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A need to act on logistics, corporate finance, market knowledge, intervene on human resources and stimulate innovation ... After a long research process, surveying firms, universities and professional federations in Morocco, in September 2019, Femise published a report aimed at placing Moroccan SMEs in the running, to position them at the heart of value chains. "Despite active sectoral policies and a number of reforms, the dynamics of Moroccan exports remain insufficient in view of the efforts made. While SMEs represent 95% of Moroccan enterprises, about 40% of GDP and 46% of total employment, they account for only 31% of exports. The purpose of this report is to identify the obstacles to improving the business environment and integrating Moroccan SMEs into the global value chains. The acceleration of exports will therefore only increase the integration of Moroccan exporting firms into these global value chains, "says Femise.
 
 

The document of about fifty pages suggests some avenues for public policies foremost among which is logistics. Although efforts have been made with the creation of the Moroccan agency for logistics and with the extension of Tangier Med, the fact remains that SMEs do not have access to logistics platforms both because of their cost and of their remoteness. Femise thus suggests grouping SMEs on specific areas so that they benefit from the massification of flows. Another path envisaged by Femise is access to international funding that could be facilitated with the creation of a specialized public bank in the wake of national institutions Bpifrance or Eximbank.

Since 80% of global trade is made between companies as part of these international production networks, integration into a value chain requires knowledge of the markets through support from Economic Advisers or through increased presence on trade shows. The objective according to Femise being to privilege a constructed approach. Innovation is also a differentiating factor in competitive markets. This is why the report encourages developing partnerships with universities and stimulating business flows to attract foreign direct investment. Investing in human capital is also an asset for Moroccan companies according to Femise.
 
* The report was coordinated by: Patricia AUGIER (President of the Scientific Committee of FEMISE and of Institut de la Méditerranée), Vincent CASTEL (Chief Country Economist – Morocco at the African Development Bank – AfDB) and Tarik EL MALKI (Professor of Management and Corporate Social Responsibility at ISCAE). It benefited from contributions by: Mohammed Amine HANIN (Financial Auditor at EY),  Maryse LOUIS (General Manager of FEMISE), Josef PERERA (Political Economist and FEMISE Researcher), Constantin TSAKAS (General Secretary of FEMISE and General Manager of Institut de la Méditerranée) and Jocelyn VENTURA (Political Economist at Institut de la Méditerranée / FEMISE). It is available for download here : http://www.femise.org/wp-content/uploads/2019/09/FEMISE-EuroMED-3-GB_compressed.pdf

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Since the conflict erupted in Syria in March 2011, millions of Syrians have been forced into exodus to the Mediterranean riparian countries: Turkey, Jordan, Lebanon, Egypt and Italy. In 2018, 5.5 million Syrians (62% of total refugees) reside in Turkey, according to the latest figures from the Office of the High Commissioner for Refugees. For the most part, Turkey was only a transit country to Europe. It has become a country of destination. The Syrians arrived massively in ten cities located in the border areas of Gaziantep, Adana before gradually gaining big cities like Mersin, Ankara, Istanbul, Izmir ... Several studies have found short-term impact of this influx population: rise in the unemployment rate, increase in the price of rents and food products. On the other hand, they have observed that consumer prices are falling as a result of lower prices or services produced by refugees, putting pressure on production costs.

According to the Femise report, coordinated by Professor Ramon Mahia (AGREEM - University of Madrid) and with the contribution of Prof. Ahmet Ali Koc at the Economic Research Center on Mediterranean Countries (CERM) at Akdeniz University in Turkey. The economic impact of Syrian integration in Turkey will accelerate over the next five years. 
According to the report on "The long-term impact of Syrian refugees on the Turkish economy", (available here  ) a new growth trend is expected between 2023 and 2028 with the arrival of young Syrians (+ 15%) on the labor market. 
The Femise report assesses the impact from the point of view of the added value of refugees in the Turkish economy. It is valued at € 4.3bn (LTL 27.2bn) at the end of 2017, or 1.96% of Turkey's total GDP. A share that according to the projections of the report will increase to 4% in 2028 with one million Syrian workers in the country. In addition, the employment of Syrian-induced economic integration of Syrian refugees was estimated at 132,454 in 2017.

For the report's authors, the production effect of refugees is greater than their induced demand effect for 2017, 2023 and 2028 respectively. This means that the productive capacity of Syrian refugees as entrepreneurial skills and labor supply seems to be more effective than their consumption effects on the overall output of the economy.
In the early days, with the language barrier and lack of correct certificates and papers, the Syrians had no choice but to work at low prices for the textile industry, the manufacturers of mechanical parts in the remote factories of Gaziantep, in poor hygiene and safety conditions.
Breathing the dust, the toxic odors, they work for long hours for an average monthly salary of 238 dollars. While progressive integration has occurred with access to the labor market, health and education services, access to citizenship and residence permits in the aftermath of the agreement between the European Union and Turkey were a decisive step.
"Improving employment opportunities, increasing skills, developing their entrepreneurial capabilities and granting work permits in targeted sectors will further increase refugees' contribution to economic growth," says Femise.
Click here to read  the FEM43-05 report 
 

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MEDITERRANEAN. “Given the forecasts for demand, the private sector’s inability to create sufficient jobs is clear,” says Chahir Zaki, pointing out the continuing difficulty companies have in hiring people. Speaking at the annual EMNES (Euro-Mediterranean Network for Economic Studies) conference in Brussels on 27th June, 2019, the associate professor of economics at the Faculty of Economics Political Sciences, Cairo University, observes that the majority of jobs created are in the services sector, which accounts for 80.1% of employees in Jordan, 49.6% in Tunisia, 47.1% in Egypt and 38.3% in Morocco. This sector produces less added value and lower margins, meaning companies have less chance of increasing staff numbers.

These countries’ private sectors are polarized around a majority of very small enterprises and a few major groups, which dominate the market. The former lack the ambition, or the finances, to develop. Changing dimension involves costs, which they cannot fund due to their poor productivity, very limited finances and total inability to move into the export markets.

“Southern Mediterranean companies have a growth problem. They start off small and are incapable of expanding. They are therefore excluded from the worldwide value chain,” observes Zaki, citing, “non-tariff barriers blocking market access for products from the region and a lack of sustainable financing sources.”

The economist and EMNES member also blames “weak institutions” that lead companies to specialize in traditional sectors instead of high technology. “The reforms to facilitate trade, exports, have to be led at a local level,” he says, citing in particular the need for a harmonization of regulations and norms, an increase in the number of laboratories and certification bodies, as well as the vital need to seek governments’ technical assistance, plus international donations, in order to attain the objectives.
 
Chahir Zaki insists on the absolute importance of attracting foreign direct investment to industries, especially those manufacturing high added value goods. “This would stimulate job creation and, as a result, foster inclusivity,” he stresses. According to him, “reinforcing workers’ skills would help the Southern economies become part of the worldwide value chain. This would increase the demand for competent employees, rather than battling fierce competition in international markets.” To this end, the European Union’s External Investment Plan (EIP) is an initiative likely to attract more investment in private-sector businesses. 

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MEDITERRANEAN. Chronic high unemployment, especially among young adults, low employment rates, changes in education systems, friction within the job market, and governments’ failure to address the issue, immigration serving as a safety valve… reasons abound to explain the gap that exists between training and job offers in Southern Mediterranean countries. These reasons were the subject of discussions at the EMNES’ (Euro-Mediterranean Network for Economic Studies) annual conference held in Brussels on 27th June, 2019, with conference facilitator Nooh Alshyab of Yarmouk University putting a leading question: “Is it a supply or demand issue?”
 
“It’s not one or the other, it’s both,” says Nathalie Creste, adviser to the Director for Labour Mobility at the European Commission’s Department of Employment, Social Affairs and Inclusion. Friction in the labour market is well and truly a consequence of the skills mismatch, bolstered by the fact that further education is civil service-oriented and that, despite an increase in schooling levels, bad quality education continues.
 
“The main problem is still the unemployment rate among the highly educated, 40% in Tunisia -50% even for women in that same country,” says Cinzia Alcidi, senior research fellow and head of the Economic Policy Unit at the CEPS (Centre for European Policy Studies). Consequently, training isn’t matched to the available jobs. “Education should be generating new jobs. It’s vital that we design an education system that trains employees for private-sector companies and new employers,” claims Alcidi.

The importance of the public sector and its attractiveness (higher salaries, better social protection, job security and status) condition education choices. And it absorbs the best talent. According to Eurostat figures (2017), of the million young people (Algerians, Egyptians, Moroccans and Tunisians) aged between 18 and 34 on European soil, 40% are employed, 42% are inactive and 18% are claiming unemployment. Further proof that their training is unsuited to the needs of overseas companies.

“Without cooperation between the two shores, we’re not going to succeed,” maintains Nooh Alshyab. Which is where programs such as HOMERe (High Opportunity for Mediterranean Executive Recruitment) come in. Its president, Léo Vincent, wants to “connect graduates with businesses” by offering six-month internships. His recent successful tender to the call for projects issued by the EU’s Department of Migration and Home Affairs will allow him to enhance the employability of young Moroccans, Tunisians and Egyptians.
“The migratory flow is going to continue; it is essential to be able to manage it,” says Cinzia Alcidi.

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MEDITERRANEAN. The blue transition addresses the future of the Mediterranean and is based on three interactive pillars. This vision must first of all promote dialogue among the many Mediterranean civilizations –the different cultures, religions and national identities- rather than focus on setting them against each other and ending up with what is known as a “red” transition. Then, if this roadmap is to succeed, it is essential to obtain support for a common project aimed at regional integration, on a win-win basis. Lastly, regional strategies and joint action plans must be put in place to further inclusiveness and sustainable development.

Speaking at the Euro-Mediterranean Network for Economic Studies (EMNES) annual conference in Brussels on 27th June, 2019, Rym Ayadi, founder and president, brought up the acronym TRIS (Transparent, Responsible, Inclusive and Sustainable) in connection with transition in the areas of energy and the environment, the economy, society and governance, a model she believes will become predominant by 2050. The model aims to instil trust by increasing accountability for decisions, actions and objectives, both past and present (Transparent). It also involves managing the foreseen and unforeseen consequences in the future and reflecting on their acceptability on an ethical level (Responsible), taking into account what is socially desirable for today’s generations (Inclusive) and being concerned about what we are going to leave future generations (Sustainable).

"TRIS can provide an answer to the prosperity paradox: the digital era provides us with unlimited potential for innovation and economic progress, but prosperity has stalled. It can also tackle the issue of the acceleration in the number of new technologies and discoveries,” says Rym Ayadi.
 
“At present, the Euro-Mediterranean project is not a joint project, it’s an individual project with a bilateral approach. But we should be talking about a regional commonwealth,” she adds, insisting that “we know governments’ role in pushing reforms, but everybody must contribute to the decisions.” EMNES does not want this road map to circulate only among economists, but also among decision-makers and citizens and in universities, to increase awareness.

The president of the Mediterranean network of economists is calling for “a paradigm shift in the world of work, involving contracts and worker mobility in Southern Mediterranean countries.” According to Ayadi, “The vision of the blue transition, indeed, is to determine how to create jobs.”