Khanaqin 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 11 Labour Market Opportunities and Challenges

EXECUTIVE SUMMARY

IOM conducts livelihood programming in 15 out of 18 • Jobseekers reported that the main economic sectors governorates in Iraq. As part of the Returns and Recovery currently hiring were in trade, construction and food Unit programming, the International Organization for and that these jobs were generally desirable. Jobseekers Migration (IOM) undertook a labour market assessment are also interested in performing all the jobs currently (LMA) in the town of Jalawla located in Khanaqin, a district available. of Diyala Governorate, from January to March 2020. • Key informants also mentioned that trade, food processing/ LMAs have been conducted in over 30 locations across Iraq preparation, services and manufacturing sectors currently and give insights on the state of the local market in a given employ most people in the city. area, the hiring preferences of employers and the available • Employers reported that working hours averaged 7.6 skills and aspirations of jobseekers, among others. per day. No business owner mentioned having written contracts with workers. STUDY COMPONENTS • Average wages for skilled and unskilled workers among LMAs consist of both qualitative and quantitative exercises: the businesses surveyed in Jalawla and surrounding Key Informant Interviews (KIIs), multisectoral community communities ranged from 120 to 600 United States workshops and surveys with jobseekers, employers and dollars (USD) for skilled workers to USD 100 to 300 for consumers. unskilled workers. This labour market assessment focused on Jalawla, in addition • Women-owned businesses, as reported by key informants, to other surrounding communities in Khanaqin District. generally include tailoring, beauty/hairdressing salons, and This assessment consisted of 101 individual interviews and food preparation. Jobseekers added trade to the list. These a community workshop, conducted from January to March businesses were noted to be mostly profitable. 2020. • Graduates suggested support to start businesses in livestock, engineering, medical services and education. A summary of key findings is included below, followed by Agricultural businesses require support at all levels, recommendations for future interventions. especially in irrigation of agricultural lands. KEY FINDINGS • For women, home businesses were suggested. • Jobseekers overall prefer to own their business (87%) • Jobseekers did not report any sector as facing difficulties pSeventy-seven per cent of jobseekers noted a preference in finding adequately trained employees. Employers, also for owning their business, suggesting a preference for asked about skills that are missing, mentioned only tailoring. entrepreneurship in the community. • Most employers reported word of mouth and/or • Eighty-seven per cent of jobseekers reported that people personal connections as their hiring mechanisms. Only are not comfortable paying for goods and services in a small number of employers, who reported personal cash in the area. Yet only 33 per cent of jobseekers connections as their primary method of hiring, were open reported preferring in-kind over cash assistance. However, to recruiting through more formal channels, while others informants did not feel that cash support would cause were less clear about it. inter-household and community conflicts in Jalawla. • Seventy-three per cent of business owners reported • Workshop participants noted that Jalawla sub-district having multiple potential suppliers for their raw materials has a large market and could absorb additional jobs and all reported being able to respond to an increase in and businesses. Currently, many people earn an income demand. from small businesses such as barber shops, taxi driving, • Businesses self-reporting average demand, and paying tailoring, and beauty/hairdressing salons; others earn daily higher salaries include a construction materials retailer, a wages. barber shop, a butcher shop, a cattle breeder, a clothing • Agriculture businesses such as crops and cattle breeding retailer, a grocery store, a PVC workshop, a restaurant, are considered the main source of income in the villages a confectionery seller, and a tailor. Because they pay surrounding Jalawla and Sa’dia. above-average salaries and experience average demand, these businesses could be therefore considered as having potential for creating sustainable jobs. 4 IOM IRAQ Labour Market Opportunities and Challenges

Recommendations

Agriculture and less mentioned sectors such as manufacturing, services and trade in SECTORS TO TARGET general were mentioned by key informants as having potential for growth. In addition, health and education were suggested by workshop participants

Key informants mentioned trade with food, especially groceries, as being oversaturated SECTORS TO AVOID and facing significant competition. These businesses might be therefore less suitable for support

• Vocational training: barbering, hairdressing/beauty services, computer skills and baking were suggested. However, the list is not exhaustive as these were mentioned as examples

• Business support packages and business expansion packages (BSP/ESP) is suggested for women, as workshop participants mentioned that women need support for ‘home businesses’, which could include food preparation, hairdressing and tailoring, ACTIVITIES TO TARGET to list just a few. Since many ‘crafts’ were reported in the market as requiring support, these should be also supported by BSP/ESP. However, these ‘crafts’ were not specified. Looking into businesses with average demand and paying higher salaries, the following might be therefore appropriate: barbering, butcher, cattle breeding, clothing retail, restaurants, and confectionery/sweets

• On-the-Job training and Farmer training were not suggested

ACTIVITIES TO AVOID N/A

Consumers reported not having any savings and more than half reported having CASH FOR WORK (CFW) incurred in debts. CFW is therefore recommended and could include waste removal, housing rehabilitation and school renovation and rehabilitation

Cash support is recommended as many jobseekers prefer cash and key informants UNRESTRICTED CASH thought that cash support would not cause community conflicts.

Youth, female-headed households, graduates, persons with disabilities, older people, PROFILES TO TARGET 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, community and institutional levels. At the individual level, IOM approximately 15Khanaqin district is in Diyala Governorate. has prioritized support to micro enterprises, including providing Diyala has a diverse ethno-religious population of Arabs, business development services (for example business advisory Kurds and Turkmen. Religious communities in the governorate services) and Business Support Packages (BSPs), including include Sunni and Shia Muslims, Christians, Yezidis and Ahl in-kind and cash support, all of which aim to increase income Al-Haqq (Kakaee). 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 ensuing United Nations sanctions, the Training (OJT), accompanied by employability assistance 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 authors 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 terrain.4 Since the harvest season IOM provides capacity building to national and local authorities, began in April 2019, crop fires have raged across Diyala, with including market assessments that seek to promote institutional varying estimates of the losses. ISIL has claimed responsibility change in support of local livelihoods. for burning hundreds of hectares of farmland in Diyala – and other areas. However, it has been impossible to determine how LABOUR MARKET ASSESSMENT OVERVIEW many fires had been started by ISIL, or otherwise untangle the various causes for an increased number of fires in comparison IOM’s LMAs are intended to provide actionable to previous years.5 recommendations for the individual livelihood assistance that IOM provides in multiple districts throughout Iraq. This LMA Diyala’s history as a hotbed for ethnic and sectarian conflict focuses on the community of Jalawla located in Khanaqin also led to a large number of internally displaced persons (IDPs) District, Diyala Governorate, and includes interviews and a even before ISIL violence. Despite the overall decrease in the community workshop. numbers of IDPs in Iraq, 34,350 individuals were displaced during September and October 2019. Most of them fled from

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

Baghdad and Diyala governorates due to the worsening security Key Informant Interviews situation, provision of services and employment opportunities.6 Ten KIIs were conducted with representatives of the Displacement remains high in Al-Khalis with 5,952 individuals business community in Jalawla. KIIs seek to establish trends recorded as of late December 2019, in addition to 74,232 and observations about the business community, industries returnees.7 currently hiring, ongoing public and private investment, and key Around 170,000 individuals are living in the sub-districts of emerging sectors capable of generating employment. Jalawla and Sa’dia: nearly 97 per cent are returnees, 2 per cent host community members, and 1 per cent are IDPs, Jobseeker Surveys many of whom are estimated to be living below the poverty Jobseeker surveys are designed to identify preferences of line. The water network does not reach all the residents of unemployed and underemployed workers. In Jalawla, 30 Jalawla, with major access issues reported for electricity as well. jobseekers were identified and surveyed. The survey’s purpose Schools have to operate in up to three shifts. While there is an was outlined for each jobseeker survey, and informed consent operational hospital in Jalawla, it experiences many limitations was obtained from those surveyed. such as lack of equipment, medicines, and other needs. Many houses remain destroyed, which prevents return. Jalawla Employer Surveys depends on agriculture and produces wheat, corn and beans. However, the area lacks an irrigation system and agriculture, Thirty employer surveys were also conducted in Khanaqin in general, is neglected by the government. district to provide a sample as representative as possible of the local market. Employers were initially provided an advance CONSUMER SPENDING SNAPSHOT copy of the handout materials and then later contacted for follow-up interviews. • Key weekly expenses: The typical consumer in Khanaqin district reported spending an average of USD 120 per Consumer Surveys week on food for the household. The consumer survey was designed to triangulate data • Key monthly expenses: 16 per cent of survey respondents related to demand, income and vulnerability. In commercial or reported having a monthly rent expense, averaging industrial districts in Khanaqin District, members of the public USD 96 per month; and 52 per cent reported monthly were approached and 31 of them identified as respondents. expenses on temptation goods, such as sweets and There were no restrictions on the demographic profiles of tobacco, averaging USD 62 per month. participants, but IOM sought diversity to the extent possible.

ASSESSMENT AND METHODOLOGY OVERVIEW The table below outlines the types and number of surveys conducted for Khanaqin district. The LMA process began in January of 2020, after a two-day TOTAL NO. training in labour market assessment objectives and the tools MALE FEMALE TOOLS OF SURVEYS RESPONDENTS RESPONDENTS for data collection. Following this training, a community- CONDUCTED level workshop with youth, women and local residents Multisectoral was organized in January 2020, followed by KIIs, jobseeker, Community 14 4 18 employer and consumer surveys. Workshops Key Multisectoral Community Workshops Informant 10 0 10 A multisectoral workshop was conducted in Jalawla with 18 Interviews Jobseeker returnees (14 men and 4 women). After introducing IOM 13 17 30 and its programming , staff explained IOM’s plan to work Surveys closely with community members in implementing future Private Sector programmes. 16 14 30 Employer Surveys Consumer 7 24 31 Surveys

Table 2. Surveys Conducted in Al-Intisar in Al-Khalis for Labour Market Analysis 6 Ibid. 7 IOM,DTM Displacement Tracking, January 2020. IOM IRAQ 7 Labour Market Opportunities and Challenges

FINDINGS

ATTITUDES TOWARDS ENTREPRENEURSHIP unskilled workers. Some filling mistakes were also noted, with AND CASH the daily wage recorded rather than the monthly salary (so Seventy-seven per cent of jobseekers noted a preference these were recalculated). for owning their business, suggesting a preference for AVERAGE SALARY FOR AVERAGE SALARY FOR entrepreneurship in the community. SKILLED WORKERS UNSKILLED WORKERS USD 290 USD 182 Eighty-seven per cent of jobseekers reported that people are not comfortable paying for goods and services in cash in the Consumers noted average monthly incomes of USD 255 per area. Yet only 33 per cent of jobseekers reported preferring month. in-kind over cash assistance. Key informants did not feel that cash support would cause inter-household and community Twenty-three per cent of employers reported a preference as conflicts in Jalawla. These suggest that cash could be safely to which gender should fill some positions, including tailoring introduced to Jalawla by an international organization. for women and smithery work for men. Women-owned businesses, as reported by KIIs, generally include tailoring, TYPES OF JOBS AVAILABLE salons and food businesses and were noted to be mostly profitable. Jobseekers added trade to the list. Women-owned Jalawla sub-district has a big market and can absorb additional businesses, as reported by jobseekers, earned on average USD jobs and businesses. Many people earn their income from 156 per month, which is slightly lower than the average for small businesses such as barber shops, taxi driving, tailoring unskilled workers reported by employers. and beauty/hairdressing salons, or have daily wages. Agriculture businesses such as crops and cattle breeding are considered the SKILLS GAPS main source of income for the villages surrounding Jalawla and Sa’dia. Participants reported that the rest work in government Workshop participants suggested a list of potential sectors positions. Returnees who self-classified as unemployed or with which nongovernmental organizations might find it underemployed tended to have about six years of professional relevant to engage. These included: experience on average, although underemployed women • IT skills tended to have significantly less career experience compared to men. • Barbering and hairdressing

Jobseekers, for their part, reported that the main economic • Bakeries sectors currently hiring were found in trade, construction and Graduated youth suggested support was needed to start food, and that these jobs were generally desirable. Jobseekers businesses in livestock, engineering, medical services and also mentioned that they are interested in performing all the education. For women, home businesses were suggested. jobs currently available on the market. Key informants also Agricultural businesses require support at all levels, especially mentioned that the trade, food, services and manufacturing in irrigation of agricultural lands. sectors currently employ most people in the city. Marketing, big companies, tourism services and supermarkets were Jobseekers did not report any sector as facing difficulties in mentioned too. finding adequately trained employees. Employers, also asked about missing skills, mentioned only tailoring. Employers reported that working hours averaged 7.6 per day. HARD TO FIND None of the reported business owners mentioned having INTERESTED SKILLED/EXPERI- written contracts with workers. Average wages for skilled TYPE OF BUSINESS IN HAVING ENCED WORK- APPRENTICES and unskilled workers among the businesses surveyed in ERS Jalawla and surrounding communities ranged from USD 120 Restaurant Yes No to 600 for skilled workers and USD 100 to 300 for unskilled Market Yes No workers. However, 16 per cent of employers reported not Water tank factory Yes No having skilled employees and 42 per cent not having unskilled PVC workshop Yes No workers. Therefore, the average was calculated for the Tailor (2) Yes No remaining businesses, who reported having skilled and/or

8 IOM IRAQ Labour Market Opportunities and Challenges

HARD TO FIND DEMAND-SIDE BOTTLENECKS INTERESTED SKILLED/EXPERI- TYPE OF BUSINESS IN HAVING ENCED WORK- Purchasing with debt is the most common challenge for APPRENTICES ERS business owners in dealing with clients, in addition to excessive Tailor Yes Yes bargaining, mentioned by one business owner. High demand Retailer was not reported. construction Yes No materials Barber Yes No Cosmetics shop Yes No Smithery Yes No Clothing retailer Yes N0

Table 3. businesses reporting challenges in identifying skilled workers and their experience in training of apprentices

Tools and assets most commonly requested by businesses included machinery and electrical appliances such as sewing machines, generators, refrigerators, ovens and raw materials/ goods; some mentioned shelves. Business owners were also asked what they would do were they to receive a cash grant, with 7 per cent mentioning hiring new employees (in an open-ended question), with the most common response being expansion and development.

RECRUITMENT MECHANISMS Fig. 1 Demand for products

While jobseekers did not know of a job centre, they suggested Only a small number of businesses reported having poor that job centre services could be offered in the centre of demand and these included a smithery, livestock breeding and Jalawla. Most employers reported word of mouth and/or tailoring. Businesses with poor demand pay less than businesses personal connections as their hiring mechanisms. Only small with average demand. number of employers who reported personal connections as their primary method of hiring were open to recruiting TYPE OF BUSINESS through more formal channels, while others were less clear AVERAGE DEMAND POOR DEMAND about it. The area is not prone to labour migration, with 33% Retailer construction material Ranching of respondents mentioned that people tend to migrate for Barber Smithery economic reasons outside of the community. Butcher Tailor (5) Cattle breeding SUPPLY-SIDE BOTTLENECKS Market The most common challenge facing employers was insecurity Clothing retailer (3) in the area, which according to respondents leads to a lack of Cosmetic shop demand. Seventy-three per cent of business owners reported Grocery (2) having multiple potential suppliers for their raw materials and PVC workshop all reported being able to respond to an increase in demand. Restaurant Participants think that some goods and services are more Confectionery expensive in the local community than in other areas of Iraq Tailor (5) and these included a PVC workshop and two clothing retailers. Water tank factory Those who did not purchase raw materials locally tended to Sweets (2) report that it was because of low quality and high prices. Average salary skilled / Average salary skilled unskilled workers: USD 251 /unskilled workers: USD190

Table 4. Average salaries among businesses with high and poor demand

IOM IRAQ 9 Labour Market Opportunities and Challenges

An attractiveness matrix can be also applied to measure above the average of the skilled workers’ salaries) were found. and contrast the varying measures of demand as reported Businesses reporting average demand and paying higher salaries by local businesses – and to compare them to the salaries were many, including a construction materials retailer, a barber these businesses reported paying their skilled workers – to shop, a butcher shop, a cattle breeder, a clothing retailer, a get a better understanding of what types of jobs could be grocery store, a PVC workshop, a restaurant, a confectionery sustainable and be decently remunerated. No businesses seller and a tailor. reporting high demand and paying high salaries (or salaries

Poor Demand Average Demand High Demand

Construction materials retailer

Barber

Butcher

Cattle breeding

Higher Clothing retailer Tailoring / Salaries Grocery

PVC workshop

Restaurant

Confectionery

Tailoring

Market

Clothing retailer Lower Ranching Cosmetics retailer / Salaries Tailoring Tailor (2)

Water tank factory POTENTIAL FOR IMPACT POTENTIAL

POTENTIAL FOR GROWTH

Table 5. Cross-tabulation demand and salaries paid to skilled workers

10 IOM IRAQ Labour Market Opportunities and Challenges

CONCLUSIONS

In Khanaqin, EDF has potential for expanding many small and medium-sized businesses, which could also absorb more youth and other priority groups into the workforce. VTs were suggested to gain skills in barbering, hairdressing/beauty, IT, and baking. However, these were not exhaustive suggestions, which leaves room for other trades.

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 those wishing to work in ‘crafts’ – and home-based businesses for women – is recommended.

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 and school and house rehabilitation would greatly benefit the communities of Khanaqin.

IOM IRAQ 11 V`

LABOUR MARKET OPPORTUNITIES AND CHALLENGES

IOM IRAQ

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