Wage-Inflation Gordian Knot 

With money supply exceeding 44,000 trillion rials ($135.38 billion), many experts wonder whether the (more or less) 10 million rial [about $30] increase in salaries will have an effect on the livelihoods of people and lower poverty. 
Iranian governments are usually stuck in the never-ending vicious cycle of inflation, on the one hand, and wage increase, on the other hand, stated economist Vahid Shaqaqi-Shahri in an article for the Persian daily Ta’adol. A translation of the text follows:
Iran’s economy has consecutively registered inflation rates of above 20% over decades. The average inflation rate reached 26% in the 2010s and 40% in recent years. Governments were incapable of containing inflation over half a century, so they opted for the simplest and easiest way, i.e., wage increase. 
Since pay raise leads to a chain reaction, the salaries of retirees and then private sector employees need to increase as well. As a result, all salaries have to increase. What does this impact the economy? 
Iran’s economy is based on labor rather than capital or technology. The rise in salaries directly affects production costs that sets the inflation cycle in motion. 
As long as we fail to control inflation, it will hurtle toward poverty, lower purchasing power and worsen the income gap. The consequences of such a situation won’t be limited to the economy, as it will weaken cultural bonds, exacerbate social ills and slash political participation. 
In fact, the failure to control inflation affects all economic, political, cultural and social sectors. The big mistake made throughout these years has been to focus on the effect (pay raise) rather than the cause (inflation).

Problematic Cycle

Pay increase starts from the public sector but expands to all employees, including pensioners. In fact, demands for a pension rise get louder when salaries increase. Then the employees of the private sector follow suit. 
But the more important issue is the source of financing it. Pay raise needs sustainable resources. 
Iranian governments don’t have access to these resources, so they employ harmful measures that lead to a budget deficit. For instance, the government decides to increase salaries from the sale of its surplus assets, which are unsustainable resources. 
It’s like selling your home carpet whenever you want to go to a restaurant. How many carpets does a family have for sale? 
The government’s assets are limited and unsustainable. Such an approach augments the budget deficit, worsens the crisis of pension funds and increases inflation over the year. Higher inflation is like you give workers 100 rials and take 1,000 rials out of their pockets.
The path taken over the years has been wrong. The problem should be solved fundamentally. The cause of economic problems is inflation and pay increase will worsen inflation. But sadly, the problematic cycle is recurring. 
When the salaries of workers and teachers increased, inflation went up. Such a trend will happen again and money supply will increase, while poverty and income inequality woes intensify. 
When the Supreme Labor Council increased the pay of workers getting minimum wages by 57%, I warned that the move would reduce production, lead to downsizing and foster unofficial contracts. 
Therefore, the government needs to contain inflation instead of increasing salaries, which promise has been made time and again, but has yet to be fulfilled like many other promises.