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Khalil

SALE, Morocco -- Clamor fills the factory as workers bent over their industrial sewing machines stitch together women's garments at galloping speed. Yet the vast workshop is only half full, its blank benches a testimony to how the global financial meltdown swings back at the developing world.

Morocco's diverse, open economy has served as a model to poorer nations in Africa and the Arab world, but it has also left the country exposed to global downturn as trade with the rich world shrinks. And many are now watching whether the ripple effects of international finance could turn nasty in a developing nation like this north African kingdom with strong political and migration ties to Europe.

Moroccan authorities fear some 20,000 jobs are being cut in the textile industry, about 10 percent of the national total. Others have vanished in the tourism industry, the backbone of the coastal country's economy. Carmaker Nissan froze plans for a car plant promising thousands more positions. Remittances are down, too, as Moroccans working in Europe face layoffs.

"We're worried more cuts will follow," said Naima Arour, shouting to make herself heard over the hammering of her sewing machine. "Without work, we starve here," she said, barely lifting her eyes from the collars she was hastily fixing to women's blouses.

The government is keeping a close watch on at-risk sectors and intervening to keep joblessness down and maintain stability. Unauthorized groups critical of Morocco's tolerant, Western-friendly liberal economy, including those on the Islamist fringes, recruit massively in the country's slums, where idle youth are a fertile target for extremists.

There are no unemployment benefits in Morocco. And the firing of one employee usually directly affects a whole family, rippling fast through the economy in working-class towns like Sale, where much of the country's textile industry lies.

Abdelhai Bessa, Arour's employer, says a sense of pride and habits of social and Muslim solidarity usually prevent Moroccan managers from firing staff until absolutely necessary. But he's already laid off more than 600 of the 2,000 people he employed.

"We're very dependent on international trends," said Bessa, a former unionized railway engineer who started his textile business from scratch in the 1990s and reached US$15 million in revenue last year, surfing on a decade of outsourcing to market Morocco's cheap labor to Europe.

His firm works primarily for upscale retailers in Britain, where consumers have been particularly hard hit by the financial crisis. Orders have dropped 85 percent for menswear and fancy children's dresses. One of his main customers went broke in December.

The Moroccan government, which unlike many Arab states has no oil revenues, heavily relies on foreign trade to sustain its projected 5.8 percent GDP growth in 2009, from a gross domestic product of US$90.5 billion last year. It says it carefully monitors which sectors are taking blows.

"When warning lights turn orange, we intervene," Ahmed Reda Chami, Morocco's industry and commerce minister, told The Associated Press.

Authorities have spent 1 billion dirham (nearly US$100 million) on a support package, whose measures include canceling some payroll taxes and offering government guarantees to companies seeking bank loans.

"If lights were to turn red, we could do much more," said Chami, who with seven other Cabinet ministers and several top business leaders is part of a "Strategic Watch Committee" set up by the government to follow the unfolding effects of world recession.

Morocco sheds jobs but hangs on in financial storm - World AP - MiamiHerald.com