Economy, Business And Markets

Government Plan to Reduce Unemployment Under Scrutiny

Government Plan to Reduce  Unemployment Under ScrutinyGovernment Plan to Reduce  Unemployment Under Scrutiny

The rise in unemployment rate is a predicament economies face from time to time. Governments strive to tackle the issue, since joblessness is a source of many other economic and social problems.

Many factors are responsible for this problem and the most successful governments identify these factors and devise long-term plans for creating jobs, the Persian daily Forsat-e Emrooz reported.

Not long ago deputy minister of cooperatives, labor and social welfare, Essa Mansouri, said plans are underway to reduce the unemployment rate to a single digit by the end of President Hassan Rouhani’s term in August 2017. This has aroused much debate between economic experts and players of the country, some of whom are optimistic about the fulfillment of the objective, while others deem it unrealistic and, therefore, unattainable.

According to the latest statistics released by the Statistical Center of Iran, the unemployment rate in the last Iranian year (ended March 19, 2016) stood at 11%, registering a 0.4% rise compared with the preceding year. The data also show 9.3% of men and 19.4% of women of ages 10 and above were jobless last year.

The unemployment rate was at 12.2% for urban areas and 8.1% for rural areas. In other words, joblessness was higher among women compared to men, and among those living in urban areas than in rural regions.

  Drawing on the Potential of Startups

Hamidreza Ahmadi, an entrepreneur and CEO of Event Company—a manufacturer of leak testing machines, says the objective is not so farfetched if the potential of startup businesses is fully exploited.

“I believe a single-digit unemployment rate is feasible, especially through startups that need only a small budget to start the business. In this way, people who do not possess much capital can start their own businesses. This would eventually lead to creating numerous job opportunities,” he said.

Ahmadi said the government is paying a great deal of attention to knowledge-based companies, granting them facilities and ratifying supportive regulations, “which is very encouraging”.

  Scarcity of  Skilled Workforce

Farhad Hedayatifar, co-founder of a startup called Taskulu, which is a web-based project management system, is not so sanguine about the issue.

Noting that one big impediment in the way of reducing the unemployment rate is the scarcity of skilled workforce, he said: “This is not a problem that can be solved within a year and a half. Therefore, the objective cannot be reached at, unless the plan would be to create jobs that do not require any particular skills.”

In other words, jobs are available for which neither workers are skilled enough to be employed, nor do such sectors have the training programs in place to impart the requisite skills.

The entrepreneur said universities are partly responsible for the lack of skills evident in their graduates, since students only study theoretical lessons that do not prepare them for practical work.

“One major problem is the fact that the domestic industry is stagnant and big steps cannot be taken for reducing unemployment unless it is revived and invigorated,” he said.

  Post-Sanctions Opportunities

Khosro Saljouqi, entrepreneur and economic player, says some people thought the lifting of sanctions in mid-January would lead to an overnight boost in the domestic economy.

“This was never the case. It will take us time to erase the detrimental effects of the sanctions. But what is evident is that their removal provides us with the opportunity to regain access to the international markets and offer our products, in addition to importing the latest technologies. These will increase production that will, in turn, create job opportunities,” he said.

According to Mohammadqoli Yousefi, an economic expert, based on the 11% unemployment rate released by the SCI, 8 million people are unemployed.

“They include more than 2.5 million jobless people and another 2.5 million who are partially employed. This is while 3 million youths are ready to enter the labor market,” he said.

  Scourge of Recession

Yousefi noted that under the circumstances, industrial and agricultural sectors should come to the rescue.

However, most industries in the country are facing recessions and are working at 48-50% of their capacity.

“We have close to 50% of what I would call covert unemployment in our industry, meaning that factories had employed workforce based on the presumption that they would be working at full capacity,” he said.

“Now that they are operating at half of that capacity, they are left with redundant workforce that cannot be laid off. This imposes extra expenses on firms and increases their production costs. Therefore, they cannot compete in the market.”

Yousefi believes that reaching a single-digit unemployment rate in the next 18 months is impossible, since experience shows that any investment made in the country takes at least 14 years to bear fruit.