An Iranian man shopping in a supermarket

Iranian Workers Face Bleak Outlook With Meager Annual Raise

Monday, 02/26/2024

The prospect of a significant increase in wages in the new Iranian year (starting March 21) appears grim, as the government has only set it at 20 percent, despite a 145 percent increase in food prices.

The Supreme Labor Council, which is responsible for setting the minimum wage, convened after a long hiatus last week but there was no discussion about the wages for the next year. In previous years, negotiations would have begun by this time, and the minimum basket of goods for a family of four would have been calculated.

This year, the Ministry of Labor, Cooperatives, and Social Welfare has been slow to act, and there is no indication that the government is willing to increase the minimum wage by more than 20 percent. This is despite the fact that inflation is officially at 45 to 50%, and the real cost of living is soaring. Iranian media speculate that the council will push for a 30 to 40-percent rise.

In January, Iran announced that the new base monthly salary would rise to approximately $200 with a 20-percent increase. However, the constant decline in the value of the rial now pegs it to around $160. The looming threat of further depreciation in the upcoming year presents a significant challenge, potentially diminishing the minimum wage's value relative to the dollar.

According to a report by the Iranian Labor News Agency (ILNA), it seems that wage negotiations this year have been marginalized more than ever before. Labor activists have condemned the government's lack of action and its unilateral stance on wage negotiations. Recently, a letter surfaced revealing that the Labor Ministry barred a worker representative from participating in council meetings due to their protest against the government's low wage proposal. ILNA described this move as "an authoritarian approach to impose terms on workers."

ILNA also cast aspersions on the legal and logical basis of remarks by Labor Minister Solat Mortazavi, who insists on the 20-percent rise while the government itself announces the inflation to be about 45 percent.

Iran's Minister of Labor, Cooperatives, and Social Welfare Solat Mortazavi

Fararu, a moderate website, says, “In the current circumstances, not only is there no hope for compensating for the inflation of over 140 percent in food stuff and the rising costs of living, but also a wage increase equivalent to the official inflation of approximately 50 percent seems unlikely.”

Against the backdrop of sluggish deliberations on the annual rise, Iran is seeing an uptick in labor protests in recent weeks, with a large number of weekly demonstrations and strikes in the country’s oil, gas, petrochemical and steel industries. 

The government's actions are seen as a threat to workers' rights and a violation of the principle of tripartism, which holds that governments, employers, and workers should have equal representation in wage negotiations, and a necessary precondition for such negotiations as mandated by the International Labour Organization (ILO).

Stockholm-based economist Ahmad Alavi told Iran International that in Western countries the private sector and workers are the main decision-makers, and the government only oversees the process. He pointed out that the inflation rate, the cost of living, the growth rate and all the relevant factors are taken into account in such negotiations, however, the Iranian government does not allow the labor unions or workers’ real representatives be at the negotiation table.

Echoing the same argument, London-based labor activist Sattar Rahmani told Iran International that Iran's Supreme Labor Council is comprised of regime insiders, masquerading as union activists, who actively oppress the voices of workers. Labeling the current practice by the government illegal based on ILO’s regulations as well as the regime’s own Constitution, Rahmani said that two factors, namely the inflation rate and the basket of goods needed to avoid poverty, should be the basis for deciding on the minimum wage.

Ehsan Sohrabi, a labor activist, described the government's approach to wages as "authoritarian,” which will adversely impact the livelihood of workers, representing 50 million people of Iran’s 84 million population. He told ILNA that since 2018, when the US withdrew from the JCPOA nuclear deal and re-imposed sanctions on Tehran, “the inflation rate for food items has now exceeded 900 percent.”

All in all, the cash-strapped government is dragging its feet and insisting on a 20-percent wage increase because it seems unable to increase the minimum wage to a level that meets the cost of living. According to Meysam Latifi, a vice president and the head of Iran’s Administrative and Recruitment Affairs Organization, about 80 percent of the government’s budget is spent on paying the salaries and even raising the minimum wage for one percent will amount to a huge sum.

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