Al-Khalis, Khalis Arfan District, Diyala Governorate

LABOUR MARKET OPPORTUNITIES AND CHALLENGES

IOM Iraq – May 2020

This programme is supported by: List of Acronyms

BEP Business Expansion Package BSP Business Support Package CIP Community Implementation Plan CoC Chamber of Commerce CoI Chamber of Industries CRC Community Resource Centre ESP Employment Support Package FGD Focus Group Discussion FT Farming Training IDP Internally Displaced Person ISIL Islamic State in Iraq and the Levant IOM International Organization for Migration JP Job Placement LMA Labour Market Assessment NFI Non-Food Items MoLSA Ministry of Labour and Social Affairs OJT On-the-Job Training SME Small and Medium Enterprise VT Vocational Training

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the publisher. TABLE OF CONTENTS

List of Acronyms 2

IOM Disclaimer 2

Table of Contents 3

Executive Summary 4

Study Introduction 6

Labour Market Assessment Overview

District Overview

Assessment and Methodology Overview

Findings 8

Attitudes Towards Entrepreneurship and Cash

Types of Jobs Available

Skills Gaps

Recruitment Mechanisms

Supply-side Bottlenecks

Demand-side Bottlenecks

Conclusions 12 Labour Market Opportunities and Challenges

EXECUTIVE SUMMARY

IOM conducts livelihood programming in 15 out of 18 that the construction sector and trade with construction governorates in Iraq. As part of the Returns and Recovery materials were dominated by certain groups (without Unit programming, the International Organization for specifying which ones). Migration (IOM) undertook a labour market assessment • Key informants mentioned that the sectors currently (LMA) in Al-Khalis in Diyala Governorate from December employing most people were in agriculture, construction 2019 to February 2020. LMAs have been conducted in (and daily paid jobs in construction), trade, grocery shops, over 30 locations across Iraq and give insights on the state malls, and internet companies. of the local market in a given area, the hiring preferences of employers and the available skills and aspirations of • Employers reported that working hours averaged 8.5 jobseekers, among others. hours per day (the majority reported 9 hours or more). Business owners do not have written contracts with STUDY COMPONENTS workers.

LMAs consist of both qualitative and quantitative exercises: • The average salary for skilled workers is 339 United States Key Informant Interviews (KIIs), multisectoral community dollars (USD) and USD 246 for unskilled workers. workshops and surveys with jobseekers, employers and • One third of employers reported a preference for men to consumers. fill some positions, including in cafes, restaurants, grocery This LMA focused on Mansouriya sub-district in Al-Khalis, shops, as electrical appliances technicians, and for jobs in one of the districts of Diyala Governorate, specifically on a snooker club. the village of Al-Jabal. • Women-owned businesses generally include tailoring, A summary of key findings is included below, followed by food preparation (including baked goods), trade, beauty recommendations for future interventions. salons, hairdressing, women’s accessories, and ‘businesses from home’ in general. These businesses were reported KEY FINDINGS to earning about USD 127 per month (or more, as many • Jobseekers overall prefer to own their business (87%) respondents reported an income range). A couple of pointing to a preference for entrepreneurship in the jobseekers thought that women do not make a profit, community. referring to businesses in tailoring and other ‘small businesses.’ • The vast majority of informants felt that cash support would not cause inter-household and community conflict. • Workshop participants discussed the need for courses in tailoring, hairdressing and wedding planning and • While almost all jobseekers reported that people are not management for women, in addition to barbering courses comfortable paying for goods and services in cash, almost for men. 53 per cent of jobseekers reported preferring cash, 33 per cent in-kind assistance, and the remaining mentioned • Jobseekers thought that no sector had difficulty in finding ‘other’. adequately trained employees. Employers also reported not experiencing difficulties in finding adequately trained • Workshop participants in Al-Jabal mentioned that the employees except for one barber. main economic sectors include agriculture and private businesses, without specifying further. • Almost half of the businesses surveyed have experience in providing apprenticeships, including employers/owners • Jobseekers reported that the main economic sectors of grocery shops, coffeeshops, electrical installation/ include agriculture, construction, retail (household items, construction shops, confectionery shops, welding furniture, electrical appliances and clothing) and trade workshops, electrical appliances shops as well as bakers (agriculture and construction materials), groceries, food (in and a barber. general, and bakeries), manufacturing (welding, smitheries, PVC), carpentry, services (photography, mechanics, cafes, • While jobseekers mostly did not know about a job centre, barbers and tailors), and restaurants. All jobseekers though they suggested that job services could be offered in the that these jobs were desirable. Four jobseekers reported community’s centre or in Al-Mansouriya’ centre.

4 IOM IRAQ Labour Market Opportunities and Challenges

• Most employers reported personal connections and word club, a construction material shop an electrical items of mouth as their main hiring mechanisms. and construction material shop, an electrical installation shop, and a welding workshop. These could be therefore • Employers mostly opposed hiring through more formal considered potentially sustainable, as businesses and in channels due to perceived corruption and lack of remuneration capacity. transparency. • While grocery shops experience all types of demand, these • No businesses with high demand and paying higher mostly pay lower salaries. Nonetheless, many groceries still salaries (or salaries above the average of all salaries), pay salaries slightly below the average, which could be still were found. Businesses with average demand and paying considered fairly high. higher salaries include three cafes, a market, a snooker

Recommendations

Agriculture/livestock, manufacturing, restaurants, textile (including clothing for men), and industry in general (sand, gravel, etc.). Workshop participants also mentioned that a kindergarten is required.

SECTORS TO TARGET Construction appears dominated by certain groups and should be therefore supported with caution considering group power dynamics. Construction should not be avoided as it was historically an important sector in this location, with high potential for job creation reported the workshop participants

SECTORS TO AVOID N/A

• Vocational training (VT) in ‘craft’ occupations such as carpentry, blacksmithing and barbering were suggested. VT in tailoring and hairdressing was suggested for women

• On-the-Job training was not explicitly mentioned

• Farming training was suggested

• Business support packages and business expansion packages (BSP/ESP) in wedding ACTIVITIES TO TARGET planning and decoration was suggested for women, in addition to hairdressing and tailoring. Typical women-owned businesses to target were also suggested, therefore food preparation, beauty salons, hairdressing, women’s accessories, and trade with other goods in general. For men, ‘crafts’ such as carpentry, blacksmithing, and barbering, in addition to trade in groceries could be supported through BSP/ESP. In general, it was suggested to expand existing small businesses

• Job placements were also suggested

ACTIVITIES TO AVOID N/A

Most consumers do not have any savings. A small number have debts. CFW is therefore CASH FOR WORK (CFW) recommended, including in general waste removal, school rehabilitation, and rebuilding of damaged houses

Cash support is recommended, as slightly more than half of jobseekers prefer cash and UNRESTRICTED CASH key informants thought cash support would not cause community conflicts

Youth, female-headed households, graduates, persons with disabilities, older people, and PROFILES TO TARGET less mentioned groups such as unskilled workers, returnees, and internally displaced persons

NOTES N/A

Table 1. Recommendations

IOM IRAQ 5 Labour Market Opportunities and Challenges

STUDY INTRODUCTION

IOM recognizes that the private sector is an engine for growth; DISTRICT OVERVIEW therefore, it strives to create inclusive markets at the individual, Al-Khalis is a town located in Diyala Governorate, approximately community and institutional levels. At the individual level, IOM 15 km north of Ba’quba. Diyala has a diverse ethno-religious has prioritized support to micro enterprises, including providing population comprising Arabs, Kurds and Turkmen. Religious business development services (for example business advisory communities in the governorate include Sunni and Shia services) and Business Support Packages (BSPs), including Muslims, Christians, Yezidis and Ahl Al-Haqq, a religious group in-kind and cash support, all of which aim to increase income with roots in Shia Islam. Agriculture represents one of the main generation at the household level. economic activities in Diyala. The governorate is famous for For those individuals who need capacity development support its production of dates and citrus, and livestock and poultry or who have specific backgrounds such as agriculture, IOM farms were also common.1 The Ba’ath regime neglected the provides specialized skills development and training through development of the governorate, and the Iran-Iraq War, the Vocational Training (VT), Farming Training (FT) or On-the-Job 1991 Gulf War, the subsequent United Nations sanctions, Training (OJT), accompanied by employability assistance the 2003 invasion and the following insurgency and sectarian – inclusive of in-kind items tailored to enhance individual fighting also took their toll on the governorate’s infrastructure. employability. For beneficiaries who already have relevant Cheap imports, and lack of skilled labour and capital further education or training and need to gain hands-on work stalled Diyala’s economic development.2 The conflict to push experience, IOM’s job placement and job matching initiatives the Islamic State of Iraq and the Levant (ISIL) of out of the link participants with businesses in growth sectors, and pays governorate led to high levels of infrastructure and private their salaries partially or fully for three to six months. property damage in Diyala, with damage to roads particularly high in Al-Khalis and Khanaqin and arable and grazing land only At the community level, through the Enterprise Development partially accessible, in part due to landmines. Legal and health Fund (EDF), IOM provides support to slightly larger businesses services were the most difficult to access.3 – small and medium enterprises (SMEs) – to support long- term job creation and the expansion of local production Insecurity remains high in the governorate, with attacks from capacities. IOM also targets the infrastructure needed to insurgents regularly reported. Some experts claim that Diyala support markets. For example, in agricultural communities remains a fallback location for ISIL – a place to hide and recover, IOM may support irrigation projects. At the institutional level, given its geography and terrain4. Since harvest season began in IOM provides capacity building to national and local authorities, April 2019, crop fires have raged across Diyala, with varying including market assessments that seek to promote institutional estimates of the losses. ISIL has claimed responsibility for change in support of local livelihoods. burning hundreds of hectares of farmland in Diyala. However, it has been impossible to determine how many fires had been LABOUR MARKET ASSESSMENT OVERVIEW started by ISIL, or otherwise untangle the various causes for an increased number of fires in comparison to previous years.5 IOM’s LMAs are intended to provide actionable recommendations for the individual livelihood assistance that Diyala’s history as a hotbed for ethnic and sectarian conflict IOM provides in multiple districts throughout Iraq. This LMA also led to a large number of internally displaced persons focuses on the communities of Al-Jabal, located in Mansouriya (IDPs) even before ISIL violence. Despite the overall decrease sub-district in Al-Khalis district of Diyala Governorate, and in the numbers of IDPs in Iraq, 34,350 individuals displaced includes interviews and a community workshop. during September and October 2019. Most of them fled from Baghdad and Diyala governorates due to the worsening security

1 NCCI, Diyala Profile, 2015. https://www.ncciraq.org/images/infobygov/NCCI_Diyala_Governorate_Profile.pdf 2 Ibid. 3 Social Inquiry, Conflict Fragility and Social Dynamics in Diyala Governorate: An Assessment of Khalis, Muqdadiya, Kifri and Baladrooz Districts, April 2018, https://static1.squarespace.com/static/5bbb4e4c29f2cc31b47ff50f/t/5c515fd5758d4639fb8908c7/1548836894008/Diyala+Peace+Dynamics+Study+- +Final+Version.pdf 4 Michael Knights and Alex Mello, Losing Mosul, Regenerating in Diyala: How the Islamic State Could Exploit Iraq’s Sectarian Tinderbox, CTC Sentinel October 2016, The Washington Institute, https://www.washingtoninstitute.org/uploads/Documents/opeds/Knights20161025-CTCSentinel.pdf 5 Ahmed Aboulenein, Maha El Dahan, After years of war and drought, Iraq’s bumper crop is burning, Reuters, June 20, 2019, https://www.reuters. com/article/us-iraq-wheat-fires-insight/after-years-of-war-and-drought-iraqs-bumper-crop-is-burning-idUSKCN1TL08T

6 IOM IRAQ Labour Market Opportunities and Challenges situation, provision of services and employment opportunities.6 Jobseeker Surveys Displacement remains high in Al-Khalis with 5,952 individuals Jobseeker surveys are designed to identify preferences of recorded as of late December 2019, in addition to 74,232 unemployed and underemployed workers. In Al-Khalis, 30 returnees.7 jobseekers were identified and surveyed. The survey’s purpose Many families in Al-Jabal are not connected to the water was outlined for each jobseeker survey and informed consent network. Access to power is poor, with many families relying was obtained from those surveyed. on generators, which are expensive. Schools are overcrowded and require major works. A primary health centre is available, Employer Surveys but is only open 8 hours per day. Waste is accumulated in Thirty employer surveys were also conducted in Al-Khalis to the river, which causes water-borne illnesses. Before 2014, provide a sample as representative as possible of the local the main source of income included agriculture, in addition to market. Employers were initially provided an advance copy of gravel and sand factories. These businesses were closed due the handout materials and then later contacted for follow-up to the crisis and subsequent security restrictions. interviews.

CONSUMER SPENDING SNAPSHOT Consumer Surveys

• Key weekly expenses: The typical consumer in Al-Jabal The consumer survey was designed to triangulate data reported spending an average of USD 133 per week on related to demand, income and vulnerability. In commercial food for their household (consisting of 5.4 members on or industrial districts in Al-Khalis, members of the public average). were approached and 30 respondents were identified as • Key monthly expenses: Seventy per cent reported respondents. There were no restrictions on the demographic monthly expenses on temptation goods, such as sweets profiles of participants, but IOM sought diversity to the extent and tobacco, averaging USD 44 per month. possible. The table below outlines the types and number of surveys ASSESSMENT AND METHODOLOGY OVERVIEW conducted for Al-Khalis. The LMA process began in late November 2019, after a TOTAL NO. MALE FEMALE two-day training on labour market assessment objectives and TOOLS OF SURVEYS RESPONDENTS RESPONDENTS the tools for data collection. Following the training, community CONDUCTED level workshops with youth, women, and local residents were Multisectoral organized in December 2019, followed by KIIs, jobseeker, Community 20 4 24 employer, and consumer surveys. Workshops Key Multisectoral Community Workshops Informant 10 0 10 Interviews A multisectoral workshop was conducted in the village of Jobseeker Al-Jabal; 24 host community members (20 men and 4 women), 29 1 30 Surveys were interviewed. After introducing IOM and its programming Private staff explained IOM’s plan to work closely with community Sector members in implementing future programmes. 29 1 30 Employer Surveys Key Informant Interviews Consumer 30 0 30 Ten KIIs were conducted with representatives of the business Surveys community in Diyala (6 from Al-Khalis and 4 from Baquba Table 2. Surveys Conducted in Al-Intisar in Al-Khalis for district). KIIs seek to establish trends and observations about Labour Market Analysis the business community, industries currently hiring, ongoing public and private investment, and key emerging sectors capable of generating employment.

6 Ibid. 7 IOM, DTM Displacement Tracking, January 2020.

IOM IRAQ 7 Labour Market Opportunities and Challenges

FINDINGS

ATTITUDES TOWARDS ENTREPRENEURSHIP AVERAGE SALARY FOR AVERAGE SALARY FOR AND CASH SKILLED WORKERS UNSKILLED WORKERS USD 339 USD 246 Jobseekers overall prefer to own their business (87%) pointing to a preference for entrepreneurship in the community. Consumers noted average monthly incomes of USD 227 per The vast majority of KIIs felt that cash support would not month. cause inter-household and community conflict. While almost One third of employers reported a preference as to which all jobseekers reported that people are not comfortable paying gender should fill various positions. They said men should for goods and services in cash, almost 53 per cent of jobseekers work in businesses including cafes, restaurants, grocery shops, reported preferring cash, 33 per cent in-kind assistance, and electrical appliances repair workshops, and a snooker club. the remaining mentioned ‘other’. All these findings suggest Women-owned businesses, as reported by KIIs, generally that cash support might be safely introduced to Al-Khalis by include tailoring, food preparation and trade. These businesses an international organization. were noted to be mostly profitable. Most key informants did not think that women focus on specific businesses due to TYPES OF JOBS AVAILABLE cultural restrictions. One key informant thought the reasons In Khan Dari and Al-Nasar, the availability of small shops was behind business choices was insecurity. Jobseekers, on the Workshop participants in Al-Jabal mentioned that the main other hand, also mentioned beauty salons, hairdressing, sectors include agriculture and private businesses, but did not women’s accessories, baking, and ‘businesses from home’ specify any further. in general as businesses that women have, and thought that Jobseekers, meanwhile, reported that the main economic these were earning about USD 127 per month (or more, as sectors include agriculture, construction, retail (household many respondents reported an income range). A couple of items, furniture, electrical appliances, and clothing) and trade jobseekers thought that women do not make a profit, referring (agriculture and construction materials), grocery shops, food to businesses in tailoring and ‘small businesses.’ (in general and bakeries), manufacturing (welding, smitheries, SKILLS GAPS PVC) carpentry, services (photography, mechanics, cafes, barbers and tailors), and restaurants. All jobseekers thought Workshop participants discussed the need of tailoring courses, that these jobs were desirable. Four jobseekers reported that hairdressing, and wedding planning and management for the construction sector and trade with construction materials women, and barbering courses for men. Jobseekers thought were dominated by certain groups (without specifying which that no sector had difficulty in finding adequately trained ones). employees. Employers also reported not experiencing difficulties in finding adequately trained employees except Key informants mentioned that the sectors currently employing for one barber. Almost half have experience in providing most people were agriculture, construction (and daily paid apprenticeships also, including employers owning grocery, jobs in construction), trade, grocery shops, malls, and internet coffee, electrical installation/construction and confectionery companies. shops, welding workshops, and electrical appliances repair Employers reported that working hours averaged 8.5 hours workshops as well as bakers and a barber. per day (the majority reported 9 hours or more). Business Tools and assets most commonly requested by employers owners do not have written contracts with workers. included machinery and equipment related to the respective Average wages for skilled and unskilled workers among businesses. Business owners were also asked what they businesses surveyed in Al-Khalis ranged from USD 110 to would do were they to receive a cash grant, with only three 600 and USD 75 to 450, respectively.8 mentioning hiring new employees (in an open-ended question), and the most common response being acquiring the needed tools/machinery.

8 (6) employers do not employ skilled workers and (13) unskilled workers.

8 IOM IRAQ Labour Market Opportunities and Challenges

RECRUITMENT MECHANISMS DEMAND-SIDE BOTTLENECKS

While jobseekers mostly did not know about a job centre, they Challenges in dealing with clients include mostly debts and suggested that job services could be offered in the community’s a low purchasing power, mentioned by more than half of centre or Al-Mansouriya’s centre. Most employers reported employers. One third do not have any challenges with clients. personal connections and word of mouth as their main hiring Seventy-three per cent of businesses reported having average mechanisms. In addition, 27 per cent also mentioned hiring demand. The average salary in businesses reporting average through formal job advertisements. Employers mostly opposed demand was USD 294 for skilled and unskilled workers hiring through more formal channels, commenting on the lack alike. Only one business reported having good demand. The of transparency in the recruitment process through formal remaining businesses experience bad demand and pay workers channels mediated by the government and mentioning that USD 316 on average, which is higher than for businesses with ‘large sums of money are paid,’ which cannot be secured by average demand. regular villagers. Payment of bribes was mentioned by 23 per cent of employers, among whom some also remarked on the TYPE OF BUSINESS influence of political parties. The area is not prone to labour HIGH DEMAND POOR DEMAND migration according to the vast majority of jobseekers. Grocery Grocery shop (3) Barber SUPPLY-SIDE BOTTLENECKS Cafe The most common challenge facing employers was poor Men’s clothing retailer demand, which was mentioned by almost one third of Restaurant respondents, and a low purchasing power, which was Samoon oven mentioned by one third as well. Nonetheless, the majority Average salary: USD 130 Average salary: USD 316 reported not having any major challenge, including grocery shops (5), a construction/electrical installation shop (2), a Table 3. Average salaries among businesses with high and welding workshop, a coffeeshop, a barber, a retailer of men’s poor demand clothing, a stationery shop, a retailer of women’s and children’s Examining salaries by business in detail (Fig.1), the highest clothing and a restaurant. salaries are mostly found in a welding workshop, cafes (only Most business owners reported having multiple potential 1 café is found with below-average salaries), a snooker club, a suppliers for their raw materials and almost all are able to construction material shop, and a market. Grocery shops are respond to an increase in demand. Most businesses purchase mostly found in under-average salaries. About eight businesses their materials locally, but 40 per cent do not because of quality were not included in the chart as these do not employ skilled issues. workers.

IOM IRAQ 9 Labour Market Opportunities and Challenges

Fig.1 Average salary – skilled workers

An attractiveness matrix can be applied, to measure and the average of all salaries), were found. Higher salaries with contrast the varying measures of demand as reported by average demand include three cafes, a market, a snooker club, local businesses – and compare them to the salaries these a construction material, an electrical and construction material businesses reported paying their skilled workers – to get and an electrical installation shop, and a welding workshop. a better understanding of what types of jobs could be While grocery shops experience all types of demand, these sustainable and be decently remunerated. No businesses mostly pay lower salaries. Nonetheless, many groceries still with high demand and paying high salaries (or salaries above pay salaries slightly below the average.

10 IOM IRAQ Labour Market Opportunities and Challenges

Poor Demand Average Demand High Demand

Market

Café (3)

Snooker club Higher Samoon bread oven Construction material shop / Salaries Electrical and construction items

Electrical installation shop

Welding workshop

Dairy and animal products store

Sweets production Cafe Lower Grocery Grocery Grocery Salaries Household goods Restaurant Restaurant

Selling and repairing electrical appliances POTENTIAL FOR IMPACT POTENTIAL

POTENTIAL FOR GROWTH

Table 4. Cross-tabulation demand and salaries paid to skilled workers

IOM IRAQ 11 Labour Market Opportunities and Challenges

CONCLUSIONS

In Al-Khalis, the EDF has potential for expanding many small and medium-sized businesses, which could also absorb more youth and other priority groups into the workforce, and most importantly, prevent young men from joining armed groups, which are still very active in the area. VTs were suggested in ‘craft’ occupations such as carpentry, blacksmithing and barbering, in addition to tailoring and hairdressing for women. FTs are also important, as well as other types of support to the agricultural sector in general.

Most jobseekers mentioned a preference for owning their business and the primary reason for not having already started their own business was lack of financial means; therefore, exploring BSP for women wishing engage in wedding planning and decoration, hairdressing and tailoring (among other possibilities), in addition to ‘crafts’ such as carpentry, blacksmithing, barbering and grocery trade for men. In general, it was suggested to expand the existing small businesses.

Because there are no written contracts between employers and employees, and workers do long hours, IOM has an opportunity to improve the formality of work through the EDF. Since people do not have savings, CFW targeting community priorities such as waste removal, school and house rehabilitation, would greatly benefit the communities of Al-Khalis.

12 IOM IRAQ V`

Labour Market Opportunities and Challenges

IOM IRAQ 13 V`

LABOUR MARKET OPPORTUNITIES AND CHALLENGES

IOM IRAQ

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