Domestic Economy

Setting Wages in Command Economy

Setting Wages in Command Economy
Setting Wages in Command Economy

The issue of wage increase preoccupies the mind of workers and employers at the end of each Iranian year [late March]; it has particularly become a pressing concern in recent years, thanks to the ever-increasing inflation rate. Except for last year when the salaries of some workers increased by more than the inflation rate, the rise in wages has always been less than the inflation rate, meaning that the purchasing power of workers has decreased gradually over the years. These were stated by Davoud Souri,an  economist, in a write-up for the Persian daily Donya-e-Eqtesad. A translation of the text follows:
Although employees have worked as hard as in the past, their financial ability to buy goods and services has declined in recent years. This reduction does not affect the workers of private sector alone, but they are more vulnerable to high inflation than public servants. On the other side are employers and investors who may slightly benefit from the price increase, but the inflation has made their market small and fragile in the face of numerous and sometimes contradictory policies of the government. Paying wages may account for a small fraction of their costs, but in practice it is one of the few variables that employers can bargain over. 


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