Iran’s Wage Earners’ Main Demand Facing the Ministry Without a Minister
The collapse in the value of the national currency and skyrocketing prices have severely reduced workers’ purchasing power. Labor activists are demanding “wage adjustment” and warning of a “crisis.” However, the Ministry of Labor has yet to respond to workers’ demands.
Severe inflation and volatile fluctuations in the foreign exchange market, rising dollar prices, the collapse of the national currency’s value, and consequently skyrocketing prices of goods in Iran have confronted workers and low-income groups with serious difficulties in meeting their daily needs.
Prices of goods in the final days of the last Iranian month (late March/early April) began their upward trajectory simultaneously with currency turmoil and accelerated daily with rising exchange rates. Reports indicate that prices of some goods have doubled and a half. This is while workers’ wages have not changed in the current year and, according to labor representatives, the purchasing power of workers and other low-income groups in society has declined by 75 percent under current conditions.
In late February of last year (2018), Iran’s Supreme Labor Council approved an 8.19 percent increase in the minimum wage, raising it to 1,115,140 rials for 2019. This was despite the head of the wage committee of the Supreme Council of Islamic Labor Councils announcing in late August of last year that the cost of living basket for a household in Iran was “approximately 5,300,000 rials.” This labor activist had also stated about two weeks earlier, citing official statistics, that workers must spend 72 percent of their monthly wages on essential food items to support their families, leaving only 28 percent of their wages for all other expenses.
These figures appear realistic given that the dollar’s value has quadrupled against the rial since the beginning of 2017 until now. The dollar price, which was around 3,700 rials in early 2017, reached above 16,000 rials in the open market on Monday, September 24.
Under such circumstances, the main pressure of the declining national currency value falls on low-income groups, including workers, whose purchasing power decreases daily. Therefore, their most urgent demand to increase purchasing power is to bridge the deep gap between wages and living expenses.
Letter to the Acting Labor Minister
In this regard, workers’ representatives in Iran’s Supreme Labor Council have called for an urgent session of this council to examine “solutions for improving workers’ living conditions and wage adjustment.” Last Saturday, they sent a letter to Anushiravan Mohseni Bandpey, the acting minister of cooperatives, labor, and social welfare, emphasizing, with reference to the doubled pressure on working families and reduced workers’ purchasing power due to the “current economic situation,” the necessity of convening an extraordinary session of the Supreme Labor Council.
The Supreme Labor Council is a body consisting of the labor minister as council chairman, two informed persons nominated by this minister and approved by the cabinet, three representatives from employers elected by themselves, and three representatives from workers elected by the Supreme Council of Islamic Labor Councils. The council also includes a representative from the Ministry of Industry, Mines, and Trade and a representative from the Ministry of Economic Affairs and Finance. According to Article 168 of the Labor Law, this council holds at least one session per month, and extraordinary sessions can be convened at the request of the chairman or the request of three members if necessary. Determining the minimum wage for workers is one of the most important duties of the Supreme Labor Council.
Workers’ representatives have been attempting to review the minimum wage level for at least three months. Following severe price increases in essential goods, rising living costs, and the deteriorating economic situation, they also sent a letter to the council’s secretary, the deputy for labor relations of the Ministry of Cooperatives, Labor, and Social Welfare, requesting consideration of solutions for improving workers’ living conditions.
In late July of last year, the first wage review session for workers was held, and on September 10, members of the Supreme Labor Council, in the absence of employers’ representatives and in agreement that workers’ conditions were unfavorable, estimated that a gap of “860,000 rials” existed in meeting the living basket for a 3.3-person worker household. In this session, it was also decided that the council would meet as soon as possible and members would decide on proposed government solutions after they were presented. The government’s failure to respond to this request, particularly from the Ministry of Labor, has led to the letter from workers’ representatives calling for an extraordinary session.
According to ISNA, sessions of the Supreme Labor Council aimed at examining solutions to strengthen the living conditions of working families were progressing until mid-August, and all parties had agreed on “wage adjustment for workers” until Ali Rabiei, the former minister of cooperatives, labor, and social welfare and then-chairman of the Supreme Labor Council, suddenly faced impeachment in parliament. Following parliament’s vote of no confidence in Rabiei and his dismissal from the ministry, sessions of the wage committee of the Supreme Labor Council were practically halted, and the ministry’s new acting official has shown no inclination to convene these sessions in the Supreme Labor Council.
Wage Earners Reaching the Stage of “Crisis”
Workers’ representatives in the Supreme Labor Council emphasized in their letter to Mohseni Bandpey that the last session of this council was held approximately two months ago and requests from worker members for an “extraordinary session have been ineffective.”
Framarz Tofighi, head of the wage committee of the Supreme Council of Islamic Labor Councils, referring to the serious problem of reduced purchasing power among workers and the estimate from two weeks ago showing a gap of more than 800,000 rials in meeting the living basket, told Khabar Online on Tuesday: “If we were to recalculate this figure today, we would reach a gap of one million rials.”
This worker representative, referring to the latest session’s directive of the Supreme Labor Council to hold an “urgent” meeting to examine solutions for increasing workers’ purchasing power, said: “The Ministry of Labor representative said 2.5 months ago that this entire process should not take more than one month, but now there is no cooperation or positive action in the Ministry of Labor to convene a Supreme Labor Council session.”
The head of the wage committee of the Supreme Council of Islamic Labor Councils warned: “It must be noted that losing time is not in the interest of the working class, as wage earners have reached a crisis stage, and this crisis is concerning. Why this session has not been convened has become a question for us, and the answer to this question must come from the Ministry of Labor, and note that we are pursuing this matter seriously and demandingly.”
Framarz Tofighi, referring to increases in “existing abnormalities in society, fights, beatings, theft, accidents, self-immolation, and suicides” in the working class, adds that “workers’ tolerance and the working class community has reached the brink of overflowing.”
It is not only workers and their representatives who point to the deterioration of living conditions. Hossein Raghfar, an economist, stated in mid-April of last year in an interview with ISNA that the “absolute poverty line” for a four-member urban household was around four million rials and concluded that 33 percent of Iran’s population suffers from “absolute poverty” and six percent live below the “starvation line.”
Hossein Raghfar also said last week regarding the electronic coupon distribution plan for 10 million Iranians and the possibility of converting people’s ration cards into commodity cards, to Deutsche Welle Farsi: “If the current chaos and anarchy in Iran’s economy continues and prices, especially basic commodities, increase, the government will sooner or later be forced to issue such cards for everyone, that is, for 80 million people. The consequences of the rising exchange rate will be frightening. A wave of unemployment will emerge, and this will likely be a prelude to the entire Iranian population gradually receiving such cards.”
Under such circumstances, a member of the Supreme Labor Council says: “Unfortunately, these days, no talk is heard about protecting work, protecting enterprises, maintaining workers’ purchasing power, except that a few million people are given a 30,000-rial food coupon, while as a worker, I do not want charity and do not need it; rather, I say, give me my right.” Tofighi also emphasized last Saturday that workers are “not charity seekers” and their only demand is “implementation of Article 41 of the Labor Law and wage adjustment.”
Article 41 of Iran’s Labor Law requires the Supreme Labor Council to determine the minimum wage for workers annually based on two criteria: first, considering the inflation rate announced by the Central Bank, and second, determining the minimum wage considering its sufficiency for covering living expenses.
Abolfazl Fathollahi, a worker representative in the Supreme Labor Council, however, told ISNA on Tuesday: “Our effort is to have a change occur in workers’ wages, but if it does not materialize, at least the provision of support packages, food coupons for workers, and tax and insurance exemptions for employers should be implemented.”
This worker member of the Supreme Labor Council, noting that “workers’ purchasing power has been reduced to one-third under current conditions,” said that members of this council have sought a way “so that workers can be helped through employers and the government can cover working-class families with a commodity basket in a non-cash manner.”
However, Fatallah Bayat, head of the Federation of Contract and Project-Based Workers, does not consider a commodity basket a solution to workers’ serious problems: “Distributing a commodity basket is a temporary palliative, and the government cannot provide it to workers permanently, so workers’ living standards must be compensated through other means such as wage adjustment or tax exemptions.”
Disagreement on How to Support Workers
It appears that all parties have acknowledged that workers’ living conditions are dire. The acting labor minister has announced an increase in subsidies for the five low-income deciles, and labor activists are pursuing wage review in the Supreme Labor Council. However, there is disagreement on the form of support for workers. Some emphasize direct wage increases, while others suggest distributing food coupons among workers. Supporters of food coupon distribution believe that wage increases, while they may somewhat reduce the gap between expenses and income, will further increase liquidity in Iran’s current economic conditions and will drive prices to rise again.
Workers’ representatives in the Supreme Labor Council, considering this issue, have proposed that at least an 800,000-rial wage increase be implemented in the form of food coupons given to workers. The head of the wage committee of the Supreme Council of Islamic Labor Councils said yesterday to IRNA: “To prevent increased liquidity in society, it was suggested that increasing workers’ purchasing power be implemented in the form of food coupons, and goods that have the largest share in workers’ living baskets be included in them.” Framarz Tofighi added: “These food coupons are issued for purchasing in Iranian chain stores so that money circulation occurs in Iran’s industry and through this, workers’ living basket is provided with standard Iranian goods.”
Hossein Habibipour, secretary of the coordination center of Islamic labor councils in Tehran, conversely believes that increasing workers’ nominal wages will not lead to renewed price increases: “If wages do not increase, with the depreciation of the riyal value of workers’ wages, existing market products will also face recession, and this will be inflationary, trapping the economy in stagflationary cycles.”
Besides disagreements over how to increase workers’ wages, some employer representatives in the Supreme Labor Council have called for worker “understanding,” stating that they do not have the capacity to pay higher wages. Meanwhile, supporters of wage increases for workers, whether in the form of nominal wages, food coupons, or support packages, are awaiting the response of the acting labor minister to the request for holding an extraordinary session of the Supreme Labor Council. This is because any plan to increase workers’ purchasing power requires approval in this council for implementation.
Source: DW
