United Nations Report On Unemployment In Iraq

The United Nations’ Office for the Coordination of Humanitarian Affairs recently released a report on unemployment in Iraq. It surveyed 25,875 families in 115 districts across all eighteen of the country’s provinces. The study found that unemployment was 18%, but that might rise because so much of the economy is dependent upon the government.

The U.N.’s findings on employment were much closer to the official numbers, than many unofficial estimates. The U.N.’s survey found that unemployed was 18%, and underemployment was 10%. The organization stated that those statistics had largely stayed the same since 2004. That was close to the last estimates released by the government. In late January 2009 the Central Agency for Statistics and Information Technology said the unemployment rate was 15% based upon a poll of 18,144 families across the country. In comparison, at the end of the 2008 the Minister of Planning Ali Baban told the Special Inspector General for Iraq Reconstruction that he believed unemployed was 35-40%.

The U.N. found that young men and women were hit the hardest by unemployment. Men between the ages of 15-29 had a 28% unemployment rate. They made up 57% of all the unemployed in the country. That was almost double the government’s statistics of 26% unemployment amongst young people. Women faced an even tougher situation as only 17% were involved in the labor market. Of those, 23% were unemployed and looking for a job. The vast majority that were employed, 80%, were college educated. Only 30% of women with a secondary education were in the labor force, and that dropped to 10% for women that only finished primary school. Iraqi women were much worse off compared to their compatriots in neighboring countries. In Kuwait for example 52% of women worked, 42% in Iran, and 29% in Jordan.

One major cause of these labor patterns was the government. 43% of all jobs in Iraq and 60% of full time work was provided by the public sector. The number of people working for the government doubled from 2005 to 2008. As reported earlier, a breakdown of jobs across Iraq’s provinces found that the government was the largest employer in fourteen of eighteen provinces, and tied for first in one more. In Kurdistan, the local authorities provided 50% of jobs. Wasit had the smallest percentage, but even then was 23%, second only to farming. The government also preferred older men between 45-65, and have hired more of them in recent years. This has distorted the labor market as civil jobs have drawn away the best and brightest from the private sector, while shutting out women and young men.

Public jobs were the most coveted in Iraq because of their security, benefits, and high pay. On average, a family with one government worker has a per capita income 14% higher than a household with one private sector employee. In rural areas that disparity is even higher at 22%. 55% of homes have no one working for the government. That means they are more likely to fall into poverty, especially if they have a female-headed household since women are far more likely to be out of work.

Private employment has declined from 2003 to 2008. In that first year 21% worked part time in the private sector, and 28% were full time. By 2008 25% worked part time for a private business, while 22% had full time employment there. As would be expected more workers moved into the public sector during that period, from 20% with a full time job with the government in 2003 increasing to 31% in 2008. The U.N. found that much of the full time work in the private sector since 2007 has been due to contracts given by the government. The agency warned that unless business grew the 450,000 new workers entering the labor market in 2009 would probably not find a consistent job.

There are many structural impediments to this happening. Private businesses can’t compete with government owned ones that are subsidized. High inflation in recent years has also kept interest rates high, which limits loans. Less than 2% of small businesses surveyed said that they had taken a loan from a bank or government for example. The oil industry also dominates Iraq’s economy, which has led to little diversification. Petroleum is also not labor-intensive meaning there are few jobs in the country’s largest business. Iraq’s laws also do not promote industry. The lack of security has kept international firms from investing and creating new sources of employment as well.

The U.N. warned that Iraq’s economy was heading for a crisis because of the drop in the price of oil. Oil profits account for the overwhelming majority of the country’s revenues. Now that world prices have collapsed, the government will not be able to employ as many workers. In 2009 salaries and benefits account for almost one-third of government expenditures. That will mean Baghdad will have to divert more of its spending to paying employees rather than investing in the future. That in turn means fewer jobs in the long run. That could threaten the future development of the country as their will be more unemployment, especially for the young, that could lead to more social unrest.

The paper ends with some recommendations for Baghdad to follow to try to alleviate this problem over the long term. First the laws have to be changed so that they promote private business. The budget also has to be adjusted so that it can give more contracts to the private sector. The economy also needs to break its dependence upon oil and diversify to create more jobs. More work also has to be created in the private sector for women and young men. The United Nations, World Bank, and Baghdad already have one program running to support business in the country. The U.S. has an Iraq First program to funnel reconstruction contracts to Iraqi owned companies. Much more is needed to solve this problem however. A government information campaign would probably also be necessary to begin changing society’s opinion about women in the work force as well. In the short-term, there is little help for Iraq’s employment situation as oil prices are dropping, and the budget is heading for a deficit. The government’s response has been to push for more oil production and exports, rather than to diversify, showing that the dominant paradigm amongst officials is to stick with what’s proven, rather than trying to forge a new way forward.

SOURCES

Aswat al-Iraq, “Iraqi Unemployment Rate Dropped by 15% in 2008,” 1/26/09

Inter-Agency Information and Analysis Unit, “Iraq Labour Force Analysis 2003-2008,” United Nations Office for the Coordination of Humanitarian Affairs, January 2009

Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09

Susman, Tina, “IRAQ: Unemployment bad and getting worse,” Babylon & Beyond Blog, Los Angeles Times, 2/15/09