Financial Tribune- Last April President Hassan Rouhani said his government would strive to reduce the galloping inflation rate to single digits. That promise was delivered in June. Next in line was joblessness and how to tackle the dole queues.
Data from the Statistical Center of Iran put the unemployment rate in summer at 12.7%. The figure was higher by 1.8% compared to last summer and up 0.5% compared with the previous quarter (March 20-June 20, 2016).
According to the SCI, 3.33 million Iranians were unemployed in Q2. It also shows that 10.4% men and 21.8% women of ages 10 and above did not have work in the period.
The unemployment rate was 14.4% in the urban regions and 7.9% in rural areas. Joblessness was higher among women compared to men and among urban dwellers.
Youth unemployment rate, i.e. the proportion of the population between the ages of 15 and 29, stood at 26.7% in summer, registering a 3.3% rise compared with the same period of last year and a 1.8% increase over the last quarter.
SCI put Q2 labor force participation rate — proportion of the population of ages 10 years and above that is economically active either employed or looking for work– at 40.4% or 26.36 million people. The figure shows a 1.5% rise compared to the corresponding period in the previous year and a 0.9% growth over the last quarter.
Men’s and Women’s
Economic participation of men and women was 64.9% and 15.9% respectively. The rate was 39.8% in urban areas and 42.2% for rural areas.
Minister of Cooperatives, Labor and Social Welfare, Ali Rabiei said last year that unemployment rate would fall below 10% by the end of Rouhani’s term this summer.
“To reduce unemployment to single digits, between 800,000 to one million jobs must be created every year,” the minister has been quoted as saying.
According to senior presidential advisor Masoud Nili, the government is among the world’s top five in generating an annual average of 704,000 jobs.
“But this extraordinary feat has gone unnoticed because of the sharp increase in the number of job-seekers,” he said.
Recession: Main Culprit
The Persian economic monthly Ayandehnegar recently asked economists and experts three questions about the unemployment problem that some observers have likened to a “tsunami”.
As would be expected, the first question was: What is the main reason for unemployment in Iran?
Shahrokh Zahiri, a seasoned entrepreneur, singled out the recession in the industrial sector as the main reason.
“At present, the industrial sector is in a slumber. One of the main characteristics of this sector is that it can create jobs. When a country’s industries are up and running, it will generate jobs and reduce unemployment. As industrial and production centers grow, their need for workforce also increases.”
Jamshid Pajouyan economy professor at Allameh Tabatabayi University also puts the blame on the doorstep of recession.
“In such (recessionary) atmosphere there is hardly any investment forthcoming for new businesses. When no companies are set up, there is obviously no need for workers. Therefore, there is no job for our young people who are educated and talented. The solution is to create the climate conducive to new investments.”
Hussein Saroukhani, deputy head of Employers’ Center for the Union of Recruitment Consultants, believes unemployment is not the result of a single factor.
“In Iran we have been grappling with recession for the past few years, which in turn undermined investments in different areas. Apart from that, we are also saddled with far too many unfinished industrial projects. Add to this the long years of international sanctions plus the impediments to the manufacturing base. Companies unable to sell their goods and services saw their inventories rising and therefore were forced to downsize.”
Inept University Graduates
The second question dealt with the sheer lack of coordination between the centers of higher learning and industries and its impact on jobs.
Zahiri believes there are too many educated people in Iran who lack the skills demanded by the highly competitive labor market.
“Regulations in Europe have made internship an integral part of the education system. Students must do practical work in industrial units. Unfortunately there is no such arrangement in Iran. There is a chasm between the university and industry, which has visibly pushed up unemployment numbers.”
Ahmad Kimiayi Asadi, deputy head of the Council for Facilitating Business, affiliated to the Tehran Chamber of Commerce, Industries, Mines and Agriculture, says the university-industry gulf “did not give rise to, but indeed aggravated, unemployment.”
Echoing the oft-mentioned complaints of his peers, he noted, “More than engineers, most production units need skilled workers who can handle the practical side of the job. Our universities fall short of meeting this demand.”
The last final question went straight to the heart of the problem. Can the Rouhani administration reduce the unemployment rate before its tenure ends in August?
Head of Iran Electrical Industry Syndicate Alireza Kolahi Samadi says the government’s anti-unemployment policies have produced results, but long-term planning is crucial to expand the payrolls in big numbers.
“The problems we are facing today is the direct result of the bitter fact that the government of former president Mahmoud Ahmadinejad (2005-2013) was rather indifferent to the policies enshrined in the five-year economic development plans and the 2025 Vision Plan.”
Development plans are laws drafted by the government and ratified by the parliament every five years. The primary aim of the plans is to pave the way for the realization of objectives outlined in the 20-year Vision Plan (2005-25).
However, Alireza Khaef, a TCCIMA member, is not optimistic and believes the government will not be able to turn things around simply because creating jobs is closely related to and depends on the efficient functioning of all spheres of production.
“Private enterprise deserves meaningful and sustainable support – something the government has not done so far.”
Kimiayi Asadi, on the other hand, makes an interesting but disturbing point.
“It will indeed be an achievement if the government succeeds in keeping the unemployment rate at the present levels! I don’t think the government is capable of doing much at this stage. However, I do believe that if the same politicians are elected in the next elections, they can and will be able to deliver — the positive results of which will emerge during the next presidential term.”
Presidential elections will be held in May.