Labour & Employment in Reconstruction and Development: Iraq in Transition, Liberalization & Reform

1. Transition, Growth & Employment. This paper addresses a number of issues relating to labour & employment in the context of the post-conflict reconstruction of Iraq. Iraq faces a number of transitions. One, from a State dominated economy, with extensive regulation, distortions, and barriers to competition and to labour mobility, towards a market based economy with a dominant role played by the private sector. Two, effecting a political transition from a one-party, authoritarian regime, to a pluralistic political regime, with effective protection of human rights and democratic representation. Three, moving from a closed economy to increased openness, with lower tariff barriers to trade in goods and greater mobility of capital and assets. Four, achieving economic diversification by moving from an oil-sector dominated economy to a more diversified production and activity structure. Indeed, the recently issued National Development Strategy calls for extensive liberalization, privatization and de-regulation of the economy, along with deep structural and institutional changes that would result from a substantially diminished role of the State in the economy and more generally, society. It is clear that there is a need for a comprehensive approach to reform, going beyond the confines of macro-economic reform, and including internal market liberalization (including labourmarket reforms), ensuring competition and SOE reform, privatization and public administration reform and modernization. 2. Reforms and priorities. The implementation of reforms poses a number of issues, including the reform priorities, the speed and sequencing of reforms, the institutional setup and mechanism to achieve consensus and acceptance of the package of economic reforms and the implementation process. Reforms and initial measures to move towards a market economy have included the completion of a national currency exchange with the achievement of comparatively stable foreign exchange market conditions, the approval of new central bank and commercial bank laws, the liberalization of interest rates, approval of a foreign direct investment law, the establishment of the Trade Bank of Iraq, the passage of the Financial Management Law and a new tax law, reform of the public administration wage structure and the simplification of the trade regime. 1 However, while