Managing a private business that wants to work ethically has become an arduous task these days, a business analyst Nima Namdar opened an article for the Persian daily Donya-e-Eqtesad with this note. He believes the following constraints have worsened this difficult situation:
Shortage of Human Resources
The entry of skilled young people into the labor market has decreased drastically, because many university graduates prefer to leave the country immediately after finishing their studies, along with professionals of ages 30 to 40 with good experience and practical knowledge, who prefer to continue their career outside Iran.
In addition to financial concerns and social conditions, these people are looking for new opportunities that are few and far between in the current Iranian labor market. Of course, those who do not intend to go are lacking the motivation and spirit to work due to the prevailing conditions.
Cash Crunch
One of the reasons for this plight is the decline in the purchasing power of customers. Heavy inflation has caused an important proportion of people to have less purchasing power than in the past.
This is while business expenses have increased, as they have to pay more for equipment, raw materials, infrastructure, workspace and salaries. The result is the creation of two-way bottlenecks in business liquidity; income has decreased and expenditure has increased.
In this situation, the government is mainly thinking about reducing its budget deficit through social security and taxes, and apparently does not pay much attention to the business environment. The problem becomes more acute when we also see the desperate state of financing.
Banks prefer to lend to asset-oriented industries such as construction and mining; but many businesses lack assets. Of course, the companies themselves prefer not to borrow and add to their debts when they are not sure about future prospects.
Command Economy
Government controls and command pricing have brought desperation.
Bad economic conditions and the sanctions have become an excuse to justify government interventions in businesses. But what has worsened the situation is the combination of ignorance, corruption and lack of accountability.
The quality of human resources in the government has declined and the power of monitoring and decision-making in government institutions has been entrusted to people who, even if they want to, do not have the ability and characteristics necessary for devising good policies.
Most government agencies do not care about the costs they impose on companies and the harm they cause to companies through trial and error, as they only seek to minimize their own risk.
Corruption
The multitude of corruption grounds that exist in our state-owned and non-transparent economy has given rise to corruption and how to deal with it has blighted Iranian businesses.
Private business managers are constantly faced with the dilemma of deciding the point at which ethical reservations and legal precautions could be abandoned and following the rules of corrupt corporate governance. Worse, the social and moral cost of not being healthy has also diminished and using corrupt practices has become the rule of the game.
As a result, even trade and civil organizations have become part of the corruption game and try to appease their members by increasing access to rent [subsidized foreign currency, class-oriented internet, cheap raw materials, exclusive licenses, etc.].
The instability of policies and the presence of non-transparent private institutions that have unfair tools to skew the competition have made it worse. These can easily create conditions that help eliminate the competitor, so the private company has to enter into some sort of a settlement with them.
The problems of the judiciary and the multitude of court cases are also part of this bitter situation that has put the Iranian private enterprise in the economic-moral strait of corruption.
Sanctions
Most of the ways to bypass banking sanctions, make payments, undertake transportation and have other interactions with the outside world are blocked and rarely does anyone outside of Iran agree to interact with Iranian businesses.
The embargo has prevented access to foreign resources, including materials, supplies, equipment, infrastructure and expertise, and denied access to foreign customers and markets. Worse, the habit of isolation has caused the ceiling of growth, competition and Iranian business profit to drop drastically.
Pressure and Pessimism
Unlike the previous bottlenecks that weaken the business, this last one makes the business owner desperate.
A person who has to deal with the afore-mentioned hardships is a human being and it is not strange for them to ask themselves what they are doing with their lives. Where should this person, who is supposed to motivate others and overcome the above bottlenecks with determination and resolve, recoup his hope and motivation from?
According to a recent study conducted by Ilia Consulting Company and Donya-e-Eqtesad newspaper, by the end of the last Iranian year that ended on March 20, 2023, only 5% of CEOs were optimistic about Iran's economy in the new year, and 65% of them considered current issues to be their main priority. So it is not strange that 65% of these people experience severe stress on a daily or weekly basis.
When people experience such a level of pressure along with frustrations about their lives and current affairs, and when they do not succeed in creating growth and making achievement, they naturally ask themselves the point of enduring all this pressure and stress?
The six bottlenecks above are like the six faces of a cube, which make the space narrower for Iranian business managers. The bottlenecks of human resource shortage, cash crunch, command economy and corruption put pressure on them from four sides and limit their mobility.
