New Iranian jobs plan faces major obstacles

Al Monitor | Alireza Ramezani : Iran’s First Vice President Eshaq Jahangiri, who also serves as head of the Resistance Economy Command Headquarters, last month unveiled a comprehensive employment plan that envisions the creation of 971,700 jobs by the end of the current Iranian year (March 20, 2018). This target could be achieved if the allocated 215 trillion rials ($6.6 billion) in credit is secured, and most importantly, if the cost of job creation is significantly cut. Meanwhile, the plan is silent on the ample red tape that must be removed for unemployment to decrease.

The latest data released by the Statistical Center of Iran (SCI) put the national unemployment rate for the first (spring) quarter at 12.6% — 0.4% higher than the same period last year. Labor Minister Ali Rabiei on May 18 warned that unemployment will remain high for the next several years as long as the pace of the development of small businesses remains slow. Of note, the energy sector was the main recipient of investment in the last Iranian calendar year, which ended March 20, without creating a significant number of jobs.

Indeed, SCI data show that only 615,000 jobs were created in the last Iranian calendar year. This was even though gross domestic product (GDP) grew by a staggering 12.5% during the same period due to sanctions relief under the nuclear deal, according to a primary report by the Central Bank. The high GDP growth in the previous Iranian year is mainly attributed to the development of the oil, gas and petrochemical sectors, which experts say create relatively few jobs at a very high cost.

Iran needs to create about 1 million jobs per year to achieve single digit unemployment by 2022. Yet officials hope that employment figures will improve this year following the government’s new approach of backing small- and medium-sized businesses as well as science-based companies across the country. The new approach may help cut the cost of job creation. If successful, the economy will potentially create more jobs for every percentage point of growth in GDP compared to the previous year.


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