Iran’s labor market is not in a good shape, as its economic participation rate is low and unemployment rate is high.
According to a report by the Statistical Center of Iran, economic participation rate stood at 44.1% in the year ending March 2020. The rate stands at 50% in Middle Eastern countries and above 60% in East Asian countries, the World Bank 2020 report says.
The jobless rate has been in the double digits over the past two decades. However, unfavorable conditions of the labor market have not been the same for all.
Generally, it is much more difficult for women and the educated to land a job in Iran, compared with men and the uneducated, Zahra Karimi, economist and university professor, notes in a write-up for the Persian economic daily Donya-e-Eqtesad. Below is the translation of the text:
Figures show unemployment rate is very low for the illiterate and those with some primary level of education. In other words, unskilled laborers enjoy full employment in Iran; the unemployment rate of 3-6% is indicative of the short time it takes for unskilled, illiterate workers to find a job. In fact, employers in different industrial sectors, construction and services complain about shortage of unskilled worker in most cities.
As per unofficial estimates, nearly one million Afghan workers are employed in Iran as unskilled and semi-skilled labor. There were a total of 776,400 local, jobless men who were either illiterate or had primary education last year.
Illiterate, unemployed men are distributed unevenly across the country. They are mostly abundant in underprivileged provinces and reluctant to migrate to large cities due to problems and high costs associated with living there. As a result, the paucity of unskilled labor is more pronounced in large cities and provincial capitals than in underprivileged areas.
There won’t be sufficient unskilled local laborers to replace Afghan workers in case they decide to return to their home country. Zero percent unemployment rate is in fact a recipe for crisis in the domestic labor market.
Employers will need to offer higher wages to lure workers away from their rivals. The hike in wages might make it impossible for employers to continue the project and they might opt for wealth-generating approaches that don’t need laborers.
The presence of Afghan workers also corroborates the fact that there is high demand for unskilled labor in Iran and that demand for unskilled labor outweighs supply. Despite the presence of migrant workers, last year’s unemployment rate of jobless men who were either illiterate or had primary education stood at 4.1% and 6.3%, respectively.
At present, Afghans are prohibited from working in several provinces such as the northern province of Mazandaran. It is difficult to find unskilled laborers in the province and employers have to take worker from other provinces to carry out their construction projects.
During rice plantation and harvest seasons, large groups of workers travel from other provinces to Mazandaran and at times y sleep in the streets during summer.
Even Tehran Municipality is unable to keep the city clean without using migrant workers.
Afghans who work in Iran are not competitors of educated jobless Iranians, so they have no bearing on the unemployment problem of university graduates. Their deportation will drive up the wages of unskilled workers and create an array of problems for domestic employers.
The rise in labor costs will consequently lead to a decrease in production and exacerbate recession. Under the circumstances, the Iranian workforce won’t benefit from the expulsion of migrant workers, either.
