Iran’s New Minimum Wage Set “Below Poverty Line”
Labor Ministry Calculations Ignore Actual Rate of Inflation
At the end of every year in Iran, the Labor Ministry sets the national minimum wage for the following year, determining a base income for more than 40 million Iranian workers.
For the Persian year 1400, starting March 20, 2021 in the Christian calendar, Labor Minister Mohammad Shariatmadari announced there would only be a 39 percent increase—far less than the inflation rate that has been strangulated Iranians’ wallets and contributing to ongoing protests.
Shariatmadari noted that the minimum wage was decided on March 13 at the conclusion of a five-hour session of the Supreme Labor Council (SLC), comprised of representatives from the ministries of economy, industry and labor, as well as the National Standards Organization, and representatives from labor organizations and employers.
Wide Gap in Earnings vs. Inflation
Article 41 of Iran’s Labor Code states that “the minimum wage of workers shall be fixed taking account of the rate of inflation.” That rate was 48.2 percent in the month of Bahman (January 20 – February 18, 2021) compared to the same month last year, as calculated by the Statistical Center of Iran.
Article 41 also states, “Regardless of the physical and intellectual abilities of workers and the characteristics of the work assigned, the minimum wage shall be sufficient to meet the living expenses of a family, whose average number of members shall be specified by the appropriate authorities.”
Implementing these provisions requires the cooperation of representatives from the government as well as workers and employers at the SLC. However, given the continuing chronic economic hardship suffered by a vast segment of the Iranian population, the council has a long way to go to meet workers’ demands.
The council set next year’s minimum wage for newly hired workers at 3,705,000 tomans ($877.77 USD based on the official rate) per month.
The minimum wage for workers with a year’s experience and one child will be 4,111,000 tomans ($973.96 USD).
Days before the SLC announced the new rate, the Free Workers Union of Iran (FWUI) denounced the council’s method in averaging the inflation rate for a basket of essential goods and services.
“Every year the SLC’s sub-committee evaluates needed income on the basis of a basket inflation that is less than half the actual rate of inflation and as a result lowers what workers will earn down to a level below the poverty line,” the FWUI said in a statement on February 20th.
The real minimum wage should be more than 12 million tomans ($2,843) per month, it added.
“At present there is nothing that can fill a 5.3 million toman gap ($1,255.66 USD) between what workers should earn every month and their expenses,” said one of the labor representatives in the SLC, Faramarz Towfighi, on March 18.
Nevertheless, Ali Kadkhodaie, another labor representative in the SLC, saidon March 16 that the new rate was a “satisfactory” compromise between the demands of workers and employers.
Why is Minimum Wage Important for Iranians?
The minimum wage will affect more than 42 million workers, retirees and others who are registered with Iran’s State Welfare Organization (SWO) and receive insurance benefits and pensions. Meanwhile, there are millions working off the books without any kind of coverage or legal protections.
“There are about 10 million people working underground who don’t even receive a minimum wage,” Ali Aslani, a member of the state-approved Association of Islamic Labor Councils (AILC), said on January 2, 2021. “Nobody is supervising these workers who are getting paid very little; not more than 700,000 or 800,000 tomans a month (about $177.7 USD).”
The country’s extraordinary economic conditions have led to an increase in the number of suicides committed by workers out of sheer hopelessness.
In January 2021, the National Medical Examiners Organization reported that in the eight months since the beginning of the Iranian year on March 21, 2020, there were 3,589 deaths by suicide throughout the country—a 4.2 percent increase compared to the same period last year.
Although the Labor Code requires the Iranian government to ensure job security, the state response to waves of labor unrest in recent years has not been to improve wages to offset the impact of corruption, mismanagement and sanctions, or to expand health coverage during the COVID-19 crisis.
Instead, workers’ demands continue to be ignored while labor rights leaders are arrested and imprisoned under trumped-up “national security” charges.
For example, regarding contracts, Article 7 of the Labor Code continues to be interpreted against the interests of workers.
The article states: “The expression ‘employment contract’ means a written or an oral agreement whereby a worker undertakes, in return for remuneration, to perform work for an employer for a definite or an indefinite period.”
However, since 1994 arbitrators have taken advantage of a Labor Ministry directive that authorizes indefinite contracts to be treated as temporary, giving employers the power to expel workers at will without accountability.
The ruling was upheld by the Supreme Administrative Court in November 1999 and as a result, more than 90 percent of all contracts are considered to be temporary in Iran, thereby seriously undermining job security.
This erroneous interpretation of the law goes completely against the intent of legislators who specified two kinds of definite and indefinite contracts.
In addition to long delays in wage and benefit payments, the tentative nature of contracts is another reason for ongoing tensions between workers and management at the Haft Tappeh company, Iran’s largest sugar producer, located in the town of Shush, Khuzestan Province.
Since the arrest of several Haft Tappeh labor leaders and activists during peaceful protests in November 2018, many have been prosecuted on the basis of baseless national security charges and imprisoned under lengthy prison sentences.
Although some of the convictions were annulled through general pardons, freelance labor reporter Sepideh Qoliyan (also Gholiyan) is serving a five-year sentence and Haft Tappeh labor representative Ali Nejati has been summoned to prison to begin serving his five-year sentence.
As one of the most significant labor actions in the Islamic Republic’s 42-year history, the Haft Tappeh protests have galvanized workers in other sectors as well, most significantly the oil sector, including at a number of petrochemical plants, as well as heavy machinery and auto manufacturing factories.
Meanwhile, protests by Iranian retirees have been getting more organized and widespread.
In January and February 2020, retirees held rallies in front of the SWO offices in 25 Iranian cities to demand higher pensions and disability compensation.