Short-Term Job Contracts Disregard Rights of Workers

The high unemployment rate in the country has forced many job seekers to work on temporary contract basis and forsake several employment benefits. At present, around 93% of all employees work on contracts between three months to one year.

In 2015, the Ministry of Cooperatives, Labor and Social Welfare, in a notification said that any job contract of less than one year duration was invalid. However, apparently under the pressure of employers, the directive did not even last for a week, Mehr News Agency reported.

Many employers try to circumvent the rights of employees under the pretext of uncertainty about the future of their companies as economic challenges mount. Experts say such excuses are only to conceal their true intention which is to hire and fire at will and get rid of those who claim their rights like insurance and other benefits. There are many big companies making profit but refuse to offer even one-year contracts.

It should be pointed out that several companies were downsized and closed because of galloping inflation, economic instability and dwindling purchasing power during the administration of former president Mahmoud Ahmadinejad (2005-2013).  The conditions remain little changed over the past three years as businesses  in general have failed to improve despite the easing of economic sanctions in January.

According to Karegaronline, Arj Company which was the biggest Iranian producer of home appliances (began its activities by producing industrial tools in 1937) was closed recently and many economic experts believe that the root cause is economic instability during the former government. The uncertainty about the future has made employers more reluctant to sign long-term contracts with their employees.

The main reasons for the problem are: the high number of young educated people seeking placements, chronic joblessness and lack of protective laws.

Currently, job contracts are renewed every one, three or six months, and the constant fear of non-renewal obviously causes distress among employees due to job insecurity. Also, in some short-term contracts (at times known as probation period agreement), the contract can be nullified before the termination date by the employer, says Mohammadreza Pendashtepour, a legal expert.  

The increasing number of short-term contracts has caused problems such as decreasing job stability, inadequate on-the-job training and falling productivity. Job insecurity is also associated with poor health and tense family relationship.

  Unemployment Rate

At present, 4.5 million students are studying in Iran’s universities and many of them will seek placements within a year or two.

“If for some consecutive years, the country’s economic growth rate stabilizes at 6% (it is expected to rise to 4.2% in 2016 and 4.6% in 2017 as per MENA Economic Monitor Report - Spring 2016) we wouldn’t have problems like joblessness among the educated people,” Ahmadreza Roshan, a board member of the Institute for Research and Planning in Higher Education (IRPHE) told the Persian language newspaper ‘Donya-e-Eqtesad,’ a sister publication of the Financial Tribune.

The Iranian economy is estimated to have advanced at an annual growth rate of only 0.5% during the 2015 Iranian calendar year (ended in March 2016), according to the worldbank.org.

This performance came in spite of signing the Joint Comprehensive Plan of Action (JCPOA) in July 2015 and the significant economic prospects it offered.

Stimulating private sector growth and job creation is a continued focus for the government considering the number of workers who will enter the labor market in the coming years, including women and youth and the persistently high unemployment rate (11.7%). 

Tackling youth unemployment in particular is a pressing policy issue in line with the evolving demographic profile of the country, which is characterized by more than 60% of its population estimated to be under the age of 30 in 2013, the World Bank said in its October overview of the Iranian economy.

  Education Quality Better

Roshan further said that the general belief is that the quality of education offered by Iranian universities is not skill-based. “However, I believe otherwise.”

Records of the Institute for Scientific Information (ISI) indicate Iran ranked second as a producer of scientific material in the region and 22nd with a rich scientific profile of 1.5% on the global scale at the end of 2015.

“Science and economy are like two wings which should move at the same speed to augment and accelerate development. However, some companies are still producing outdated products, such as evaporative coolers,” he said.

Talented Iranian students have received patents for their inventions, but their devices have not been produced on a mass scale by investors, he added.

The Statistical Center of Iran said the unemployment rate in summer (June-Sept.) 2016 was 12.7%, a 0.5% rise compared with the previous quarter (March –June), and a 1.8% increase compared with the corresponding period in the summer of last year.

The data indicates that 3.33 million Iranians were unemployed in Q2. It also shows that 10.4% of men and 21.8% of women aged 10 and above were jobless.