Making an improvement in people’s livelihoods is the goal of all economic policies. Economics and all policymaking tools should help promote economic growth and public well-being. With that in mind, a positive change in the welfare of people could be considered an indicator of the achievement of the country’s policymaking apparatus.
Zahra Kaviani, an economist, prefaced her write-up for the Persian economic daily Donya-e-Eqtesad with this note. A translation of the text follows:
Unfortunately, Iran’s economic indicators all show similar results: negative economic growth, high inflation and widespread unemployment, which reflect the rising trend of poverty. The super challenges that economists have frequently warned about are now entering the crisis stage.
Even the conundrum of budget deficit has pushed inflation close to critical limits and the economic growth of the past decade has hit an all-time low, which have serious public ramifications.
The spread of poverty is so serious that no policymaker can ignore it. Policymaking for poverty alleviation requires deep analysis; a look at the changing characteristics of the poor presents a worrying picture.
For example, the joblessness of the householder has always been one of the emerging characteristics of poverty, so the corresponding support policy has help the poor find jobs, but a look at the prevailing trend shows that since 2006, the poor and the non-poor do not have a significant difference in terms of unemployment.
This does not mean that the poor have landed jobs; rather, it suggests that over time those who held a job have also become poor, i.e. as time passes, the income of the job-holder is not sufficient to allow workers to live above the poverty line.
The issue is more pronounced in urban areas, especially in Tehran. In the capital city, the percentage of the employed among poor householders is slightly higher than those who are not categorized as poor. Why should the number of employed but poor people increase by the year in a country that has a minimum wage law, i.e., a worker is guaranteed by law a level of wage that should ensure the minimum level of subsistence? What should be done to prevent the poverty of job holders?
The challenge of policymaking for tackling poverty is beyond the issue of employment. As the poor and the non-poor both move toward convergence (an indication of widespread poverty), they show divergence in some other characteristics. For instance, having a child in mid-2000s did not make much difference between the poor and the non-poor, but in recent years and in urban areas in particular, a significant difference can be observed between the poor and the non-poor in terms of having children.
This does not mean that the rate of childbearing among the poor has increased more than among the non-poor, but rather it means that the high costs of adding a new person to the family in proportion to the household income can push the household below the poverty line.
What should be done now? Are policies such as the distribution of car rent among families with children a solution to pull these families out of poverty?
In general, a look at the features of the poor shows that poverty in Iran is taking on a new face. The poor and the non-poor have become very similar in terms of characteristics that should distinguish them from each other, such as the householder’s employment. This is while the gap between the poor and the non-poor is widening in terms of characteristics that should have less effect in distinguishing them, such as having children. Both of these suggest that Iranian households have become extremely vulnerable. As a result, having a job does not ensure a household’s wellbeing; on the contrary, a change like having a new addition to the family can throw them a curve when it comes to meeting the expenses.
In fact, child poverty is a hugely worrying issue, hence child support policies should ensure a dynamic flow of support given throughout childhood (not just car rent among households). The child should have all kinds of support regarding nutrition, education and social support in order to pass childhood intact. Such support can only be afforded by governments that have sufficient resources. A government with a growing budget deficit cannot provide such a comprehensive support system for children.
The new face of poverty in Iran’s economy provides a very important guideline for the policymaker, i.e., the economy should be the country’s top priority. Otherwise, poverty and its economic and social consequences will become so pervasive that they will ultimately force the policymaker to put the economy first priority on its agenda after squandering a lot of resources.
