Only a month into the new Iranian year, the consequences of the government’s economic plans are becoming evident for manufacturers and industrial enterprises with the rise in prices of goods and services, lack of economic stability, decline in inflation, appreciation of local currency and improvement of public welfare, despite political unanimity among the branches of government.
Instead, mutual plans by the parliament and government have laid the groundwork for a surge in costs of production and prices of goods. This was stated by Nima Basiri, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture, in an article for Otaghiranonline.ir. What follows is a translation of the text:
Although all economic variables attest to a rise in the prices of goods, an official is being quoted as saying that prices should return to the levels they were last year, and overnight! He failed to pay attention to the existing economic realities and what has been imposed on economic players and producers. His statement was denied the following day, possibly in response to a widespread reaction from the public. However, the fact remains that Iranian officials resort to mandatory pricing to control prices and inflation.
Elimination of subsidized foreign currency for importing essential goods, 57% increase in minimum wages, rise in energy prices, a sixfold increase in customs duty on raw material exports, appreciation of the dollar, new restrictions and forex directives, imposition of tax on exports, 60% increase in tax on manufacturing enterprises and imposition of new taxes, market instability as a result of uncertain nuclear talks and global increase in the prices of raw materials, thanks to political tensions, have troubled producers and small- and medium-sized enterprises.
The irony is that, for example, automobile prices don’t decrease to levels they were last year but private sector manufacturers have to reduce their prices despite all pressures and problems.
The 57% increase in workers’ wages is another challenge facing business owners. No doubt that the sharp rise in foreign exchange rates, the 40% inflation rate and 100% inflation of some items, particularly housing and food have reduced the buying power of workers. But are the employers and owners of businesses to blame for the current economic conditions and runaway inflation?
The rise in wages would have been justifiable if it had really resulted in improving the purchasing power of workers but sadly, in actuality, these changes will give rise to a series of closures and unemployment.
We need to acknowledge that such indifference [on the part of the government] regarding the fate of manufacturers and the spate of anti-production policies have been unprecedented in the last few decades. The direct pressure has been imposed first on employers and business owners and then on workers and employees.
Of course, this is not the whole story. Officials need to take note of the fact that entrepreneurs may not be able to oppose the government’s anti-producer policies but they do have agencies representing their own businesses. If these pressures continue, they are highly likely to close shop in spite of all their interest in production and job creation.
