45% Inflation in Iran; Government to Increase Salaries of Employees and Pensioners Gradually

Davood Manzoor, head of the Planning and Budget Organization, announced on Saturday, December 16, that the average salary increase for employees and pensioners next year will be 18% and 20%, which will be implemented gradually. This comes as ILNA news agency reports that 'inflation hovers around 45%.' According to the website 'Entekhab', the head of the Planning and Budget Organization stated that if the average growth of 18% is increased using inflationary methods, it will not benefit the people, adding, 'Gradual growth will not have inflationary effects.' In recent years, officials of the Islamic Republic have repeatedly defended the lack of significant salary increases in Iran by claiming that such actions would have inflationary consequences. Nevertheless, Ali-Hossein Ra'iti-Fard, Deputy Minister of Labor, said last week in a speech, 'The inflationary effect of wage increases is only 3 to 5%.' The head of the Planning and Budget Organization had previously stated in response to demands for salary increases that there is no capacity to pay a 30% salary increase to employees. Meanwhile, Davood Manzoor's remarks regarding the gradual increase in salaries of government employees and pensioners were described by the 'Khabar Online' website as 'the head of the Planning and Budget Organization poured cold water on the hopes of employees and pensioners; indicating that they should not expect a larger salary increase.' Additionally, according to Khabar Online, Behrouz Mohibi Najm-Abadi, a member of the Budget Consolidation Commission in the Islamic Consultative Assembly, has predicted that parliament representatives will 'make amendments to the government's proposal so that the salary increase for government employees next year reaches at least 20%.' However, even this action, which is a 20% salary increase for government employees and pensioners next year that is to be implemented 'gradually,' means that their salaries will be about 25% lower than the inflation rate of November this year. Khabar Online noted that potential scenarios for inflation next year show 'figures above 40%.' Economist Peyman Molavi told this website that 'in the best-case scenario, inflation will be in the range of 35 to 40%, and in the middle scenario, around 40 to 45%.' Hamid Haj-Asmaeili, a labor market expert, also stated, 'On what basis does the government propose these figures for salaries, especially when we witness daily increases in commodity prices and there are predictions of price increases next year?' Earlier, Somayeh Golpour, head of the Supreme Council of Labor Associations in Iran, recognized by the Islamic Republic, told Tasnim News Agency on December 1 that 'even a 30% increase in wages is still lower than the inflation rate and does not meet the people's costs.' In this regard, independent labor and pension associations have repeatedly pointed to the cost of living in Iranian cities, which some parliament representatives claim ranges from 20 million to 30 million tomans, calling for wage increases for workers, pensioners, and other wage earners. This demand has been raised repeatedly in gatherings of pensioners held from Sunday to Wednesday each week. Before the latest news regarding the salaries of government employees and pensioners was announced, Solet Mortazavi, Minister of Cooperatives, Labor, and Social Welfare, expressed hope for what he called 'breakthroughs' in workers' wages on Thursday, December 14, stating that it remains to be seen what numbers will be proposed and approved in the negotiations of the Supreme Labor Council. According to 'Hamshahri Online,' he added that his ministry is 'a single thread' that brings together representatives of the government, labor community, and employer community in the Supreme Labor Council to reach a common point. Solet Mortazavi refrained from giving a clear answer regarding the probable wage figure for workers in 1403, stating, 'This is a tripartite matter; it is based on negotiations and bargaining.' Based on two clauses of Article 41 of the Labor Law, the monthly minimum wage for workers must be determined based on the inflation rate and the cost of living for a working-class household. Activists and independent labor associations have repeatedly emphasized that the Supreme Labor Council has ignored the clause related to the cost of living in its resolutions. Currently, the monthly minimum wage for workers covered by labor law, married and with children, is about eight million tomans, while the wages of workers not covered by labor law are much lower than the Supreme Labor Council's resolution. Foad Kikhisravi, a board member of the Free Workers Union of Iran, stated on December 14 in an interview with Voice of America that 'for years we have seen that the minimum wage set for workers is always several times below the poverty line and less than the cost of living,' adding, 'The Supreme Labor Council and its wage committee have never implemented even the existing labor law.' He explained the performance of the Supreme Labor Council, stating that 'this council includes 10 main members; the Minister of Labor as the head of the council, two representatives proposed by the Minister of Labor and approved by the cabinet, the head of the National Standards Organization, three representatives of employers, and three individuals designated as representatives of workers.' Mr. Kikhisravi added, 'Even if the representatives of workers and employers were real and independent, the presence of four individuals from the government has distorted the balance.' He emphasized, 'In Iran, there is essentially no phenomenon called tripartism in practice, and this is merely a grand deception by the government against workers.'