More Jobs Does Not Signify Labor Market Upswing

More Jobs Does Not Signify Labor Market UpswingMore Jobs Does Not Signify Labor Market Upswing

A drop in the unemployment rate does not necessarily signify an improvement in the employment market, says Ayoub Faramarzi, director of the Department of Economic Research at the Statistical Center of Iran (SCI).

Citing figures released by the SCI, he said the unemployment rate in Iran has always been in double digits. In 2005, the rate was 11.5% while in 2013 the figure declined to 10.4%.

“A non-expert looking at the figures may think that the country’s labor market has improved, but this is a wrong notion,” the Persian language newspaper Donya-e-Eqhtesad, a sister publication of the Financial Tribune, quoted him as saying.  

The problem of joblessness is not a new phenomenon, but chronic, he added.

“Unemployment rate is the percentage of the total labor force that is unemployed but is actively seeking employment and willing to work. The active population includes both employed and the unemployed working-age population who are looking for work.”

Therefore, working-age people who are not looking for a job are not considered in the active population, he said.

While the unemployment rate has fallen slightly by 1.1% over a period of time, “we should note that the active population has also declined from 41% in 2005 to 37.6% in 2013.”

So a drop in the jobless rate cannot be attributed to successful economic policies and effective measures taken by the previous government; rather, it is a consequence of the decline in the active population, he noted.

 Economic Inactivity

The reasons for people’s unwillingness to participate in the economy include: personal and family responsibilities, being university students and sickness and temporary physical disabilities, which discourage them from looking for jobs. The rate of active population can therefore show a decline for these reasons.

One of the most important reasons for both men and women’s economic inactivity is education. In other words, “the education policy of the previous government removed 5 million people from the active population and added it to the inactive population,” he said.

He wondered whether the policy was based on productive plans or to avoid taking responsibility for creating jobs for the youth, or dumping the task to the next government.

It is worth noting that men recruited in the national military service are considered employed while on completion of their 2-year compulsory service, they are deemed unemployed, he said.

The population structure in the comparative years (2005 and 2013) showed that the number of men in military service was more than those who had completed conscription.

“This helped lower the unemployment rate temporarily during those years,” he added.