Iraq’s public sector workforce set to shrink, private sector to take lead in a decade
Shafaq News/ Iraq’s public sector workforce is expected to account forjust 1-2% of the private sector in the next decade, an advisor to PrimeMinister Mohammed Shia Al-Sudani said, amid a surge in government hiring inrecent years.
“We have reached sufficient staffing levels after hiring extensivelyover the past years. Under current conditions, public sector jobs will onlymake up 1-2% of the private sector in 10 years,” the advisor noted.
Al-Sudani, in a statement on Saturday, stressed Iraq’s need to diversifyits economy and reduce reliance on volatile oil revenues, which remain theprimary source of the country’s financial resources. He warned that the statecould no longer sustain continued public sector hiring.
“The policy of government employment cannot continue,” al-Sudani saidearlier, urging a shift in focus towards other economic drivers.
Economists have echoed the need for reforms, calling for greater supportfor the private sector to stimulate job creation. “Strengthening the privatesector is critical to reducing reliance on government jobs,” one economistsaid, adding that Iraq’s banking sector must play a key role in financing privateenterprises and fostering economic growth. Some called for involving theprivate sector in key economic decision-making as part of efforts to revitalizeIraq’s economy.
Limits Of Public Sector
Hussein Falamarz, head of the Entrepreneurship Team and advisor to Iraqipremier, said that public sector employment has reached its limits, followingsignificant hiring in recent years. Falamarz said that future governmentemployment would focus primarily on key sectors such as education andhealthcare, where the state remains responsible for infrastructure and budgetallocations.
“The public sector, which is government employment, has boundaries,”Falamarz told Shafaq News Agency. “With the large number of people hired inrecent and current periods, there is now sufficient staffing. Future hiringwill depend on the government’s expansion plans in education, healthcare, andessential sectors where the government continues to manage infrastructure orprovide funding.”
Falamarz explained that this situation will lead to a decline in publicsector hiring as private sector employment rises. “Foreign investment companiesare coming in, and they need small projects, which are provided by the localcommunity. This is why the state has begun focusing on vocational trainingcenters,” he said.
He assured that the private sector can accommodate everyone, as itcreates job opportunities based on real market needs. “Any individual whocreates a job for themselves in the private sector simultaneously provides jobopportunities for others. The private sector always grows based on genuinelocal demand, unlike the public sector, where certain departments may not havea significant impact but are necessary. In the private sector, there is no jobcreation without actual demand.”
Falamarz projected that Iraq’s rapidly growing population, whichincreases by over a million people annually, underscores the need to boost theprivate sector. “This demographic growth requires the promotion of the privatesector, along with harnessing all available resources and establishingpartnerships between the government and private enterprises, such as throughthe Iraqi Development Fund and the Entrepreneurship Initiative.”
He explained that the goal is to build a private sector that meetsnational needs while providing job opportunities for youth across all skilllevels.
“The Entrepreneurship Initiative, launched by the Prime Minister onMarch 4, 2023, aims to encourage the private sector and motivate young peopleto enter the labor market according to their skills. It also seeks to study thelabor market through them,” Falamarz said. “Research has shown that smallprojects are the best way to secure employment. With the training,registration, and app-based tools provided by the Entrepreneurship Initiative,it has become easier for all trainees, especially the youth, to access jobopportunities.”
Government Support
Iraq’s constitution mandates government support for the private sectorto play a central role in driving economic growth and creating jobs, said SamirAl-Nasiri, advisor to the Association of Iraqi Private Banks.
“Article 25 of the Iraqi Constitution emphasizes the need for thegovernment to support and develop the private sector, allowing it to take on akey role in development and job creation,” al-Nasiri told Shafaq News Agency.He noted that government hiring in 2023 and 2024 had exceeded its capacity,making private sector support essential.
“Supporting the private sector is necessary for generating jobs, and thebanking sector must play a major role in financing small, medium, and largeprivate projects,” he said, adding that the private sector should alsoparticipate in key economic decision-making.
He pointed to the importance of including private sector representativesin central committees tied to the Prime Minister’s Office, such as theMinisterial Council for Economy and the Economic and Financial Reform Cell.“This involvement is necessary to discuss critical economic decisions thatsupport sustainable development,” Al-Nasiri said.
With sufficient support, the private sector can provide jobs forgraduates and unemployed workers across sectors, including industry,agriculture, tourism, services, health, and real estate, he explained.
"The private sector must play a fundamental role, as outlined inthe Private Sector Development Strategy for 2014-2030 and the NationalDevelopment Plan for 2024-2028."
Decades Of Negligence
“The private sector is neglected andstruggling. For example, the number of projects in the egg and poultryproduction sector has dropped from 6,000 to 2,000, and of those, only 1,000remain. The other 1,000 are also on the verge of closure due to negligence andthe lack of border control and supportive policies,” Lawmaker Ibtisam al-Hilalitold Shafaq News Agency.
The lawmaker added that the parliamentary agriculture committee haspassed Law 35, which is now up for a vote in the House of Representatives. “Thislaw is important, as it grants farmers the right to establish projects such asfeed and poultry factories, which will contribute to job creation and boostagricultural production,” she said.
Meanwhile, economic expert Mustafa al-Faraj criticized the government'sefforts to reduce unemployment and employ Iraqi labor, calling theminsufficient given the scale of the problem. "Government measures toreduce unemployment and recruit Iraqi workers have been ineffective and do notmatch the magnitude of the current crisis, where unemployment stands at around35%, a figure likely to rise with the freeze on public sector hiring,"al-Faraj said.
He emphasized the need for the government to turn to the private sectoras a "true partner" and encourage it to employ Iraqi workers. “Theprivate sector is being undermined by the government, with no support in theface of stifling bureaucracy and red tape, which has caused its decline andexacerbated unemployment in Iraq,” he said.
Al-Faraj revealed that Iraq is home to roughly one million foreignworkers, with 30% to 50% of them having entered the country illegally. “Theseforeign workers are competing with Iraqi labor, draining local workers’opportunities. Reducing the number of foreign workers would open up job opportunitiesfor Iraqis, especially given that there are 1.5 million unemployed Iraqis,” henoted.
He urged Iraq's Ministry of Labor and Social Affairs to hold workshopsto train Iraqi workers and prepare them for the job market while safeguardingtheir rights. Al-Faraj also called on Iraq's Ministry of Higher Education anduniversities to update curricula to align with labor market demands,particularly as technology and artificial intelligence continue to evolve.
