LControversy against his pension reform is currently in full swing in France. For good reason, the decline in the statutory retirement age and the increase in the number of working quarters do not seem to please everyone.
On the one hand, politicians, journalists and experts close to the current government accuse future retirees of living longer, even after they retire at age 63. France’s average life expectancy is now 79 for men and 85 for women, and fertility is declining.
On the other hand, left-wing trade unionists and other experts see the current pension system as a haven not to be disparaged. But this remains a French affair, which is of no concern to us at all, and the question is not raised in France alone. From Morocco, the question becomes more and more urgent. First, the demographic environment. Morocco is in the process of completing its demographic transition, which began in the mid-1970s. The result is an inevitable decline in the fertility rate, which is currently hovering around the replacement rate (about 2.1 children per woman), even reaching the rate. 1.9 children per woman in urban areas.
At the same time, according to data from the HCP, the aging of the Moroccan population is starting to accelerate, with 4.3 million people over 60 years old in 2021. This is 11.7% of the total population. We are still far from reversing the population pyramid, but as the saying goes: “Prevention is better than cure”. Other socio-demographic factors also pose problems from the point of view of population dynamics, such as increasing celibacy rates and delays in the average age at first marriage. What does the administrator propose to deal with it? A number of steps seem to have been taken. First, the retirement age should be raised to 65 for both the government and private sectors. Similarly, an increase in contributions along with the minimum pension threshold is planned to double the SMIG.
Unions, on the other hand, are pushing for unification of pension schemes and a 63-year retirement age. The conversation started, and promises to go viral. Meanwhile, the financial position of our pension funds remains critical, except for the CNSS, which will perform well until 2038. However, the increase in retirement age should always be considered as a magic wand by various governments. ? Because this measure is routinely used when reorganizing the accounts of pension funds, it seems to buy time, allowing the problem to be postponed until later.
This will cause significant problems with uniformity, particularly if the government’s desire to start at age 65 goes ahead. Because, in this case, the average life expectancy at birth would be about 4 years shorter, and we would have the same retirement age as the French. Here, I am not talking about life expectancy in good health, where the gap can be wide, given the state of our health system and the number of people living in precarious conditions in Morocco.
But there are other alternatives
More obvious, but at the same time more hidden, is the view of the informal sector as a population reserve army. Because millions of youth work in the informal sector but do not contribute. If the latter are integrated into the formal sector, their young age and their contributions will make them a sort of newborn from the perspective of pension funds. When talking about the informal sector, remember that we are talking about 77% of the Moroccan workforce according to the latest World Bank report.
This is the highest rate in the MENA region. This is enough to give our pension fund a second wind. Another lever we can work on is labor productivity. For a very simple reason, if the latter increases significantly in the coming decades, the levels of income, wealth generated and contributions will increase proportionately. This would be equivalent to doubling the size of the active population from an economic perspective, while keeping the same size from a demographic perspective. In other words, the productivity of one Moroccan worker in 20 years should be equal to the productivity of 2 or 3 Moroccans today. So this applies to multiplicative contributions as well. So, buying time is good, but what to do with it?
This is a different story. Without repeating the mistakes of other countries, we now have the opportunity to explore new and innovative ways to solve the current and future problems of our pension funds, essentially reducing the issue of retirement age. Abraham Maslow said, “If the only tool you have is a hammer, you tend to see every problem as a nail.”
By Rachid Achachi, columnist, CEO of Archè Consulting
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