The play out of forces of demand and supply are critical in the determination of prices for both goods as well as services. The price of labor services in a country is largely dependent on the ability of the local populace to provide adequate labor and more importantly the demands presented by the economic activities occurring in the country. This paper assesses the demand and supply of labor situation in Iraq as well as other factors that inform the wage rate determination in the country.
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Iraq has faced civil strife since the American invasion and the subsequent toppling of the then president Saddam Hussein. The conflict left a badly disarranged country whose reconstruction requires concerted efforts from infrastructural development to investments in human capital. Currently, Iraq faces a paradox of some sort. A large percentage of the population remains unemployed while demand for foreign workers remains high. There are several reasons for this situation.
First, the country’s economy is founded on socialism. Socialist ideals dictate that the public sector is the dominant player in the economy. The productive resources are owned by the state. This means that the state is the singe largest employer. Such retrogressive ideologies meant that little regard was given to the development of human skills. Training was only concentrated in areas where the government thought were fit. Again only the government was involved in the training as most of the universities and colleges were publicly owned for a very long time. This social arrangement is a major reason for the acute shortage of skills in most of the sectors critical to the reconstruction of the country today (Looney, 2005, Par4).
Secondly, throughout the socialist period, there was massive over employment in the public sector which defied all market forces. The expansion of the public sector was financed by oil revenues from the expansive oil reserves. This meant that people only wished to study what was demanded by the government. In addition, the government concentrated more on developing physical infrastructure and not human capital. The overall outcome of this is that, the country accumulated excess skills in some fields while experiencing acute shortages in others. The effect is that the jobs with minimal supply continue to have their wage rate rise a situation which could become unsustainable (Looney, 2005, Par5).
Solving the problem requires a radical shift from the current ideas in the development of human capital. First is an emphasis on English. This is necessitated by the fact that most of the implementers of the reconstruction projects are from English speaking countries. Secondly, a massive reconstruction of the educational facilities coupled with an expansion program has to be undertaken in a id to increase the level of skills available in the labor. Even more important is the fact that the educational program has to shift focus and give much greater emphasis to developing skills which match the requirements of the current Iraq. This is the ultimate solution in addressing the acute shortage of skilled workers amid a large population of unskilled unemployed population.
This is however a long-term goal and other short term measures must be in place to immediately address the issue. The most important is the improvement of security country wide to offer even more incentives to people from other nations to flow in and fill the glut in the supply of skilled labor in the country. Again, the migratory laws have to be reviewed to improve inflow of foreigners into the country (LabourStart logo, 2009, Par5).
In addition to these measures, computer literacy would go along way in improving the status of the Iraqi worker. It would not only offer employment opportunities but also develop a channel through which the people can access knowledge from other areas in the world. Not everyone can manage to attain a degree as circumstances may not allow that but online classes can go along way in improving the skills among the people (Labor issues apology to heckler, 2005, Par 3).
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Other obstacles not mentioned in the article concerning the acute shortage of labor supply in Iraq include the cultural setting and local beliefs in the country. Due to the abundance of oil in the country, there is reluctance by the local population to undertake tough training programs as they believe that the oil reserves are their God given source of livelihood and thus no one should struggle to fend from elsewhere. With such retrogressive cultures, the introduction of relevant training programs may not bring the desired results. The people have to be encouraged to take the children to school and at the same time seek ways of improving their own skills by engaging in training in colleges or at work.
Such combined efforts together with government subsidization and support towards private training firms which are more responsive to the needs of the markets as opposed. A combination of all these factors will in the long run lift the country from the current paradox. Of most importance is that the efforts decided upon be consistently applied without major deviations so as to quicken the rate at which the glut is eliminated. This will not only quicken the reconstruction o the country but will also ensure that the country develops adequate labor force top drive the country’s emerging capitalist structure further even after the reconstruction period.
Labor issues apology to heckler (2005). BBC News. Web.
LabourStart logo. (2009). Labor news from Iraq. Web.
Looney, R., (2005). “Labor Market Impediments to Stability in Iraq” Strategic Insights, 4(6). Web.