Iran Economy NewsUnemployment in Iran a Problem With Political and Social...

Unemployment in Iran a Problem With Political and Social Dimensions

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The most important problem of the next decade in Iran is the problem of unemployment, a problem that can even have political and social dimensions, according to Iran experts.

In the summer of 2017, when the twelfth government took office, President Hassan Rouhani announced that his government’s top priority would be to solve the unemployment problem in the country and promised to create 900,000 jobs annually.

The major anti-government protests of January 2018 and November 2019 and the incident of the coronavirus pandemic changed the priorities of Iran’s government in preventing any protests and the rise of the people.

For nearly a decade, Iran’s economic growth has been close to zero, which means that according to the logic of economics, the creating of new job opportunities and eliminating previous job opportunities should be close to zero. However, the problems seem to be so great in Iran, that no one can address the unemployment crisis.

The population of Iran in 2011 was reported to be about 75 million and now, in 2021, it is estimated at about 84 million. About nine million people have been added to the population of Iran during this decade, but apparently there is no prosperity in the Iranian labor market, and this means that if four years ago the employment crisis was just a light wind and its alarm siren a little whistle, now this light wind has become a storm and its alarming siren has becoming a deafening sound.

The official unemployment rate in Iran is not accurate. The latest data of the ‘Labor Force Survey Plan’ in 2018, provides a more accurate picture of this issue. According to the Statistics Center of Iran, that year about 23.8 million people were employed throughout Iran, of which about 13 million (equivalent to 5%) were employed at least 44 hours a week.

On the other hand, of the total population of employees in 2018, about 9.7 million people (equivalent to about 40.8%) worked less than 44 hours per week, which in fact, in general, indicates ‘underemployment’. Simply put, nearly 41% of all Iranians who were employed in 2018 did not have a full-time job (in the sense of a full-time job).

However, data from the Statistics Center of Iran, last updated in April 2021, show that the unemployment rate in Iran has declined in recent years. This may seem strange at first glance, because we all know that the general state of Iran’s economy has steadily deteriorated in recent years.

However, economic logic supports this data, because by reducing the actual (or nominal) wages of workers, it becomes easier and cheaper for the employer to employ labor. Accordingly, the unemployment rate (according to the definition of the Statistics Center, the ratio of unemployed population to active population (employed and unemployed), multiplied by 100) in the winter of 2020 across the country, was equal to 9.7 percent.

Unemployment rates in Iran have been declining in recent years, but these statistics are naturally based on self-reported individuals.

This rate was equal to 10.6 percent in the winter of 2019 and 12.5 percent in the winter of 2016. Thus, in the last five years, the unemployment rate has decreased, because the wages of the employees in practice (for example, in terms of their dollar wages) have been lower than before and it has become easier for the employer to pay. For this reason, the employer prefers to hire a larger labor force.

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