Statistics show the absolute poverty line for a four-member Iranian family stands at 63.57 million rials ($194) per month in the current fiscal year (March 2022-23).
This figure is not the same in all parts of the country. For example, it is 120 million rials ($366) in Tehran and 32 million rials ($97) in Sistan-Baluchestan (the lowest in the country). The difference in poverty line is mainly because of the varying costs of housing, food and transportation.
Studies show one-third of the population has slipped below the poverty line in recent years. Per capita poverty line calculated for the fiscal 2021-22 stood at 16.82 million rials ($51), which figure has worsened by 49% so far to reach 23.45 million rials ($71) in the current fiscal year, the Persian economic daily Donya-e-Eqtesad reported.
Absolute Poverty Line & Livelihood
Poverty line is one of the terms used extensively by the media; giving a detailed definition of which will clear up ambiguities.
High inflation shrinks the buying power of households by the year and the poverty line is the minimum level of income deemed adequate for a household. It is calculated based on all resources an adult person needs to consume and function.
An income lower than poverty line is "absolute poverty line”, it is a situation in which people are totally deprived of all the resources needed for survival. These people are incapable of meeting needs such as food, clothing and housing. Therefore, absolute poverty line is the minimum income an individual needs for daily life.
Here, the relative poverty line should also be defined. It considers the income of the poor compared with other income groups.
The British weekly Economist reported that half of the population of China was in absolute poverty in 2000, which figure is now zero. Economic development policies and the country’s economic growth pulled a significant number of people out of poverty.
The latest report by Iran’s Ministry of Cooperatives, Labor and Social Welfare put the country’s poverty line for a four-member household at 33.85 million rials ($103) in the fiscal 2020-21, but with the rise in inflation in the fiscals 2021-22 and 2022-23, poverty line has also increased. Reports say the figure now stands at 63.6 million rials ($194) which, as we mentioned above, differs for provinces and cities.
Latest estimates show Tehran registers the highest absolute poverty line in the current year (started March 21) with 120 million rials ($366), with per capita poverty line at 45 million rials ($137). Sistan-Baluchestan registers the lowest poverty line in the country with 32 million rials ($97). Therefore, the poverty line ranges between 32 million rials ($97) and 120 million rials ($366) in Iran. Providing a single figure on poverty line is, therefore, misguiding.
Estimates show about one-third of the population is below absolute poverty line as of 2022-23. These people need support to get out of absolute poverty.
Consecutive economic growth over the years, which would lead to growth in per capita income and improve support polices can help people get out of absolute poverty.
How to Calculate Poverty Line?
One of the ways to calculate the poverty line is to use the Engel coefficient. First, the changes in total expenses are measured according to changes in food expenses and then the cost of food is multiplied by the inverse of the Engel coefficient to obtain the poverty line.
The noteworthy point is that the Engel coefficient is not the same in all parts of the country. For example, this coefficient is 2.4 in Tehran and about 2 in Sistan-Baluchestan. Therefore, it is natural that the poverty line in Sistan-Baluchestan is lower than that of Tehran.
One of the reasons for the lack of a single figure for the poverty line in the whole country is the inability to determine an equitable minimum wage. When the same minimum wage is set in all parts of the country, the poverty line is also measured in the same way. However, the minimum wage in many cities covers the total cost of living for households, while it is not the case in metropolises.
Another uncertainty regarding the calculation of the poverty line is the household size. When the number of people in a household exceeds one person, a lot of expenses in that household, such as the cost of housing, decline. Therefore, instead of the number of people in households, there is a certain coefficient to calculate their expenses.
In fact, after calculating the living expenses of a person, this number is multiplied by that number instead of the number of people in the household. This number is 1.7 for a two-member household, 2.2 for a three-member household and 3.2 for a four-member household. Calculating the costs of living without paying attention to the above numbers leads to errors and exaggeration.
Another reason behind discrepancies in calculating the poverty line is the amount of calories considered for each person. The caloric level based on which poverty is defined is different from the standard caloric definition. For example, the calories needed by an adult are 2,000 to 2,500 calories per day.
According to international standards, about 2,100 calories are set to measure the poverty line. If we set this amount of calories at higher levels, the poverty line will be significantly different. On the other hand, when it comes to calculating the poverty line, the type of items a household consumes per day should be calculated accurately because the poor also consume about 2,000 calories to maintain their lives, but their household basket consists of cheaper and lower quality items.
Nevertheless, experts agree that apart from inflation and recession, many other factors affect the poverty line, such as social injustice, lack of educational and economic opportunities and corruption. So, handling poverty requires national determination and equal opportunities.
