Below the locked-up rooms where she once used to sew for a living, Zahra Bouffera makes her bed in the corridor of the factory she now calls home.

The 40-year old Moroccan worked in the textiles factory just outside the capital Rabat until six months ago, when management shut its doors as the global economic crisis took its toll.

Unable to pay her rent, Bouffera moved into the empty premises, where sewing machines still stand and drapes of fabric hang, locked up and only visible through a window.

Upstairs, another former worker and her son live in what once was an office.

"The factory closed its doors and I cannot find any work to pay rent. I preferred to come live in an empty factory instead of living on the street," Bouffera said. "I live here and beg at the door of the factory."

Bouffera has made her home in the corridors of the premises, which have remained open, bar the rooms where she and her colleagues say they used to make garments for international brands such as Britain's Marks & Spencer and Spain's Zara.

Foreign-owned textile manufacturer Mornatex closed four factories in Sale, across a river from Rabat, in September. Some 1,500 people were made redundant, former workers say, after they were told by their bosses the financial crisis imposed the closure.

Economic woes in European markets, Morocco's largest export destination, raised fears for the future of a sector which accounts for around 16 percent of exports.

Competition from clothing suppliers such as China and India has not helped a country with high poverty and unemployment and without the oil wealth of other Arab states.

The industry lobby AMITH says 10,000 jobs had been lost over the previous two years. While it does not yet have the final number of factory closures in 2010, AMITH says about 30 shut in Sale alone.

But with signs of recovery emerging and some European clients coming back to Morocco because of its proximity, AMITH says things are slowly improving.

"Demand in destination markets fell at the end of 2008 and in 2009 but since the end of March 2010, we have seen monthly improvements ... compared to 2009 and 2008," AMITH director general Mohamed Tazi said.

"In the first quarter of 2010, revenues fell 30 per cent compared to 2009 ... but month after month we started to reduce the gap and ended the year with a 4.5 per cent rise."

He said AMITH was working on "urgent" vocational training plans to boost employment in the sector and attract investment, without giving further details.

While unemployment officially hovers around a contested nine per cent, the government has not been able to create even half the jobs it has pledged over the 2007-2012 period, partially due to the effects of the crisis.

To limit the damage from the global crisis, the government granted manufacturers incentives including tax breaks.

Along with industry experts, it has opened a fashion and textiles school in Morocco's biggest city Casablanca, Labour Minister Jamal Aghmani said.

"After the international economic crisis, the government decided to help certain industries, especially export-oriented ones such as textile and garments," Aghmani said.

"The sector has been recovering lately, but this does not mean the end of difficulties for some since our help was conditional". The government would only help employers who pay social insurance for their staff and taxes, he said.

Morocco is an ally of the West with a reformist monarch and growing economy, seen by some experts as less susceptible than its neighbours to the unrest sweeping the Arab world.

Amid revolts in Tunisia and Egypt and demands at home for reform, Rabat added 15 billion dirhams to the 17 billion dirhams allocated by the 2011 budget for the subsidy fund called Caisse de Compensation.

At the same time, plans to give public-sector jobs to an estimated 4,000 highly-qualified graduates were announced last month in an apparent bid to defuse the potential escalation of almost daily protests by jobless graduates in the capital.

"Today, Morocco is considered an alternative base for manufacturing, not just versus Asia but also from a security point of view in light of what has been happening in the region, in Tunisia and in Egypt," Tazi said.

In Sale, former Mornatex workers want the government to do more. Dozens stage almost-daily protests outside, calling for help from officials after they say their former manager, an Australian, left Morocco. Company officials were not reachable for comment.

Struggling to come to terms with the loss of her job, former employee Fatima Akougel said: "The decision to close the factory was abrupt. We were working normally. We worked for major international brands."

"We are asking the Moroccan government to put pressure on the foreign investor. It is the government that allowed (the firm) to come here to invest, so the government is responsible."

Upstairs, above Bouffera's makeshift bed, former worker Houria Boulboul lives in what had once been an office in the factory with her nine-year old son. She too could no longer afford to pay rent and moved into the factory, bringing with her basic belongings such as tea pots and a gas cannister.

"Teachers ask me why my studies are not going so well," her son Nawfal said. "I tell them it's because I live in a factory."