Today, Iraq’s labor force is considerably larger than it was even a decade ago as a result of steady population growth and an increasingly dominant youth demographic. In 2012, the total labor force in Iraq was 8.2 million people, which was nearly a 2 million increase from 2004, and almost double the size it was in 1994. 42 percent of the Iraqi population participates in the labor force, which is defined as persons 15 years of age and older working or looking for work. Labor participation varies across the country, with data from 2011 showing Anbar, Najaf, and Wassit governorates as having the highest labor force participation (between 47 to 48 percent), and Dahuk, Thi-Qar, and Muthanna the lowest rates (between 37 to 40 percent).
According to data from the World Bank, unemployment in Iraq is currently at the lowest point it has been in the past two decades. As the country transitions out war, more economic opportunities have opened up. In 2004, unemployment reached 28.7 percent, but as of 2012 it had dropped down to only 15.1 percent.
Like many of its Middle Eastern peers, Iraq has a youthful demographic. 56 percent of the Iraqi population is under 24 years of age, and the median age is a mere 21 years. While a large proportion of Iraq’s population today is children, in a few years’ time, the country will be well-equipped with a sizable labor force that can assist the development of Iraq’s various sectors. This makes foreign investment prospects in the country evermore promising, especially in manufacturing, construction, or agriculture.
Further efforts to build the capacity of Iraqi youth are needed, but the country’s growing working age population is not without skills. 78.5 percent of the population is literate, and the majority of Iraqis go through at least 10 years of schooling. However, only one out of every ten Iraqis has at least a diploma, and the likelihood of being unemployed or underemployed in the country increases substantially without a degree. Young Iraqis have received international support for skills development over the past few years. Organizations such as the US Agency for International Development and the International Labour Organization have equipped young Iraqis with job skills training and business development education for rising entrepreneurs.
Iraq’s economy is heavily dependent on the oil sector, but petroleum industries do not create many job opportunities. Job-seeking Iraqis are dependent on public sector employment, or smaller private industries for work. While men tend to find opportunities in construction and security, women in Iraq largely find work in agriculture or services.
In Iraq, formal employment–where employees receive a wage and are entitled to workers’ rights–is largely represented by public sector openings (approximately 62 percent of waged employees). Private sector opportunities are fewer and primarily limited to the oil and security industries. An estimated 45 percent of urban employment is accounted for by public and government sectors, and 28 percent of rural employment. The public sector in the governorates of Kirkuk, Diyala, Najaf, and Basrah employ around 70 percent of waged employees, whereas Sulaymaniya’s government only employs 47 percent. Although women comprise of less than one-fifth of the labor force in Iraq, 60 percent of working women are employed by the public sector.
The informal sector, the part of Iraq’s economy that is neither regulated or taxed by the government, fills the gaps where formal public and private employment cannot. In a study that defined informal employment as those employed without access to social security benefits, an estimated 66.9 percent of workers in 2012 belonged to this group. Participation in informal sectors is spread out evenly between manufacturing and construction, wholesale, transport, services, and public administration and social services (involvement in informal agriculture was considerably smaller). The informal economy is not illegal and in many ways supports the activities of the formal public and private sectors by acting as an intermediary for goods and services, although the former delivers finished products as well. Many Iraqis move into the informal economy to gain experience, and then try to transition into formal employment. Thus, the underground sector is a large employer of Iraqis and absorbs a good amount of the labor force.
The Iraqi Ministry of Labor and Social Affairs is responsible for setting regulations on wages, labor code, safety, health, and labor relations. Effective July 1, 2013, the ministry raised minimum wage for unskilled workers from 250,000 dinars ($215) to 120,000 dinars ($103) per month. The Center for Organization of Statistics and Information Technology approximated that the average salary per year in 2009 was 2.4 million dinars ($2,060), which was at the time, two to three times the poverty level.
Labor laws in Iraq are in place to protect worker’s rights to associate and bargain collectively, and prevent forced or compulsory labor, but these laws are seldomly enforced. With the lack of formal employment opportunities and the prominence of unregulated and informal labor, many work conditions go unsupervised and fall below satisfactory standards. Half of employed Iraqis are unprotected, which means that they work without a contract, pension, and annual leave. In a survey conducted by the National Democratic Institute in 2012, jobs were rated as the Iraqi people’s biggest priority, ahead of even basic services or security.