocco's leading CEOs echoed
similar concerns about the failure of the country's education system
to prepare new graduates entering into the workforce. According to
Coca Cola's CEO Imad Benmoussa, Morocco's education system has
failed to produce graduates fit for the work place. Mehdi Sahel,
the CEO of the outsourcing firm Tata Consultancy Services (TCS),
added that his company's greatest challenge in terms of business
operation and growth is the scarcity of qualified personnel. He
explained that because of the limited supply of qualified employees,
these candidates are in a position to demand higher wages that
cannot be met by many employers. Reinforcing this point, the
director of the country's largest recruiting firm, Jamal Belahrach,
explained that for each IT position advertised in the market, only
four applicants out of 100 meet the minimum qualifications. Out of
these four, on average one is willing to accept the job at the
advertised salary. Belahrach lays the source of labor market
imbalance at the feet of the basic education system in Morocco,
which he categorizes as "catastrophic".


4. (SBU) However, even if Morocco's top universities could overcome
the shortcomings in the educational system, the lack of work ethic
in the younger population also remains a problem for employers.
Ahmed Legrouri, the dean of engineering at Al Akhawayn University,
told EconOff that Moroccan businesses complain that although recent
graduates from engineering and technical schools may have adequate
academic knowledge in their field, they often lack an understanding
of what an employee is expected to do. New hires, he reported, fail
to report to work on time, neglect instructions, and resist
direction from supervisors. Moroccan schools and higher education
institutions need to do a better job of inculcating in students the
basic expectations of an employee, in order to make them more
attractive to potential employers, he concluded.

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Bridging the Skills Divide
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5. (SBU) Government programs to bridge the skills divide have
yielded mixed results. For instance, public institutions like the
Office of Professional Training and Labor Promotion (OFPPT),which
trains close to two-thirds of all the country's recent graduates
have not translated into larger-scale reductions in unemployment.
While OFPPT is expected to double the number of trainees in 2010,
Morocco's OFPPT southern regional director told EconOff that he
worried about the lack of jobs once twice as many graduates entered
the system. And although state grants of up to USD3100 exist for
engineering and higher-technology sectors to train college
graduates, employers have been reluctant to participate in such
programs due a long and cumbersome reimbursement process, said
Mohamed Tamer, the Vice President of the General Federation of
Moroccan Business (CGEM).


6. (SBU) "What the government has to understand is that improving
the quality of education, not the quantity of students and trainees,
will be critical to preparing Morocco's graduates to be competitive
in today's job market", argued Rachid Benabdallah, the President of
Al Alkhawayn University. With an official unemployment rate that
remains higher among the educated (19 percent) than the non-educated
(5 percent),it is not clear that higher public expenditures to
increase the number of educated youth alone will improve employment

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levels. As a result government agencies are beginning to place more
emphasis on the quality of education, although such reform will take
years before Morocco reaps its benefits. "Morocco's educational
system has to be restructured if the country's higher value-added
industries are to succeed," TCS's CEO warned.


7. (SBU) Aside from governmental intervention, ISACE students
unanimously agreed the private sector had a bigger role to play in
promoting education and job growth. For instance, enterprise
promotion programs targeting young people, such as business
incubators, were cited as a promising area because they address
practical hands-on experience and competency issues many young
adults lack in the work place. As an example of private sector
intervention in this context, Coca Cola's CEO told EconOff that his
company is slated to open a university that will help bridge the gap
between graduates' existing skills and the demands of modern jobs.

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Comment
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8. To modernize its workforce and job creation systems, public
private partnerships in education and training should be created in
the context of growing an economy that can export higher value-added
goods and services. Specifically, university and private sector
partnerships should join forces to conduct the R&D required for a
high value-added economy. Building capacity at the university level
and linking capabilities among faculty, researchers, and graduate
students with the needs of private enterprises, should figure
prominently in Morocco's efforts to create a modern and out-looking
services sector. Morocco risks losing out to better educated, more
dynamic workforces in the MENA region, if it fails to address the
skills gap.

MILLARD