At a moment when Iraq is seeking to reposition its economy after years of crises and volatility, the “National Reform Agenda to Improve the Business Environment,” supported by the World Bank Group, has set the country on a new path centered on investment attractiveness and international competitiveness. The document, linked to the “Business Ready” (B-Ready) assessment tool, aims to improve Iraq’s ranking, which stood at 39 out of 100 in the 2024 evaluation, with particularly weak performance in insolvency and a moderate score in the labor pillar.
Yet behind the technical language lies a profound political and social question: Can the business environment truly be improved without reengineering the balance of power within the employment relationship? Is reform intended as a gateway to equitable development, or as a mechanism for redistributing risk at the expense of workers?
The document proposes broad amendments to the Labor Law under the banner of “enhancing flexibility.” Among the most significant proposals is allowing individual and collective dismissals “for work requirements” without the need for prior approval from the competent authority, relying solely on notification. At first glance, this may appear to be an administrative measure aimed at accelerating economic decision-making. However, its social implications are far deeper. The term “work requirements” is broad and open to interpretation, potentially encompassing restructuring, cost-cutting, or even profit maximization. In an economy marked by institutional fragility and a large informal sector, reducing oversight over dismissal decisions risks turning flexibility into a gateway to insecurity.
The proposed amendments go beyond termination procedures. They also include reducing end-of-service benefits and shortening notice periods. The official justification is that high labor costs discourage companies from hiring. However, Iraq’s social reality differs significantly from that of economies with robust and effective unemployment insurance systems. End-of-service compensation is not an excessive privilege; in many cases, it constitutes the worker’s only safety net upon losing employment. Reducing it without building a comprehensive social protection system simply shifts economic risk from capital to labor.
The reform plan also includes expanding the use of fixed-term contracts even for permanent jobs and permitting night work without higher pay. These measures are presented as tools to boost competitiveness, yet they may in practice institutionalize job insecurity and weaken long-term employment relationships that form the backbone of a balanced labor market. In a country facing high youth unemployment, “flexibility” could easily become a permanent condition of temporary work.
It is fair to acknowledge that the document contains positive elements, such as reviewing the minimum wage and linking it to the poverty line, extending social protection to non-traditional workers, and strengthening complaint mechanisms against discrimination and violence in the workplace. The core issue, however, lies in sequencing and priorities. Will the expansion of social protection precede the reduction of dismissal safeguards? Or will cost-cutting measures for businesses be implemented first, while social reforms remain contingent on funding and political circumstances?
Iraq is not a diversified industrial economy burdened by excessive regulatory rigidity. It is a rent-based economy heavily dependent on oil, struggling with weak infrastructure and fluctuating public and private investment. Addressing these structural challenges cannot be achieved by scaling back labor rights, but rather through a comprehensive development strategy that raises productivity, supports non-oil sectors, and strengthens institutional trust.
From a trade union perspective, reform cannot be reduced to simplifying company registration or expediting liquidation procedures. True reform is one that balances the need for investment with the right to decent work. Flexibility may be a useful tool, but without strong social protection, flexibility becomes another name for insecurity.
Improving the business environment must not turn into a purely technical exercise detached from social realities. A healthy business environment is one in which investors are responsible, workers are protected, and the state guarantees justice. Reform that focuses solely on easing constraints on companies without strengthening worker protections risks undermining the very social stability upon which sustainable development depends.
Iraq today stands at a crossroads. It can pursue a higher ranking in international indices by lowering the social cost of production, or it can choose a more balanced path one grounded in a renewed social contract that links competitiveness with justice. The Arab Trade Union Confederation affirms that development is not measured by the number of days required to establish a company, but by the ability of workers to live with dignity and security in a transforming economy.
English 
Arabic