Informal Work and Auto-Entrepreneurship Laws in the Maghreb: What can Tunisia learn from Morocco?

They not only make up over half of the region’s labour force and a substantive part of its GDP, but often put workers into unsafe environments or in conflict with authorities. While Mohamed Bouazizi’s self-immolation is surely the most famous example, deaths and injuries of informal workers have been part of a wider pattern, from Hoceima and Jerada to Sbeitla. Almost ten years after Bouazizi’s passing, Tunisia’s government has passed an “auto-entrepreneur” programme designed to help informal workers “formalise” - to make it easier to register their business, to pay a simplified tax, and gain access to the social security system. From a state’s perspective, the hope for such programs is typically that they will provide better data on informal work and raise standards alongside some modest tax revenue. For informal workers, the hope is typically that participation will protect them from state harassment and gain access to formal support such as credit and social security. Is this program good news for Tunisia’s informal workers, and what challenges lie ahead? In order to answer these questions, we are taking a look at the program - and at the experience of Morocco, who has been running a similar scheme since 2015.

Auto-Entrepreneur Laws in Tunisia & Morocco

The two ‘auto-entrepreneur’ laws in Morocco and Tunisia, adopted in 2015 and 2020 respectively, both seek to create a more regulated status for informal workers through registration and the simplification of tax and administrative procedures. Both programs suggest a broad set of informal activities that can apply, including industry, trade, services and crafts. Among the main differences between the program is the fact that Tunisia’s auto-entrepreneur regime is designed to also apply to agricultural activities, which are a substantive set of the rural labour force in both countries. The programs are limited to small-scale economic activities. To be eligible for the auto-entrepreneur status, Tunisia has set an annual turnover threshold of 75,000 Dinars (approx. 24,000 Euro). Morocco however has segmented thresholds by activity, with 500,000 Dirhams (approx. 46,000 Euro) for industrial, craft and commercial activities and 200,000 Dirhams (approx. 19,000 Euro) for service activities.

Both programs are built around a simplified, and notably regressive, turnover-based tax regime, designed to lower fiscal barriers to firm registration. In Tunisia, this is composed of an income tax applicable to the annual turnover of 0.5% and a social contribution of 7.5% annual turnover (with an exemption for the first year) for all types of activities. In Morocco, again, tax contributions (revised downwards since 2019) depend on the type of activity performed, with a 0.5% tax rate on annual turnover for industrial, craft and commercial activities and 1% for service providers, a distinction that Tunisia might want to consider moving forward. One of the critical differences here lies not in the payments, however, but in the benefits. In Morocco, while the law 114-13 on the status of the auto-entrepreneur in 2015 mentioned a medical and social assistance scheme, no specific legislation has since been adopted to date to set the terms of medical and social coverage for all Moroccan auto-entrepreneurs. Here, Tunisia’s programme is more explicit, outlining a mechanism for auto-entrepreneurs to contribute and benefit from social security.

Keys lessons from Morocco’s auto-entrepreneur program

One of the key lessons of Morocco’s auto-entrepreneur program has been that the devil lies not only in the detail of the programme specification, but also its implementation. We highlight three main points.

First, Morocco’s experience shows that in order to get informal workers to register for the program, significant outreach and trust-building is necessary. Many informal workers have had negative experiences with state bureaucracies or associate them with harassment. In addition, the flow of information about new economic programs is often limited. In order to overcome these issues, Morocco had given its post office a central role in the implementation of the program, hoping that informal workers would have more trust in the institution. In addition, it implemented a campaign of seminars and training that drew on an expansive NGO network. In Tunisia, outreach, as well as trust-building methods will be similarly important, and likely should be approached with a long-term outlook and a focus training as auto-entrepreneurs navigate their new status.

Second, even with trust-building measures, Morocco’s experience highlights that an auto-entrepreneur programme will likely only be attractive to some parts of the informal sector. In Morocco, take-up of the programme has been clustered in particular in coastal urban areas such as Casablanca and Rabat. Auto-entrepreneurs are frequently working in informal commerce and services, with a lower take-up in manufacturing and artisanry. Given that informal work is extremely diverse, it is unsurprising that auto-entrepreneurship is not a one-size fits all solution. Not all informal work is ‘auto-entrepreneurship’ - some is in informal or even formal enterprises. Consequently, this can represent one aspect of a state strategy to engage with informality, but needs to be complemented by a wider set of policies. In Tunisia, this will be exacerbated through the inclusion of social security access through the program. While this is attractive for many informal workers, it also raises the costs of contribution. This connects to our final point.

Third, the success of such a program likely depends on additional financial support. Conversations with Morocco’s auto-entrepreneurs constantly point to financing as a major difficulty. Frequently, banks remain reluctant to lend to auto-entrepreneurs because they still consider their work insatiable or insecure, or because the terms of their credit are non-compatible with the auto-entrepreneur's profile (amount, terms, activity, etc.). Consequently, Morocco has set up, since February 2020, a national support and financing program, which offers a range of products to auto-entrepreneurs, with a preference for rural areas, which have been popular among new entrants to the program. This highlights not only the importance to provide financing in Tunisia, but broader support that includes training and access to infrastructure.

Conclusion: Inclusion and Support

As the previous point has noted, the challenges that informal workers face are diverse, and they do not stop only because they begin to pay taxes. For both programs, more inclusivity is possible. While gaining access to the auto-entrepreneur status has been a practical challenge for migrants in Morocco, they appear to be explicitly excluded from the program in Tunisia. In both countries, a more explicit commitment to data sharing and transparency would also facilitate the collaboration with civil society groups and researchers and help build trust in the programs. It is good news for informal workers that the auto-entrepreneur programs in Tunisia and Morocco, contrary to common trends, are not solely structured around taxation and resource extraction, and that support is a key part of the discourse around these programs. Their success will partially depend on how much this support materialises, and how much these programs are embedded in a wider set of social and distributive policies.

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By Othmane Bourhaba (Université Hassan II) and Max Gallien (ICTD, IDS)