A report recently published by Majlis Research Center shows the poverty line in Tehran has reached 45 million rials ($240) a month for a family of four compared with 25 million rials ($133) of two years ago, i.e. an 80% increase in the minimum income or expenditure needed to ensure an adequate standard of living in the capital city.
Studies by the influential research arm of the parliament show the poverty line in Tehran was close to 10 million rials ($53.47) in the year ending March 2012 and gradual increases were registered up to the year ending March 2018.
However, the decline in per capita income and the depreciation of national currency in the fiscal 2018-19, as well as the rise in overall price levels, have led to a sudden surge in the poverty breadline.
The inflation rate stood at 31.2% in the fiscal 2018-19 and 41.1% in the fiscal 2019-20.
The International Monetary Fund has projected a 34.2% rise in consumer prices for the current year (March 2020-21). Recently, the Central Bank of Iran said based on “realistic assumptions and scenarios”, it will set the inflation target at 22% during the current fiscal year, which according to experts is no mean feat, in view of current economic headwinds and uncertainties.
Per capita income or average income of the Iranian people declined by 34% between the fiscal 2011-12 and fiscal 2019-20. Despite the nominal increase in Iranian people’s income, their purchasing power has eroded by one-third over the past eight years
The parliamentary think tank’s report also found that per capita income or average income of the Iranian people saw a 34% decline between fiscal 2011-12 and fiscal 2019-20. Despite the nominal increase in Iranian people’s income, their purchasing power has eroded by one-third over the past eight years, the Persian-language daily Etemad reported.
According to IMF, Iran’s per capita income, calculated by dividing the country's total income by its total population, stood at $5,200 in 2017 and the country ranked 91st in the world.
MRC had earlier announced that 23-40% of the population are living below the poverty line, i.e. about 20-40 million people. The report does not provide detailed information on the average income in Iran, but its graphs imply that the average figure for the poverty line in the country was 20 million rials ($106) in the fiscal 2019-20 compared with five million rials ($26.73) in the fiscal 2011-12, indicating a fourfold increase in eight years.
Economic Growth
The average level of income per head is directly proportional with the country’s economic growth.
According to MRC, although the economic growth rate was set at 8% in the fifth and sixth five-year development plans, it remained close to zero over March 2012 to 2020; over these years, it fluctuated between -8.3% and 14%.
Capital accumulation involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of profit, rent, interest, royalties or capital gains was negative in oil and gas, industry, mining, construction and communications sectors since the year ending March 2013.
Over the seven years ending in March 2018, a nearly 2.2% decline per annum was registered in capital accumulation whereas the economic growth of these sectors during the seven years to March 2011 hovered around 3.5%.
From the fiscal 2015-16 to fiscal 2019-20, close to three million people were added to the employed population who were mostly absorbed in retail, wholesale, transportation and repair sectors. These sectors are normally not categorized as economic enterprises, suggesting that unemployment rate is still high and not consistent in all provinces: unemployment rate might stand at 8% in one province and 19% in another.
MRC believes that all the above have led to wealth inequality and the rise in Gini coefficient, which is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation’s residents and is the most commonly used measurement of inequality.
It ranks income inequality on a scale from zero—no inequality—to 1, maximum inequality. In other words, the closer the number is to 1, the more wealth is concentrated in the hands of fewer people, thus the bigger income disparity.
Since the fiscal 2013-14, inequalities started rising and the Gini coefficient went up on the back of negative economic growth and chronic, high inflation rates. The tanking of national currency against foreign currencies has offset the positive effects of welfare policies like cash subsidies and reduced household purchasing power and standard of living.
