Iran’s rising unemployment: inside the problem

By Sara Rajabova

Alongside many other economic problems that inflict great economic challenges on Iran, the rising unemployment problem in the country is adding fuel to the fire.

The rate of unemployment in Iran is continuing to rise despite the efforts of the government. Iranian President Hassan Rouhani said after he elected as a president that job creation is the most significant issue in the future of the country's economy. However, new government efforts couldn’t be considered as too effective taking into account recent situation.

The latest report from the Iranian Statistical Center, released on January 1 said Iran’s unemployment rate during the autumn (Sept. 22-Dec. 22) stood at 10.5 percent, while it was 9.5 percent in summer (June 21 – Sept. 21). The unemployment rate among Iranians aged over 10 years in the mentioned three-month period was 0.2 percent more than the same period of time in the preceding year.

The figure also indicates one percent increase compared to the preceding quarter’s unemployment rate (June 21 – Sept. 21). About 2.52 million of Iranians above 10 years old were jobless in the mentioned three-month period (ended on December 22).

While considering the unemployment problem in Iran, it should be noted that the rate was high among women comparing to men that has social reasons. Unemployment among men was around 8.7, in the time when the rate among women was 20.3 percent during the same period.

Also, based on international standards, Iran is currently struggling with a crisis in regards to the unemployment rate of the youth (under the age of 30). According to the Iranian media, at least 1.2 million of over 2.5 million unemployed people in Iran are college graduates.

Earlier, Iran’s Cooperative, Labor and Welfare Minister Ali Rabiei warned that if the current trend continues, the number of jobless people in Islamic Republic will reach 10 million in 2021.

Rabiei called on the lawmakers to help resolve the unemployment crisis through approving a bill to establish a special employment fund.

Reasons triggering unemployment in Iran

There are several reasons for the rising unemployment rate in Iran, which requires immediate steps.

Many in Iran, as well as the incumbent government blame the previous government’s mismanagement for the rising unemployment in the country. The experts said lack of appropriate policy and accurate planning not only has caused business owners to face bankruptcy, but also has endangered the living of ordinary people and impeded life for the low-income people in the society.

Some believe that the sanctions imposed on the country over its nuclear energy program have played minor role in the country’s economic disturbance. They say the major reasons for the current situation in Iran was lack of strategic policies, incorrect implementation of the law, absence of common sense, deterioration of some governmental structures and some other reasons.

Iran’s President Hassan Rouhani has also put the fault on the previous government, saying nearly no job was created in the country between 2006 and 2011.

He recently noted that although in the decade ending 2011 the country’s foreign currency income was great, but nearly no job was created in the country between 2006 and 2011, Iran’s media reported. Rouhani added that this issue shows that oil revenues are not good solutions to country’s problems.

Another reason for the rising unemployment, especially among the young people is that some part of them couldn’t find job fitting their wish and capabilities.

Rabiei said earlier that there are two million job opportunities in the country that no one is willing to take. He explained that the college graduates' unwillingness to do certain jobs has given the opportunity to foreign immigrants to take the jobs.

Kamran Dadkhah, a professor of economics at Northeastern University in Boston city of Massachusetts State, explained the high unemployment in Iran with the decline investment in country.

Noting the necessity of investments for opening jobs, Dadkhah told AzerNews that due to past ill-conceived policies including confiscation of property, government heavy intervention in the economy, business activities of government organizations and the Revolutionary Guard, and the general atmosphere of insecurity for capital, private sector investment has dwindled and many industries have closed down in recent years.

He said the situation has got worse due to sanctions imposed on Iran as a result of its nuclear activities that have also prohibited foreign investment and technology to help Iran’s economy to create jobs.

Dadkhah further added that on the other hand, the oil revenues which have been the main source of government income and government development expenditures have dwindled in recent years, which led to decline in the government investment.

Also, one of the reasons that significantly impact the general figure on unemployment rate is the unemployment among women and government and society’s unwillingness to pay more attention to this issue. Women's unemployment is one of the most important socioeconomic issues Iran is facing as women labor force participation rate in the Islamic Republic is far below advanced countries.

World Economic Forum's Global Gender Gap Report 2014 indicates that there was slight improvement in the level of participation of women in the workforce in the past year as compared to 2013. Iran continues to have one of the lowest rates of female representation in the labor market globally, with women constituting only 17 percent of the labor force. According to the report Iran ranks 137 of 142 countries assessed.

Many government officials believe that due to the high rate of unemployment amongst men, women should automatically be given second priority when applying for a job. In addition, the comprehensive population and family excellence plan presented to the parliament, further undermines the participation of women in the workforce. It introduces a hierarchy of hiring by both public and private institutions. The plan states that in all governmental and non-governmental sectors, the employment is to be assigned first to men with children, then to married men without children and only then to women with children. The plan excludes unmarried women from the selection process.

Though Rouhani’s administration has stated its opposition to the plan, many high-ranking Iranian officials have defended it.

Solution to the unemployment challenge

Iran possesses one of the youngest population in the world with approximately half of its population being under 35 years old. The experts said if major tax and constitutional reforms are not undertaken, unemployment will continue to rise, depicting a somber future for the next working age generation. Therefore, it is needed to take more deceive measures to tackle this problem.

Rabiei earlier said his Ministry has initiated a plan jointly with the planning department of the presidential office to create 500,000 jobs by the year end, Iranian media reported. He also said about three billion dollars will be invested in the job creation plans.

Previously, President Rouhani said 190,000 new jobs are projected to be created by the end of the current Iranian year.

Speaking on the ways out of the unemployment crisis, Ayatollah Akbar Hashemi Rafsanjani, Iran’s Expediency Council Chairman has recently suggested bank cash to be spent on campaign against unemployment.

Rafsanjani said if the bank cash is spent properly and in favor of economy and development, it will help greatly push forward economy and deal with unemployment.

He noted using domestic asset and the capacity of foreign policy will be the main pre-condition for employment and production.Rafsanjani added that taking cooperatives' role in economy for granted and failure to implement general policies of Article 44 of the Constitution properly will be tantamount to rising unemployment rate.

Furthermore, Dadkhah noted that although the Rouhani government has promised many of these actions, it seems to have been slow in implementing them.

He said if the policy of increasing the rate of growth of population succeeds, then the employment condition would be even worse in the decades to come.

He stressed that in order to help create jobs the government has to create an environment of security for capital, investment, and entrepreneurship.

Dadkhah also noted that Iran should bridge the gaps with the world powers over its disputed nuclear energy program. “Also it should come to terms with the P5+1 so the sanctions are lifted.”

“Government entities, particularly the Revolutionary Guard, should leave business activities. Foreign investment and technology in petroleum and other industries should be encouraged. Finally, once the sanctions are lifted and Iran can export more oil and access its proceeds, the government should devote all the proceeds to investment or save it in a national fund for future investment,” Dadkhah said.

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Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova

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