Jobs & a Living Wage

Jobs & a Living WageJobs & a Living Wage

Economic problems, if left unaddressed for long, have the potential to turn into complex social issues with disconcerting ramifications.

Poverty, unemployment, underemployment and other related economic indicators also have far-reaching social dimensions.

Given the army of jobless people (the unemployment rate increased to 10.9% in the third quarter of 2015 from 10.8% in the second quarter according to the Central Bank of Iran) and its social dimensions, it goes without saying that the issue of the jobless poor should be addressed on priority, says an article by economist Hadi Mousavi Nik in the Persian-language Tejarat--e-Farda weekly, a sister publication of the Financial Tribune.

On the other hand, there should also be a concern about sections of the employed population living in poverty. Since poverty is usually seen to be associated with the jobless, elderly, disabled, and those with no guardians, the problems of these working strata are generally ignored.

The truth of the matter is that poverty also exists among a large section of the working class, especially those on low wages. In other words, a part of the employed population is mired in poverty and policymakers have a tendency to ignore their plight simply because they are on payrolls.

There is evidence that a growing number of the employed are practically poor, in the absolute sense of the word, and are not much better than those without a job. The minimum monthly wage set by the government for the present fiscal year (ends March 20, 2016) is 7,120,000 rials ($200). Though higher by the standards of many underdeveloped nations, this meager wage cannot even rent a small apartment in the working districts of Tehran or for the matter other metropolises.

An article by Mohsen Renani, one of the most prominent economists in Iran, titled ‘Acid Attack on the Face of the National Economy’, published in 2011, said there were 2.22 million jobless people between the age of 15-29 years, and 4.14 million NEETs in Iran. NEET is a young person who is “not in education, employment, or training.”

Forewarned is forearmed. The article predicted that the number would reach more than 7 million in 2015. The warning should have prompted the administration to come up with an effective policy to address the issue long ago. The current figures of joblessness, however, show that the state of unemployment has not seen any perceptible improvement as apparently there was no major shake-up in the economic policy.

 SCI Survey

As per a survey by the Statistical Center of Iran (SCI) on major labor force indicators by sex, urban and rural areas, published in spring this year the current number of unemployed stands at 2.6 million. However, a person can be in employment but deemed “inactive” if, for instance, an individual works for only an hour a week. Official unemployment rates do not include the economically inactive population.

In fact, all individuals aged 10 or over (a specified minimum age) who according to the definition of work have been taking part in production of goods or services (employed) or are able to take part in production of goods or services (unemployed) are considered as economically active population.

By the same definition, all persons aged 10 or over who worked for at least one hour during the reference week preceding the survey or temporarily left their job for any reason, are reckoned as employed.

Unpaid family workers (those who work for a member of their household that is a relative without receiving any remuneration), trainees who directly contribute to the production of goods or services, students who have worked during the reference week, and all those who are serving as permanent and temporary cadre in the armed forces are also considered employed due to their critical role in the national economy.

Reports from the SCI say that the total number of the industrial sector employees is three million, 57% (1.7 million) of whom work in factories with fewer than 10 workers, earning less than five million rials ($138) a month.

The pressing need for a plan of action to look at the unseen or hidden statistics of unemployment and underemployment, and addressing the plight of the employed poor, who earn less than the minimum wage, cannot be underscored.

Unemployment and poverty are two major challenges for many global economies. Joblessness leads to financial crises and reduces the overall purchasing capacity of a nation. This in turn results in poverty followed by increasing burden of debt. As per the World Bank definition, poverty implies a financial condition where people are unable to maintain the minimum standard of living.