Iranian workers and the 1394 minimum wage: One step forward?

During the annual negotiations to set Iran’s average minimum wage, Iranian workers won a raise of 17 percent. While this is one of the biggest steps forward in recent years for the country’s struggling workers, this small victory comes amidst a larger context of economic decline and political under-representation.

The Islamic Republic of Iran’s trilateral commission responsible for managing the minimum wage, composed of representatives of the government, employers, and workers, met on 14-15 March 2015. They decided to set the minimum wage at 7,124,240 rial/month for the 1394 (2015-2016) calendar year, a 17 percent rise over last year’s minimum wage which Minister of Labour Ali Rabi’i called an “exceptional” achievement that is good for Iranian workers. This is an important step for the Hassan Rouhani administration toward fulfilling its campaign promise of increasing worker’s wages in tune with the official annual inflation rate, which for the current 1393 (2014-2015) calendar year is 15 percent.

Rouhani’s campaign promise is based on Article 41 of the Labour Law, which states that every year the minimum wage must increase according to: (1) the official annual inflation rate and (2) the cost of living of a medium-sized family, declared as an average figure but set on a city-by-city basis to reflect differences in local living costs. As the regime’s own labour representatives in the Iranian Labour News Agency (ILNA) have lamented, while this year’s wage raise is a positive step, it falls short of meeting Iranians’ actual day-to-day needs. Writing in ILNA, Isfahan Sepahan Cement labour representative Mehran Jafari explains that the minimum wage raise is not “exceptional” and that in order for the Rouhani administration to have met it’s promise for both of the years it has been in power, the minimum wage must be raised by 25 percent rather than just 17 percent.

Moreover, according to official statistics next year’s official minimum wage would fall short of the cost of living of a medium-sized family. The Iranian parliament’s labour faction on 25 November 2015 cited Iran’s Center for Statistics and Central Bank as having set the cost of meeting the needs of a medium-sized family at 18,000,000 and 25,000,000 rial/month respectively. When one considers that, according to official statistics, the poverty line for a four person family is set at 16,000,000 rial/month it becomes clear that next year’s minimum wage of 7,124,240 rial/month falls far short of meeting Iranian worker’s most basic needs.

What is more, this snapshot analysis cannot tell the full-story of the difficulties that Iranian workers are facing. For instance, the official statistics may underestimate both the inflation and cost of living, some public and private enterprises may not abide by the official minimum wage, and many households in the country still have only one working adult.

Iran’s working class, which according to at least one source may number approximately 13 million working adults and millions more dependents, has faced a steady decline, especially since 1989 when Iran began implementing market reforms in line with trends at the global level. In more recent years, public sector privatisation, economic mismanagement, sanctions, and increased cheap imports from countries like China and India haveundercut employment in industries across the board. Under the populist Mahmoud Ahmadinejad administration, these trends accelerated and worker’s conditions arguably did not improve, although long-existing policies like public healthcare and newer policies like cash handouts from subsidy reform have softened the blows somewhat.

What is surprising is that Iran’s working class, despite its dire condition and potential economic and political clout, remains vastly under-represented in Iran’s political elite. Although official labour organisations exist, they are far from independent representatives of the nation’s workers, whose own autonomous organisations have been systematically repressed. And keep in mind that even these official labour organisations are dissatisfied with the government’s performance thus far.