Middle East and North African Economies: Past Perspectives and Future Challenges

Abstract of paper presented by Pål Sletten at a conference in the Free University of Brussels, June 2-3:

The Unemployment Situation in Iraq after the War

Estimates of the unemployment rate in Iraq vary widely. Reviewing three nation-wide household surveys, this paper finds that the unemployment rate was 10.5 per cent in May 2004. There is important hidden unemployment, and if discouraged workers are counted as unemployed, the unemployment rate jumps to 18.4 per cent. Although this is lower than most observers expected, it is still a very high unemployment rate, and Iraqi households consider unemployment to be one of their most pressing problems. The majority of the unemployed are young men who have never previously been employed, indicating that unemployment is not caused by job losses after the invasion. The labour market appears to have been surprisingly stable, and employment levels may be substantially higher a year after the U.S.-led invasion than at the end of December 2002. Factors that may have mitigated the negative impact of the armed conflict on the labour market include: Strong fiscal expansion under the CPA, the lifting of sanctions, and the structural reforms carried out by the CPA.

The conference was organized by The Global Economic Modeling Network (ECOMOD) and The Middle East Economic Association (MEEA)

Pål Sletten