Despite being a resource-rich economy, Iran is facing a deepening wage–cost mismatch that has eroded the living standards of millions of employed households.
Persistent inflation, especially in food prices, combined with years of wage suppression, has left even full-time workers unable to secure minimum subsistence. The result is a quiet but far-reaching social crisis in which survival has replaced aspirations for a better quality of life.
One of the most visible symptoms of this imbalance is the rising share of food expenditure in household budgets. According to official data, food and beverages have recorded the highest inflation among consumer groups in recent months, with repeated price surges pushing basic nutrition out of reach for many families.
As food prices rise faster than incomes, households are forced to allocate a growing portion of their earnings simply to eat, often at the expense of quality, health and long-term wellbeing.
Years of wage suppression have amplified this trend. While Iranian labor law explicitly states that the minimum wage should be sufficient to cover the cost of living for an average household, this provision has remained largely unenforced.
Adjustments to wages during the year, though legally possible, are rarely implemented in practice. As a result, real wages have steadily declined, even as inflation—particularly in essentials—has accelerated.
Recent figures from the Central Bank of Iran highlight the scale of the problem. In the Iranian year 1403 (2024/25), the average annual gross expenditure of an urban household reached about 4.69 billion rials, or roughly 391 million rials per month, marking a year-on-year increase of nearly 38%. Of this amount, close to 30% was spent on food and beverages alone. For an average household of 3.2 people, monthly food expenses exceeded 116 million rials.
By comparison, the official minimum monthly wage for a married worker with one child in the same year stood at about 108 million rials. In other words, the cost of food for an average household was higher than the legally defined minimum wage itself, leaving nothing for housing, transport, healthcare or education.
Although the minimum wage for 1404 has been raised to around 145 million rials, accelerating inflation—especially in food items—suggests that purchasing power will continue to deteriorate.
The pressure is not limited to food. According to the head of Iran’s State Welfare Organization, around 80% of household spending nationwide is now devoted to six basic needs: food, housing, clothing, transport, health and education.
In major cities, this share rises to as much as 90%, leaving families with virtually no flexibility to absorb economic shocks.
Housing costs have been a major driver, with their share of household expenditure climbing from 27% in 2016 to more than 42% in 2024, and exceeding 60% in some metropolitan areas.
Depth of Crisis
International comparisons further underline the depth of Iran’s wage crisis. A basic food basket that costs about €19 in Madrid—roughly 36 million rials at current exchange rates—can be purchased in Tehran for only slightly less. Yet the income context is entirely different. Spain’s minimum hourly wage is around €9, while Iran’s minimum daily wage for 2025 translates into roughly $0.28 per hour.
Even compared with regional peers such as Saudi Arabia, the UAE, or Russia, Iranian labor is priced far lower, without translating into higher employment or competitiveness.
This mismatch reflects structural issues beyond inflation alone. Sanctions, limited access to global markets, the state’s dominant role as employer, and the absence of strong, independent labor unions have all weakened workers’ bargaining power.
Over time, wages have been treated as an adjustment variable to contain costs, rather than as a foundation of social stability.
Iran’s economy possesses ample natural resources, a strategic geographic position and significant human capital. Yet the continued erosion of real wages has reduced economic life for many citizens to little more than meeting basic needs.
Without meaningful wage reforms aligned with living costs, the gap between income and expenditure will continue to widen—undermining social resilience and making everyday life increasingly unsustainable for working households.
