Iran Economy NewsOne in Three Iranians Live Below the Poverty Line

One in Three Iranians Live Below the Poverty Line

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How much did the minimum intake cover the poverty line in Iran in the 2000s? How much were the Iranian people to spend on a certain basket of goods and services in the last decade with their salaries?

These are questions that are raised especially in the wake of the worsening economic situation of the country and the people.

According to statistics of the 2000s with an average economic growth which was nearly close to zero, in which the rate of fixed capital formation also decreased by half, welfare declined significantly, and the Gini coefficient, which was supposed to reach 0.34 at the end of the sixth development plan of the Iranian government in this year, it remained above 0.4 and did not appear to be declining in the current circumstances.

Iranian government experts believe that what has happened to Iran’s economy in the past decade, even in its best years when there were no sanctions or the coronavirus, could not reduce the poverty and increase prosperity.

The situation is becoming more troubling when, according to the Ministry of Labor and Cooperatives’ Poverty Monitoring Report, 26.5 million of the country’s population live in absolute poverty, which is almost impossible to escape. Except with cash and non-cash donations and, of course, raising purchasing power for the minimum wage.

But to what extent does being employed and receiving wages by individuals can pull them out of the poor with low financial resources?

According to a Ministry of Labor report in which the poverty line per capita in 2020 was declared 1.254,000 Tomans, the poverty line for families of four was estimated at 3,385,000 Tomans last year.

However, at least one married person with two children with no work experience received about 3 million Tomans. Therefore, the gap between the poverty line and the minimum intake for a family of four was 385,000 Tomans.

These figures also seem a little strange when inflation was reported at 36.4 percent annually. According to the Ministry of Labor and Cooperatives, the country’s per capita poverty rate reached 1.245,000 Tomans in 2019 but living with this amount of money remains a joke in metropolises.

Some 1,254,000 Tomans is a figure announced as the poverty line of 2020 by the Ministry of Labor and Cooperatives, which is a little strange because buying a certain basket of edible goods for a month without paying for other goods such as clothing, transportation, healthcare, etc. costs more than 800,000 Tomans for families of four.

In another part of the report, the Ministry of Labor and Cooperatives also dealt with what poor people faced in 2020, according to which 100 percent of the jobs lost in 2020 (due to the coronavirus) were informal jobs in which people from low-income deciles were working, and since the share of wages and salaries was about 75 percent of the income sources basket of people in the lower deciles, it can be concluded that with the unemployment of people in 2019, practically 75 percent of the income source of the low-income deciles has been lost. In 2019, the poverty rate reached 32 percent, indicating that 26.5 million people were in absolute poverty.

Given that the poverty line in 2020 increased by 38 percent to 1,254,000 Tomans, it is expected that due to the widespread of the coronavirus in the country and the exit of about two million people from the labor market, the number of people living in absolute poverty will reach about 30 million.

If an average of 3.24 is considered for each household (the same figure stated in the Labor Ministry report), it is estimated that about 10 million households live below the poverty line.

It is customary to publish poverty line data from official centers in any country. Of course, sometimes like in 2011, the Iranian government did never publish accurate statistics about any subjects. But about the published statistics about poverty in Iran, it does not seem to be consistent with the realities of the market, because the cost of living in the country, especially in the metropoles, with a monthly salary of 1,245,000 tomans is almost a joke.

The poverty line rate in 2019 and 2020 was 4,600,000 Tomans and 9 million tomans, respectively, citing these numbers, the gap between the poverty line and the minimum wage in these years has been 2.5 million tomans and 7 million tomans.

Although the figure of recent years is somehow speculation about the cost of living in Iran, it seems closer to reality, since, with annual inflation of 36.4 percent in 2020, as well as 66.6 percent point inflation for edible goods in March 2021, it does not seem that 1,245,000 Tomans will cover the living expenses in the metropolises.

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