Labor Policy to Focus on SMEs

Labor Policy to Focus on SMEs
Labor Policy to Focus on SMEs

The Supreme Council for Employment (SCE) has ordered Bank Melli, Iran’s top state-owned bank, to develop funding packages for small and medium enterprises in coordination with the Ministry of Cooperatives, Labor and Social welfare, the minister, Ali Rabiee, said Sunday.

One policy priority of the government is to create jobs, he said, noting that “unemployment is not only an economic issue but also impacts social and cultural problems,” the Persian language newspaper ‘Iran’ quoted him as saying.

Referring to the current labor market data, Rabiee said the overall unemployment rate has declined from 12.1% in 2013 to 10.6% in 2015.”

“Our success in social, cultural and economic fields depends on how we respond to the problem of unemployment through a correction in policies.”

At present, from the 80 million population in the country, 64.6 million are in the working age groups, but only 25.1 million are active in the labor market.

The economic growth rate of 3% in 2014 had some positive impact on reducing the unemployment rate. “I go by statistics provided by the Social Security Organization and insurance organizations as they are more reliable.”

Economic experts say with every one percent of economic growth, 100,000 new jobs can be created in the country, the official said.

As per an order by President Hassan Rouhani, the SCE has a mandate to launch a Market Information System (MIS) within the next six months.

The system will provide more accurate information about the overall labor market and relevant issues. Having accurate and comprehensive information should help devise effective and workable plans to put more people on the payrolls.

  Job Planning

An employment planning pilot program will also be launched in six provinces. “We want to study what kind of jobs should be created in each province, and categorize the skills that people have. We also want to determine the ratio of university graduates to the labor demand in each province,” the minister said.

At present creation of each job in the domestic refineries costs about $3.3 million while in the SMEs one job can be created by expending only $140,000. “Therefore the focus now is on promoting and sustaining the SMEs.”

According to Mohammad-Reza Nematzadeh, minister of industries, mining and trade, SMEs constitute 90% of the domestic industrial sector. However many small businesses are under mounting pressure due to rising costs, expanding inventories and the long recession that has forced many to close up shop.

To tackle unemployment and achieve sustainable economic growth, SMEs should be propped up.

The United Nations Industrial Development Organization (UNIDO) is also assisting Iran to improve the business environment and create job opportunities, especially for youth, including women and people with disability.

This is part of a project funded by the Iranian government and implemented by UNIDO in cooperation with the Labor Ministry.

The project aims to improve the domestic business environment through developing highly potential sectors in which vulnerable groups such as youth, women and people with disabilities are employed. The sectors include footwear and leather products, garments and handicrafts.

In late September, at a project review in Tehran attended by all stakeholders, including Rabiee, the minister had expressed confidence that the project would help reduce unemployment and “achieve inclusive and sustainable industrial development by promoting entrepreneurship development in the selected sectors.”

  Job Readiness

Currently, 4.5 million students are in universities and will seek placements within a year or two. Plans and policy with the ministers of science and education have been discussed to improve skills and expertise in students during their academic years to better prepare them for the labor market.

In eight academic programs, “we have outline technical and vocational requirements for students to help them enter the labor market after graduation.”