Construction Workers in Iraq: Law No. 18 and Investment Rights

The construction sector has seen rapid growth in Iraq in recent years. According to a press release published on the renowned platform Globe Newswire, Iraq’s construction sector is expected to grow by 5.2% in 2025, driven by investments in transportation, renewable energy, and tourism.
The Iraqi government aims to attract 9.1 trillion Iraqi dinars (approximately USD 7 billion) to stimulate economic growth in 2025, which is anticipated to lead to further investments in construction projects. In August 2023, Iraq established the Iraq Development Fund to streamline investment procedures for both domestic and foreign companies, particularly in sectors such as tourism, health, environment, public transport, and smart agriculture.

In the medium term, Iraq’s construction sector is expected to register an average annual growth rate of 4.8% between 2026 and 2029, supported by investments in energy, water infrastructure, and government efforts to increase oil production capacity to more than 6 million barrels per day by 2029, compared to 4.5 million barrels per day in 2024.

Given this context, it becomes essential to study this sector and establish a clear legal framework governing its operations—particularly to protect the rights of construction workers employed on a temporary basis, ensuring their social security enrollment, fair wages, and health insurance, while also maintaining investor rights and addressing administrative barriers that may hinder the implementation of such major projects. Construction workers form the backbone of these initiatives and are a fundamental pillar of sustainable development and reconstruction efforts in Iraq.

This article addresses four key questions:

A. What is the view of the International Labour Organization (ILO)?
B. What are the main practical gaps in applying the legal provisions to this sector?
C. Does the Social Security Law effectively cover construction workers and offer them adequate protection?
D. What is the connection between the Investment Law and labor relations as a means to safeguard workers’ rights?

A. The View of the International Labour Organization (ILO)

According to the ILO report released in August 2025, titled Extending the Social Protection Framework to Daily-Wage Workers in Iraq’s Construction Sector, the organization provided a comprehensive assessment of this category under the Private Sector Labor Retirement and Social Security Law No. 18 of 2023. The report highlighted existing legislative and institutional shortcomings that continue to prevent these workers from enjoying adequate protection.

The ILO notes that daily-wage workers constitute one of the most vulnerable groups in Iraq’s labor market. They comprise a large share of the private-sector workforce, especially in construction, yet they often work without formal contracts and in unstable, insecure conditions, leaving them outside the practical scope of labor and social laws currently in effect.

The organization stresses that the legal relationship between the worker and employer in this sector is highly flexible and irregular, as wages are typically paid daily or weekly, and work duration depends on project or seasonal needs. This irregularity makes it difficult for workers to regularly pay monthly contributions, as required by the new law, which is designed for workers with stable incomes and consistent contributions.

Data from the report show that most construction workers earn very low wages—the average monthly income is 374,000 IQD in federal Iraq and 309,000 IQD in the Kurdistan Region, barely covering the minimum living expenses and, in many cases, below the national minimum wage of 350,000 IQD. Consequently, requiring such workers to contribute 5% of their monthly income to the social security system imposes an unsustainable financial burden, making participation unrealistic.

The report also identifies several institutional and procedural challenges hindering effective implementation, including:

Lack of trust in public authorities;
Pervasive bureaucracy;
Low awareness among workers regarding their rights and registration mechanisms;
Poor coordination among responsible agencies.

Furthermore, the ILO warns that the provision allowing optional insurance for informal-sector workers could create a legal loophole exploited by some employers to evade mandatory registration, thus expanding informal employment rather than reducing it.

In conclusion, the ILO recognizes Law No. (18) of 2023 as a progressive step toward strengthening Iraq’s social protection framework. However, it asserts that the law cannot achieve its objectives unless it is redesigned and implemented to reflect the realities of informal and daily-wage workers—especially in the construction sector, which forms the core of Iraq’s infrastructure development. The organization calls for comprehensive legal and institutional reforms to ensure these workers are inclusively and sustainably covered by social security, in line with international labor standards and the principles of social justice central to the ILO’s philosophy of building more equitable and stable societies.

Construction Workers in Iraq Law No. 18 and Investment Rights

B. The Main Practical Gaps in Applying the Law to This Sector

Although the legal provisions of Law No. (18) of 2023 clearly mandate the inclusion of construction workers under the Labor Retirement and Social Security framework, practical implementation has revealed major gaps and challenges.

One key issue is the absence of detailed executive instructions on how to calculate wages and contributions for temporary and daily workers, leading to inconsistent interpretations among implementing agencies and resulting in unequal treatment across different projects subject to oversight.

Moreover, the variable nature of construction work and the difficulty of accurately determining employment duration make it challenging to establish exact contribution periods. As a result, workers may remain enrolled in the system even after their employment ends. Requiring official documents from contracting authorities to remove workers from coverage also causes delays, emphasizing the urgent need for clearer, more flexible, and equitable regulations tailored specifically to the construction industry.

C. Does the Social Security Law Ensure Coverage and Adequate Protection for Construction Workers?

To answer this question, the discussion must be divided into two parts:

The challenge of determining contribution rates for construction workers, considering their irregular and fluctuating income patterns.
The procedures for terminating coverage after the completion of construction work.

1. Method of Determining Social Security Contributions for Construction Workers

Paragraph First of Article 3 of the Labor Retirement and Social Security Law No. 18 of 2023 specifies the categories of workers to whom the law applies. It states:

“The provisions of this law shall apply to workers in the mixed, private, and cooperative sectors, to self-employed workers, to those covered by the provisions of the Labor Law, and to employees of state departments and the public sector who are not permanently appointed on the fixed staffing list.”

This means that construction workers employed on construction projects are covered by the provisions of the retirement and social security law—regardless of the contracting entity—so long as their work falls within the private, cooperative, or mixed sectors, or if they are public-sector employees not permanently appointed.

Given the temporary nature of construction work, and the fact that wages are generally not paid on a monthly basis, it has become customary for such workers to be paid daily, reflecting the flexible nature of their employment and the possibility that their services may no longer be required after specific project phases are completed. Consequently, the rules for calculating their contributions and terminating their coverage need to be governed by special provisions that address the characteristics of the construction sector, thereby avoiding administrative complications that might arise in investment projects when completion rates advance or projects are fully executed, rendering the initial workforce redundant.

In this regard, Paragraph Fourth of Article 15 of Law No. 18 of 2023 states that:

“The method of calculating wages and contributions for insured persons who are minors, temporary or seasonal workers, self-employed individuals, workers in the informal economy, and other similar cases shall be determined by instructions issued by the Minister upon the recommendation of the Fund’s Board of Directors.”

Since, at the time of writing this article, the implementing instructions for Law No. 18 of 2023 have not yet been issued, the Labor Retirement and Social Security Directorate continues, for regulatory purposes, to apply the provisions of the previous Retirement and Social Security Law No. 39 of 1971.
Article 26(c) of that law provides:

“If the worker’s wage is not monthly, contributions shall be calculated based on the total actual wages received during a full month, without prejudice to the provisions of Paragraph (a) of this Article.”

This provision therefore determines how monthly social security contributions should be calculated for daily-wage workers, who are mostly employed in the construction and building sectors.

2. Procedures for Terminating the Coverage of Construction Workers after Project Completion

The temporary nature of construction work naturally necessitates its conclusion upon project completion, which in turn requires closing the social security files of workers registered in such projects. These projects are usually implemented under investment contracts between the executing company and the government.

The Labor Retirement and Social Security Directorate allows for the removal of certain workers from coverage when progress is made in project completion and their services are no longer needed. However, this process must be supported by official documentation issued by the contracting authority (for example, the National Investment Commission). Based on the percentage of completion, inspection committees may approve the reduction of the workforce or even terminate the contract entirely, thereby removing all remaining workers from coverage once it is verified that project completion has reached 100%.

D. The Role of the Investment Law as a Framework for Regulating Labor Relations and Protecting Workers’ Rights

One of the main objectives behind the enactment of the Investment Law No. (13) of 2006, as amended by Law No. (2) of 2010 and Law No. (50) of 2015, is to advance and develop Iraq’s economic and social development process, attract technical and scientific expertise, develop human resources, and provide employment opportunities for Iraqis through investment promotion.

Article 2 of the law sets forth several objectives directly related to this study:

Paragraph (Third) emphasizes the development of human resources in line with market requirements and the need to provide job opportunities for Iraqis.
Paragraph (Fourth) underscores the importance of protecting the rights and property of investors.

These objectives highlight the need for a legislative and practical balance between the interests of investors and the rights of workers, particularly in large-scale construction projects, which form the cornerstone of Iraq’s economic development.

Conclusion

From the foregoing analysis, it is evident that including construction and building workers under the Labor Retirement and Social Security Law is a key pillar in achieving social justice and ensuring protection for workers in this vital sector, which constitutes a fundamental component of Iraq’s development and investment projects.

Nevertheless, practical implementation of the legal provisions calls for urgent action, specifically through the issuance of the executive regulations of Law No. 18 of 2023, to ensure clarity in calculating contributions and terminating coverage in a consistent and organized manner.

Achieving a balance between workers’ rights and investors’ needs also requires effective institutional coordination among the Labor Retirement and Social Security Directorate, the National Investment Commission, and other regulatory bodies, to guarantee a fair and stable work environment that genuinely contributes to driving economic and social development in Iraq.

Need legal guidance on labor or investment regulations in Iraq? Our experienced team of legal consultants and partner law firms in Iraq can help you navigate the new Social Security Law and ensure compliance for your projects.