Domestic Economy

Rabiei’s Track Record Probed

Business & Markets Desk
Minister of Cooperatives, Labor and Social Welfare Ali Rabiei
Minister of Cooperatives, Labor and Social Welfare Ali Rabiei
At present, about 93% of all Iranian employees are hired based on three-month to one-year contracts

Reducing unemployment rate and creating jobs for the disabled, addressing malnutrition and providing universal healthcare were some of the promises made by Minister of Cooperatives, Labor and Social Welfare Ali Rabiei during his vote of confidence parliamentary session in August 2013.

However, according to statistics as well as comments made by economists and parliamentarians, most of these promises have remained unfulfilled four years on. This comes as President Hassan Rouhani is expected to unveil a new Cabinet next week for his second term in office.

The minister is highly unlikely to win a second vote of confidence from the parliament, legislator Hassan Lotfi told Rouydad24.

“As a member of Majlis Social Commission, which keeps a close watch on the ministry’s performance, I see the overall performance of the as unsatisfactory. The ministry has fallen short of its commitments, particularly in creating jobs or even providing accurate statistics on the precise number of jobless people,” he said.


According to the Statistical Center of Iran’s latest statistics, the unemployment rate in the first quarter of the current fiscal year (March 21-June 21) stood at 12.6%, registering a 0.4% rise compared with last year’s corresponding period and a 0.1% increase compared with the previous quarter.

The figures show 3.36 million Iranians were unemployed this spring. The youth unemployment rate, i.e. the proportion of those between 15 and 29 years old, stood at 26.4% in Q1, indicating a 1.5% rise year-on-year and a 0.9% increase compared with the previous quarter.

The high unemployment rate has forced many job seekers to work on temporary contracts and forsake employment benefits. The increasing number of short-term contracts has caused an array of problems such as reduced job stability, inadequate on-the-job training and falling productivity.

Job insecurity is also associated with poor health and tense family relationship. At present, around 93% of all Iranian employees are hired based on three-month to one-year contracts, the Persian daily Jahan-e Sanat reported.

One of the promises of Rabiei was to streamline temporary contracts. In 2015, his ministry declared any job contract with a duration of less than one year as invalid. However, apparently under the pressure of employers, the directive did not even last for a week.

Hit by years of international sanctions and recession, loss-making Iranian businesses have long complained about labor and social security laws. They argue that the bulk of Iran’s labor laws date back to decades and are influenced by socialist tendencies that normally treat the employers and business owners with suspicion.  

Strict retirement laws related to difficult and hazardous jobs, the right of workers to easily sue their bosses and the big financial share of employers in the workers’ mandatory medical/pension schemes have been among the main gripes of private enterprises.


  Labor Law

Many employers, however, try to circumvent the rights of employees under different pretexts and are mostly successful, thanks to labor law loopholes. By and large, Iran’s labor law is in desperate need of reform while the ministry has not taken measures so far to fix it.

According to economist Mahmoud Qorbani, the ministry has also failed to move forward with five-year development plans regarding labor market and workers’ welfare.

The Iranian development plans outline government strategies in its budget for the five years to come.

“One of the main plans, which could have benefited workers if implemented or even drafted, was the ‘National Document of Decent Job’. As a part of Fourth Five-Year Development Plan (2006-11), the parliament tasked the government in 2004-5 to prepare a document with the aim of creating permanent, productive jobs, analyzing labor market, promoting equality between the incomes of men and women, observing legal minimum working age, banning child labor and extending social welfare,” Donya-e-Eqtesad quoted Qorbani as saying.

“Since then, all governments, including that of President Rouhani and his minister of cooperatives, have failed to put in efforts and tenacity needed to prepare and implement this very important document.”

He also said the ministry could do more to ensure the safety of workshops and prevent incidents like the Plasco building collapse.  

The 17-story Plasco commercial tower in downtown Tehran, Iran’s oldest high-rise and an iconic structure built in 1962, caught fire on January 19 and was completely destroyed. In the incident, sparked by an electrical short circuit, 16 firefighters and four civilians lost their lives.

Close to 4,000 people lost their jobs in the incident, as Plasco was home to 560 production units and outlets selling apparel, shoes and sportswear.

As a member of the International Labor Organization, Iran has yet to ratify 66 conventions set forth by the United Nations body. The top three conventions considered fundamental are on “freedom of association and protection of the right to organize,” “right to organize and collective bargaining” and “minimum age”.

   Pension Funds

Nearly all the 18 pension funds operating in Iran are in poor financial state, creating a huge drag on government finances and threatening the future of pensioners and employees.

The costs of pension funds are climbing and their coffers are empty. Four of these pension funds, namely the Civil Servants Pension Organization, Iran Steel Pension Fund and Farmers, Iranian Social Security Organization and Villagers and Nomads’ Social Insurance Fund, operate under the auspices of the Ministry of Cooperatives.

According to official reports, the first two are in essence bankrupt. SSO, the largest pension fund in Iran, is in better shape, but it is headed in the same direction due to its swelling number of retirees and faltering returns from investments. It has resorted to asset sales to keep up with its surging pension payout. Unfortunately, no improvement was seen in their performance under the leadership of Rabiei.


Article 44 of Iran’s Constitution stipulates that the national economy falls into three categories of public, cooperative and private sectors. The Fifth Five-Year Development Plan (2011-16) had envisaged a 25% share for cooperatives in GDP, which is currently no more than 6%.

“There are nearly 80,000 cooperatives in Iran and most of them have gone out of business,” labor activist, Hamid Reza Haj-Esmaeili, said.

“We saw several credit institutions and cooperatives close shop over the past four years.”

Haj-Esmaeili noted that the cooperatives sector was consigned to oblivion under Rabiei. Many of the companies on government’s privatization list could be handed over to the cooperatives sector to make this sector the main driver of Iran’s economy, but the enthusiasm of anyone willing to do something was dampened by the ministry.

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