Statement of WCEU on the Official Miminum Wage Level

Iran Labor Report

A joint statement was released on the recent minimum wages levels announced by two workers organizations tied with the previous administrations in the country. The text of the statement reads as follows.

Statement of the Working Community Elders Union and the Executive Secretaries of the State Labor Houses

The esteemed workers and toilers in laboring and enterprise front in our beloved Islamic Iran

As you know, all the Iranian people and at least those that supported the president in his first election with 15 million votes, from the time Mr. Ahmadinejad entered the elections with slogans of social justice and protection of the downtrodden, elimination of the deprivations, dignity and pride of Iran and Iranians were expecting to see signs of this trust in action. The same year of 2005, his very first slogan of paying 3 millions tomans in housing down payments and 10 million tomans housing loans led to a large flock of people especially the retired to sign up physically or through the internet and endured expenses in this regard as well. But none of these came into fruition and only caused tensions in the housing and rent markets resulting in the burden of the hikes to fall on lower income people. Thus, in the same year, immediately an inflating budget was sent to parliament of up to 50 percent. The liquidity increase practically started in 2006 showing itself in the government budgets. The huge tide of rental and housing costs soon spread to other sectors in the economy and in a short time with incredible increases in oil prices, with the huge coffers, the government was enticed to increase its expenses rapidly. This trend in liquidity increase along with price controls and fixing the currency rates and some other prices turned the economy into a single commodity based and relied on imports such that in certain years the legal and illegal imports topped 100 Million dollars.

Fixing the currency and some other prices rates which was controlled by the state devastated production on the one hand and on the other shut consumption for certain commodities and services to the roof and also led highly to contraband fuel in the country.

This situation was catastrophic for both the consumers and the producers as currency was wasted and liquidity increased and production and employment did not grow proportionally.

This trend led the country to an stagnate economy in which whenever the increase in inflation and costs led to pressures on the consumers, the government resorted to wide spread imports using the lower 1050 tomans per dollar currency so that the consumers were kept happy causing the producers to back down and close shops. This scenario, however, with the decline in currency rates in 2009 and 2010 forced the government to resort to a new scheme. The administration, parliament, and then head of the parliament which spear headed fixing the prices and were extremely opposed to the interest rates and fixing the interest rates to a single number at the time now changed course 180 degrees and in a surprising move became advocates of true costs of goods and services especially in the oil and energy sectors. The justification for the matter of course was provided in their special eloquence. For instance, they stated that the administration is paying 100 thousand billion tomans in subsidies, 70 percent of which going to 20% of the population and the 30% rest of it to the 70% others which is against justice and benevolence. This led to economic rationalization which was a lot different from the rationalization of 1989 to 1994. While the 1989 to 1994 economic rationalization improved the economic growth, investments and reduced the unemployment rate and led to non oil exports to about 5 billion dollars a year and reduced the unemployment rate to 9 percent, the second economic rationalization led to extremely opposite social and economic indicators.

With passing of few years of this plan known as targeted subsidies law, many production facilities closed down and many more on the verge of closing. Increasing unemployment has taken hold of the employed and turned them into the existing army of unemployed. Increasing social ills, increase in judicial, intelligence, and security centers and prisons are the fruits of this era. In this same period the life of the poor got worse. The economic situation of workers, employees and retired gets worse every day and the administration is indifferent to this situation, governing the country on the day to day basis. Today all attest that no family can survive with less than 1.5 million tomans but the minimum wage stops at 500 thousand tomans. About 70 percent of the retirees and those on social security should continue with the same wage ceiling while in the health care area, most critical after food, the co-payments have increased by 30% in private and 18% in the public ones. The official currency rate in 2012 reached 2000 tomans per dollar due to the administration currency needs and is an indicator of coming increase in prices in 2013.

On one hand, the outstanding loans by the banks have reached more than 75 thousand billion tomans or the banks are giving 120 percent of their resources as loans illegally while the production facilities are still suffering from lack of liquidity and many factories are not able to continue production for this reason. The whole economy has been in a price race. Unfortunately, the administration and then other sectors following the administration led to the situation that the prices for example in the automobile industry doubled over night and with the esteemed administration’s permission!

In this period, unfortunately, the most under privileged sectors in the society which are the state employees and retirees are facing the most hardships. Thus, we are witnessing that the kindness of the benevolent administration never reached wages and employment and the economic indicators are testament to this fact that the purchasing power of this sector is diminishing each year and this year the official inflation rate has been announced as 31.7 percent while the minimum wage has been increased 6.7 percent less at 25 percent. The state employees and retirees are in a more dire situation, telling the weak to be weaker, eat less, buy less clothes, do not ask for health care, be obedient and not to stand tall.

We are saying that the working community, retirees and state employees should not be indifferent to so much pressures. The administration, legislators and policy makers should know that such acts will result in weakening the foundation and these are not becoming of the Islamic system.

The Elders Working Community Union declares that the wages set by the High Council on Labor, the administration foot steps and shadows on which are clearly visible, are not acceptable at all and does not recognize the formula for the retirees and employees. We ask for increase in wages based on the current realities, real inflation rate and matching the wages with the living needs. We declare that social security based on Articles 96 and 111 should increase the wages. We are hoping that the authorities in the country act with more sensitivity to the existing realities and take the social implications into consideration in their decisions. They should know that keeping a substantial portion of the society in poverty will have destructive consequences which they cannot exempt themselves from those at all.

The authorities should know that the second phase of targeted subsidies law if implemented will be the coup de grace on the national economy. Thus we are seriously opposed to the implementation of the second phase and call for a serious reconsideration on the first phase of the law. If this is not done, you should know for sure that the working community will be in a situation called overflow of their patience; Now, it is up to the administration and those involved. They either push forward with the current catastrophic situation or create the accompaniment of the poor with the revolution by changing economic course.