Iran Economy NewsIran: Government’s $12-Billion Debt to Social Security Organization

Iran: Government’s $12-Billion Debt to Social Security Organization

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In Iran, more than 40 million people are covered by insurance provided by the Social Security Organization. In low-cost medical cases, these insurances aid the people. According to Iranian media, President Hassan Rouhani’s government has a three-quadrillion-rial [$12 billion] debt to this organization, severely affecting the life and livelihood of over a half of Iran’s population.

In the late 2010s, then-Members of Parliament (Majlis) unveiled a $500-million embezzlement case in the Social Security Organization during political rivalries. Given the concerns over public implications and all factions’ involvement in the scandal, the issue was concealed by influential officials.

At the time, the Majlis presidium sabotaged the investigating process to hide high-ranking officials’ theft from millions of people affiliated with the organization. “Money of 30 million of social security retirees have been turned into family companies, and all of the small and great contracts have been allocated to officials’ children [Aghazadeh] and relatives,” said then-MP from Maku and Chaldoran jurisdictions Soleiman Jafarzadeh on July 4, 2017.

Social Security, Administrations’ Backyard

“Subsidiary companies and subordinates of the Social Security Organization were likely a backyard for different parties and factions in previous and current administrations,” Jafarzadeh added.

This method was followed within the next administrations while the organization was directly responsible for millions of Iranian citizens’ livelihood. However, until the early 2020s, these profiteering policies continued their destructive effects on the organization’s affiliated people.

Currently, more than 40 million of Iran’s 85-million population are under the Social Security Organization cover. Since the beginning of Hassan Rouhani’s Presidency, the government’s debts to the organization have constantly soared every year.

“Now, the [Rouhani] government has a three-quadrillion-rial [$12 billion] debt to the Social Security Organization,” said MP Rahim Zare, the Spokesperson of Budget Integration Commission, on February 27.

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However, this is not the whole story. The coronavirus outbreak, the government’s failure to contain the pandemic, and the socioeconomic consequences added insult to injury for millions of retirees, pensioners, and welfare recipients affiliated with this organization.

In recent months, not a week goes by without countrywide rallies by retirees and pensioners in Iran. The continuation of these protests displays that these underprivileged people can no longer tolerate hardship and misery, which are direct outcomes of the ruling system’s corruption, nepotism, and economic failures.

The government’s refusal to adjust retirees’ pensions according to the current rate of inflation and provide appropriate insurance services are among pensioners’ newest dilemmas. However, given the administrations’ view of this organization as a backyard, retirees and welfare recipients forecast a bleak future.

Distinction Between Salaries and Inflation

The government’s debt to the Social Security Organization has rendered a dramatic distinction between retirees’ pensions and the rampant inflation rate. This dilemma is not limited to retirees alone but also has brought enormous difficulties to working families.

According to official statistics, 90 percent of Iran’s working families struggle with economic problems, and many of them face poor nutrition. In other words, they are scrambling to remain alive. According to experts, working families’ food expenditures—aside from additional essential costs—reach 60-80 million rials [$240-320] per month, according to experts.

However, the tripartite committee, including workers’ representatives, employers, and the government, estimated the food basket by 6.895 million rials [$275.80] as a cornerstone for wage talks at the Supreme Labor Assembly. This is while there is a drastic difference between workers’ salaries and retirees’ pensions.

Furthermore, the Social Security Organization is one of the secret entities, and its non-transparency has intensified the people’s concerns. This organization is considered one of the state-run companies. However, there are no rules to hold such institutions accountable. This issue gives the green light to administrations to plunder and exploit the assets of people who are affiliated with the organization.

Despite experts’ suggestions for resolving the crisis between the Social Security Organization and retirees and pensioners, the government did not signal enthusiasm to ease welfare recipients’ dilemmas. In fact, the government itself is the main barrier to resolving the crisis due to its massive privileges through its financial resources.

“According to the Vice-President’s order, [the government] had withdrawn some money of the Social Security Organization’s Investment Company and granted it to the Sports and Youths Ministry to pay the National Soccer Team’s coach and compensate for its debts,” on January 26.

In such circumstances, retirees, pensioners, and impoverished people who benefit from social security insurances see no path to gain their inherent rights but following up their demands through protests. In this context, on February 28, retirees once again rallied in 26 cities across the country, blaming officials for failing to meet their grievances.

“Only by taking to the streets, will we get our rights,” “Our enemy is right here, they lie that it’s America,” and “We live in poverty, while you [officials] are well off,” protesters chanted in front of the Social Security Organization’s representations and Provincial Governorates. The February 28 rally was the retirees’ sixth countrywide protest in recent weeks against poverty, discrimination, and indifference about people’s hardship, which are the ominous gifts of the Islamic Republic’s 42-year history.

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