At the beginning of 2015 several demonstrations took place in Iraq protesting the lack of new civil service positions due to the austerity budget. Graduates in particular were bitterly angry that they were not provided with jobs as was expected and had been happening in previous years. Politicians and religious leaders called for the government to provide jobs, holding it responsible for ensuring citizens have an income. So far the government has not increased the new positions available beyond what was allocated in the budget and it is likely that this situation will be repeated next year.
Any observer will know that government employment already suffers from two major problems: overstaffing and inefficiency. Two thirds of the Iraqi budget goes towards salaries and expenses, a number that is not sustainable with lower oil prices. In every single department of the state there is considerable overstaffing, and productivity is extremely low. The endemic issue of corruption compounds the state’s problems, and appointments are based on the political and sectarian quota systems in operation, with no due attention to whether that person is the right one for the job. There is no culture of reviews, evaluation, or professional development. In fact, government employment is a job for life as almost nobody is ever fired or made redundant, rather they are moved from one department to another, even if they are incompetent. Because government employment guarantees a pension and a job for life, there is high expectation and demand to be employed by the state.
According to the Ministry of Planning’s studies in 2013 the latest estimate for Iraq’s total population is 35.1 million. Of these 20 million are classed as adults capable of work, between the ages of 15 and 65. The actual size of the labour force is around 8.5 million, a low figure due to the fact that female participation is only 15%. The government has 3.5 million permanent civilian employees and 1 million on fixed term contracts. In addition, the security forces of the Defence and Interior ministries total 1.5 million. The total number of government employees is therefore 6 million out of a total labour force of 8.5 million. Additionally around 1 million are in receipt of social welfare but not in employment. Only a small number of employees are in the private sector and given that the rate of unemployment is 16% and that around 500,000 enter the labour force every year, there is huge pressure on the government to find a solution to the employment crisis.
Iraq’s population is young, 40% are under the age of 15 and the rate of population growth is 2.6%, double the world average, with the total population expected to hit 80 million by 2050. Access to education and female participation in the workforce are increasing steadily, meaning that the demand for jobs in the coming years will rise. The government cannot continue to meet expectations that it will provide jobs for all in the state sector, and so it must undertake several steps to avert an even greater crisis. Some suggestions on employment policy are:
- Outline clearly how many state sector jobs are available each year to manage expectations and limit the employee intake to 20% of new graduates per annum
- Introduce performance reviews across the state sector to tackle the inefficiency problem and identify overstaffing issues
- Increase the tax rate for higher paid government staff and lower the tax rate for private sector employees
- Offer the private sector a 25% subsidy of a new employee’s salary for the first two years to increase private sector employment for graduate and entry level jobs
- Offer entrepreneurs access to government-backed loans if they hire a minimum number of new employees
- Open a new public-private pension scheme so that private sector employees have access to pensions with similar benefits to state sector employees
- Legislate for private sector development and investment in order to encourage domestic and foreign companies to operate in Iraq, including tax breaks for companies that offer a significant amount of new jobs
- All new government awarded contracts should require that a minimum of 95% of the workforce be local Iraqis
- Introduce a quota on employment visas offered to foreigners
- Invest in infrastructure, industry, and agriculture to open up thousands of new jobs
- Privatise loss-making state enterprises but with a jobs guarantee
- Outsource more government work to the private sector in order to improve efficiency and move employees out of the state sector
In essence the growth in jobs in the coming years will largely need to come from the private sector and so the government needs to undertake policies that will support this growth. Above all, the government needs to work on managing expectations that it can and should provide jobs for all.