The presence of foreign workers and the ongoing struggles within Iraq’s private sector have been widely discussed as contributing factors to the country’s high unemployment rates. Manar Al-Ubaidi, the head of the Iraq Future Foundation for Economic Studies and Consultations, recently highlighted that the root causes of escalating unemployment in Iraq are primarily linked to the inadequate personal, scientific, and practical qualifications among job seekers, rather than solely relying on the influx of foreign labor.
In a recent statement, Al-Ubaidi noted that, despite some growth in various economic sectors, Iraq continues to grapple with a significant issue concerning the skill deficiencies among those seeking employment. This disadvantage hampers their ability to secure available positions in a market that has seen development, particularly in key sectors such as services, hospitality—including restaurants, hotels, and cafes—construction, finance, agriculture, and notably the oil sector. He pointed out that, due to this lack of competitiveness, foreign workers have predominated in many of these roles.
Al-Ubaidi emphasized that the challenge extends beyond mere qualifications, encompassing inadequate education and preparation for the labor market, as well as insufficient vocational training opportunities that hinder local workers’ competitiveness against expatriates. He further explained that the ineffective enforcement of labor laws has allowed some sectors to exploit foreign workers under conditions akin to servitude, thus making them a more appealing option for employers than local talent.
To address these issues, Al-Ubaidi argues that merely increasing job vacancies will not suffice. A restructuring of the education and training systems is imperative to align them with market needs. There’s an urgent call to enhance vocational education to ensure that graduates possess the skills necessary for competition and to reformulate higher education programs to better fit job market requirements.
Moreover, he advocates for the expansion of colleges and institutes that specialize in critical sectors such as oil, banking, tourism, and hospitality, ensuring that adequately trained personnel can meet the demands of these industries.
On the regulatory front, Al-Ubaidi insists on the strict enforcement of labor laws to prevent the unwarranted prevalence of foreign workers, thereby providing local individuals with a fair opportunity to compete within the job market. Without these necessary reforms, the persistent demand for foreign labor will remain unchanged, keeping unemployment rates high despite the creation of new job opportunities in Iraq.
The phenomenon of expatriate labor in Iraq has persisted for several years, impacting all sectors, particularly with a substantial number of workers originating from Bangladesh, followed more recently by those from Syria and Lebanon amid regional economic challenges. These workers are predominantly found in the service industry, including restaurants, hotels, and nightlife venues.
Data regarding the number of foreign workers in Iraq is inconsistent; the Ministry of Labor and Social Affairs reported 4,000 foreign workers in 2024, whereas former Minister of Labor, Basem Abdel-Zaman, estimated the figure in 2019 at 750,000. The previous parliamentary committee on labor and social affairs put the number as high as 1.5 million.
A significant aspect of this issue is the informal entry of foreign workers into Iraq, with reports suggesting that up to 95% enter illegally to evade the country’s legal residency procedures, as noted by Ministry of Interior spokesperson Khaled Al-Muhanna.
On January 21, recent enforcement measures were taken against foreign workers violating residency laws, resulting in 700 arrests of individuals who failed to regularize their legal status within the allotted timeframe.
The economic disparities between local and foreign workers are stark, with the average salary for foreign employees in Iraq pegged at $700, contrasted with a minimum salary for local workers at $270. The head of the Strategic Center for Human Rights indicated that the unemployment rate for workers in Iraq, when factoring in unregistered foreign labor, stands at approximately 26 percent.
Iraq has been marked by widespread protests over the years, often resulting in fatalities due to government crackdowns. Protesters have consistently called for job creation, improvements in unemployment rates, and enhanced public services, ultimately demanding a dignified standard of living.
According to the latest figures from the World Bank, Iraq’s unemployment rate has reached 13.7 percent, marking the highest level since 1991. This was corroborated by Abdul Zahra Al-Hindawi, a spokesperson for the Ministry of Planning, who also noted an increase in the poverty rate to 31.7 percent last year, although it has declined slightly to 30 percent this year.
The industrial sector in Iraq has faced considerable decline since 2003, with many factories ceasing production in favor of imports. The Iraqi Industries Union previously estimated that around 40,000 industrial projects remain idle. Despite successive government programs pledging to stimulate the economy and local industry, little progress has materialized, while trade with neighboring countries continues to overshadow domestic production.
The private sector, alongside government projects, has also stagnated, experiencing severe declines due to inadequate infrastructure and ongoing security challenges that have contributed to a consumer shift towards imported goods.