Domestic Economy

Service Providers Form Majority of Workers Made Jobless by Coronavirus

The services sector employed 49.7% of the Iranian employed population (11.4 million) in the first quarter of the current Iranian year (March 20-June 20)
Service Providers Form Majority of Workers Made Jobless by CoronavirusService Providers Form Majority of Workers Made Jobless by Coronavirus

Fifty-nine percent of all workers who lost their jobs due to the outbreak of coronavirus were service providers, says Masoud Babaie, an official with the Ministry of Cooperatives, Labor and Social Welfare. 
“Sixty-two percent of businesses affected by the virus were also involved in the services sector. Workers in the industrial and agricultural sectors accounted for 31% and 1% of those made jobless by coronavirus respectively, as nearly 31% and 3% of the virus-affected businesses were in the same two sectors, respectively,” he said. 
“Close to 12,500-13,500 people typically file for unemployment benefits annually. However, over 871,400 applied for unemployment insurance following the outbreak of coronavirus by July 31, of whom 730,882 were eligible for the three-month relief program. Since then, 107,000 new continued unemployment claims have been registered. These individuals will be subject to Article 7 of Iran Unemployment Insurance Law,” he was quoted as saying by Mehr News Agency. 
According to Article 7 of Iran Unemployment Insurance Law, the total duration of the payment of the benefit since the beginning of its allocation shall be a maximum of 36 months for single persons and 50 months for married persons or those with dependents.
Insured persons, of ages 55 or older, receive unemployment benefits up to retirement age. The minimum benefit is 55% of average earnings that must increase by 10% for each of the first four dependents. However, the total benefit should not be less than minimum wages or exceed 80% of average earnings of the insured. 
The unemployed insured person’s average daily wage or salary for the calculation of unemployment benefit shall be the total insured person’s income in the last 90 days before unemployment divided by the working days in this period.

*** Services Account for Half of Employed Population
Data released by the latest report of the Statistical Center of Iran on the country's labor market show the services sector employed 49.7% of the Iranian employed population (11.4 million) in the first quarter of the current Iranian year (March 20-June 20)–0.1% more than the corresponding period of last year, whereas industrial and agricultural sectors provided 31.8% and 18.6% of jobs respectively. 
Over 7.29 million were employed in the industrial sector, indicating an increase of 0.3% compared with the year before and 4.26 million worked in agriculture, posting a 0.3% decline YOY. 
The services sector consists of wholesale and retail trade; restaurants and hotels; transport, storage and communications; financing, insurance, real estate and business services; as well as community, social, education, health and personal services.
The services sector employed 9.24 million men and 2.15 million women in the three-month period; over 6.41 million men and 879,933 women were active in the industrial sector and 3.51 million men and 749,770 women worked in the agriculture sector in Q1. 
Services sector accounted for 59.4% or 10.09 million of all jobs in urban areas and 22% or 1.31 million of jobs in rural areas. The industrial sector made up 33.8% or 5.74 million of the jobs in urban areas and comprised 26% or 1.54 million of employment in rural areas. This is while 6.8% or 1.15 million of the total jobs in urban areas and 52% or 3.1 million of the jobs in rural areas were in the agriculture sector. 

*** Q1 Unemployment Rate at 9.8% 
Iran’s unemployment rate, the proportion of jobless population of ages 15 and above, stood at 9.8% in the first quarter of the current Iranian year (March 20-June 20), indicating a 1.1% decline compared with the same period of last year. 
A total of 2,505,336 Iranians were unemployed in Q1. 
Men’s unemployment stood at 9% while the rate for women hovered around 13.7%. 
Over 1.9 million men and 602,074 women of ages 15 and above were jobless in Q1, according to the latest SCI report.
The unemployment rate was 10.7% for urban areas (2.03 million people) and 7.3% for rural areas (472,634 people).

*** Decline in Labor Force Participation Rate
The outbreak of coronavirus and its associated challenges have had a significant impact on Iranians in terms of labor force participation—the proportion of the adult population (ages 15 and above) who are employed or seeking a job. 
Labor force participation fell by 3.7% to 41% (or 25.46 million people) over the first quarter of the current Iranian year. Men’s and women’s economic participation rates were 67.9% and 14.1% respectively in the same period. 
About 21.07 million men and 4.39 million women of ages 15 and above were economically active in Q1, i.e., they were either employed or looking for a job. 
“A total of 2.76 million people [1.3 million men and 1.46 million women] were added to the number of inactive labor force in the first quarter; 14.8% of the employed population and 37.2% of unemployed population in the same period of last year were added to the population of people outside the labor force this year,” says Javad Hosseinzadeh, the head of SCI. 
These individuals aren’t included in unemployment calculations, which only count people who are looking for work. This means that the fall in labor force participation translates to people not searching for work, chiefly due to the outbreak of coronavirus, and consequently a decline in unemployment rate. 
"A decrease in the unemployment rate isn’t necessarily a sign of an improving economy. When people stop looking for jobs and drop out of the labor force, the unemployment rate will decline even though the true employment situation hasn’t improved. For an economy to run satisfactorily, the decline in unemployment rate must be coupled with an increase in both economic participation and employment rates," the SCI chief said. 
Hosseinzadeh referred to an unprecedented decline in average working hours due to the pandemic and said the average working hours have decreased from 45.8 hours per week in Q1 of last fiscal year to 40.4 hours per week this spring.  
Generally, during the first quarter of the current year, 56.1% of the employed population worked 44 or more hours per week and 36.7% put in fewer than 44 hours while 7.2% were temporarily absent from work, he added.  
And in a further sign of the impact of coronavirus on Iran’s labor market, Hosseinzadeh said, “Out of 20 groups that economic activities are divided into, only five groups reported an increase in their employed population in Q1 compared with last year’s similar period. The highest increase in the number of employees was posted for healthcare and social workers, and the sharpest decline was registered in fields, such as agriculture, industries and manufacturing, retail and wholesale, transportation, education, hotels and restaurants.” 

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