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As a result of the ongoing Syrian conflict, more than 220,000 Syrian refugees have fled to the Kurdistan Region of Iraq (KRI). In addition, the fall of Mosul in June and ISIS attacks have pushed more than 730,000 Iraqis to flee to KRI. Neither conflict seems likely to end soon, meaning that the displaced population is likely to stay over at least the medium term. Moreover, the political crisis between the central government in Baghdad and the KRI government has been heightened since February 2014, with political deadlocks around disagreements over budget allocations and oil revenues. The local economy, once robust, is experiencing stagnation. Though humanitarian actors have thus far focused on providing emergency relief, especially in refugee camps, they are currently looking to develop longer-term livelihoods programming.
Under these circumstances, the Danish Refugee Council (DRC) commissioned this EMMA in order to assess opportunities in livelihoods generation and access to income for Syrian refugees and IDPs living in and outside of camps, in order to inform its livelihoods programming. The construction and service sectors were selected as critical market systems; within the latter system, the study focused on the sub-sectors with the greatest potential to employ the target groups, hospitality and retail.
The main factors influencing the function of both market systems include the relationship between the Iraqi and the KRI government, the attractiveness of public sector jobs, the Ministry of Labour and Social Affairs, tourism and investments, the FIDIC standards (requiring a certain percentage of local hires), and seasonality. Roughly 50% of the construction workforce consists of foreign laborers (meaning those from outside KRI), with the remaining positions divided more or less equally among local and Syrian refugees, the latter group filling many of the unskilled positions. Meanwhile, many businesses in the hospitality and retail industries are managed by businessmen from neighboring countries. Most unskilled positions in hospitality and retail are filled by foreign workers. Administrative positions tend to be taken by locals, while many of the semi-skilled positions are occupied by refugees. Though the region offers a variety of education and job training institutes, there are problems with the quality of education offered, namely an insufficient emphasis on practical skills. Recruitment often occurs through personal and informal networks rather than through formal mechanisms.
The influx of refugees and IDPs has increased pressure on the labor market in KRI. This is exacerbated by a drop in demand for construction due to conflicts between the KRI and the central Iraqi governments and a drop in demand for hospitality services due to insecurity in the region and the relative economic standstill. In the construction labor market, the percentage of foreign workers has been halved, with local workers and IDPs filling the gap. Meanwhile, wages have dropped by 30-50%, with the greatest change for unskilled workers. Educational services in KRI are not available to refugees at IDPs at present. Though many NGOs are offering humanitarian assistance and cash for work programs to the target population, these interventions are of relatively low economic benefit to beneficiaries and are not a long-term solution.
This assessment recommends the following responses in order to improve access to labor markets and income generation for Syrian refugees and Iraqi IDPs: improved efforts to target IDPs and refugees in non-camp settings with humanitarian assistance; raising the target groups' awareness of locally available jobs and building their capacity to find decent jobs; promoting job placement mechanisms; partnering with private sector actors to invest in potentially valuable value chains; promoting innovation in small enterprises; conducting market analyses on access to credit for small businesses and on agriculture and related labor; advocating with humanitarian actors for a phase-out of short-term interventions; and updating the results of this study.