National Conference Paves Pathways to Formalizing Iraq's Informal Economy

Against this backdrop, Yesterday’s National Conference on “Informal Work and Pathways to Decent Work in Iraq” marked a critical step in addressing these challenges. Organized by the International Labour Organization (ILO) in collaboration with the Government of Iraq and funded by the European Union, the conference brought together national and international stakeholders—including representatives from federal ministries, local authorities, workers' and employers' organizations, academia, civil society, and development partners—to foster a unified approach to formalizing Iraq’s economy.

The event set the stage for an ambitious national strategy aimed at expanding social protection coverage and formalizing employment across sectors over the next five years. Throughout the discussions, the consensus was clear: addressing informality is essential not only for safeguarding workers’ rights but also for driving Iraq’s economic recovery and future prosperity.

The opening remarks by Deputy Minister of Labor and Social Affairs, Ms. Huda Sajad, emphasized the urgent need for action: “This phenomenon represents a significant portion of the workforce, with the number of workers in the informal sector reaching around five million. This poses a serious economic and social challenge that requires us all to work together to address it seriously. In cooperation with our partners from unions, civil society, and the private sector, we aim to transform this reality by regulating work and providing social protection to those who are not currently covered. We also seek to develop policies and programs that contribute to integrating these groups into the formal economy and achieving economic and social stability.”

Dr. Hanaa Ismail, Administrative Deputy of the Ministry of Planning, stressed the importance of transitioning to formal employment, noting that "the informal economy encompasses numerous activities that are not subject to legal regulation, making it difficult to reach the workers involved. Through these efforts, we aim to empower affected groups, facilitate the transition to the formal economy, and create job opportunities that ensure economic and social stability."

In her speech, Dr. Maha Kattaa, the ILO Coordinator in Iraq, highlighted that "the large size of the informal economy presents significant challenges in Iraq. More than five million workers are not covered by social security and work in poor conditions. In addition, there are hundreds of thousands of private sector companies operating informally, making it difficult to reach these workers and companies, particularly during crises like the COVID-19 pandemic. The ILO’s Recommendation No. 204 of 2015 outlines guiding principles and policies to help countries transition to a formal economy. We are working to provide technical and expert support to the government and social partners for a gradual and smooth transition."

Discussions during the conference examined the complex factors driving informality in Iraq. Among the barriers are the bureaucratic and administrative challenges that make formalization a costly and lengthy process for businesses, as well as cultural practices that perpetuate informal labour relationships. Addressing these issues, participants explored how simplifying business registration processes and offering incentives to employers could help transition workers into formal employment while expanding their access to vital protections like social security.

A major focus of the event was Iraq’s recent legislative achievements, particularly the ratification of ILO Convention No. 102 on Social Security and the passing of Law No. 18 on Pensions and Social Security in 2023. These reforms are a pivotal milestone in the journey towards formalization, offering new protections for informal and self-employed workers, including maternity and unemployment benefits. By extending social security coverage to millions who were previously excluded, Iraq has taken a significant step forward in addressing the challenges of informality.

Participants also heard from international experts, who shared successful examples of formalization from other regions, such as Asia and Latin America, where integrated policy frameworks have helped millions of workers transition from the informal to the formal economy. These case studies provided valuable insights into the potential strategies Iraq could adopt to support its transition.

The technical sessions of the conference explored several key themes, including the social costs of informality and the economic, legal, and institutional reforms needed to foster formalization. Drawing on ILO Recommendation No. 204, participants discussed how to gradually implement a structured, coordinated approach to formalization that can drive both economic growth and social justice.

As the conference concluded, a set of recommendations was presented, outlining clear actions to expand social protection coverage, streamline business formalization, and build an inclusive economy where all workers can enjoy decent work. Over the coming years, the ILO will continue to work closely with the Government of Iraq and national partners to translate these recommendations into tangible outcomes, ensuring that the foundations laid today will lead to lasting, positive change for Iraq’s workforce.

This conference is part of the activities of the Social Protection System Reform Program, implemented by the International Labour Organization in collaboration with UNICEF and the World Food Programme, and supported by the European Union.