Highest Unemployment Rate in 16 Recent Quarters; Unemployment Reaches 12.7%

A few days ago, Hassan Rouhani, the President of Iran, acknowledged in a speech that the biggest problem facing Iran in the coming years will be a "wave of unemployment," while also admitting that the government lacks the capacity to create jobs. According to the President, this year for the first time, more than 1.2 million people were job seekers. Rouhani emphasized that to solve the unemployment crisis, "childish disputes" in Iran must end so that prosperity and investment can return to the Iranian economy. The highest unemployment rate in the last 16 quarters is reported by the Statistical Center of Iran, which has announced the unemployment rate for this summer at 12.7%. This summer's unemployment rate is the highest reported in the last 16 quarters, meaning that the Iranian economy has not experienced such a rate since spring 2012 when the unemployment rate was around 13%. The unemployment rate this summer has increased by half a percentage point compared to the previous quarter. Comparing this unemployment rate to the same quarter last year shows an increase of 1.8 percentage points. Part of the increase in the unemployment rate should be attributed to the growth in the economic participation rate, which reached over 40% this summer, reported at 40.4%. The last time the economic participation rate in Iran was above 40% was in 2006, a decade ago, and the increase in the economic participation rate is a positive point in the recent report from the Statistical Center of Iran regarding the labor market situation in summer 2016. The increase in the economic participation rate can be interpreted as the active population of Iran becoming hopeful about finding work and returning to the labor market. Fereydoun Khavand, an economist and professor in Paris, cautiously links the rise in the economic participation rate to post-JCPOA developments, stating that perhaps part of Iranian society that had previously withdrawn from the active population has become hopeful with the implementation of the JCPOA and the lifting of sanctions, leading them to return to the labor market. However, he emphasizes that the labor market situation in Iran is in an "unfavorable" condition. According to the report from the Statistical Center of Iran, the number of unemployed this summer has reached over 3.337 million. In this season, about 430,000 new jobs were created, which is 200,000 jobs less than the number created in spring 2016. Based on two reports published in the first half of this year, it can be calculated that over one million new jobs were created in the first half of this year, but despite this, the number of unemployed and the unemployment rate have increased, indicating that the Iranian economy needs more transformation and change in the labor market. On the other hand, the economic participation rate of women reaching slightly less than 16% (15.9%) this summer indicates a significant presence of women in the labor market, which is a clear sign for Iranian economic officials of the serious need for planning for this segment of the job-seeking population. According to this report, the unemployment rate among men in summer 2016 was 10.4%, while the unemployment rate for women in this season was 21.8%, which is more than double the unemployment rate for men and shows a significant gap from the overall unemployment rate in this season. Emphasis on home-based and small businesses and facilitating the process of granting bank loans to these businesses are among the policies that the government's economic planners have put on the agenda to address the unemployment crisis. This policy, according to Fereydoun Khavand, is the only way to solve the unemployment problem. He states that many university graduates who were previously absorbed into government agencies and companies now have no chance of being hired in this sector due to the accumulation of excess labor in the government and public agencies. Khavand says, "Conditions must be created so that these forces think about creating jobs for themselves and others instead of thinking about employment in government and public agencies." This Iranian economic analyst immediately emphasizes that "to achieve this, the business environment must improve." However, Hossein Raghfar, an Iranian institutional economist, recently stated in a television program that he believes there is "essentially no specific policy in the area of job creation." According to Raghfar, "there is no development strategy in Iran, and there is no compass for policymaking in Iran." He points out that "there is no clear economic philosophy in Iran," stating, "If human dignity is the goal of the country's economic philosophy, as emphasized in the constitution, it is employment that can provide this dignity, and people derive their identity from employment." Raghfar argues that if this philosophy and belief existed, the focus of value-added creation in Iran should be on employment-based policies rather than windfall revenues from oil and gas sales. The rise in unemployment has occurred in the last two quarters of 2016, while the Iranian economy has at least distanced itself from a growth rate of around negative seven percent in 2012 and a growth rate of nearly negative two percent in 2013, experiencing a growth rate of approximately zero percent last year, which improved to 4.4 percent this spring. Now the question is, despite the improvement in economic growth rates in the last two years, why has the unemployment rate not improved? Hossein Raghfar, a faculty member at Alzahra University, states, "More important than the growth rate is the quality of economic growth." According to this economics professor, "the fundamental problem in the Iranian economy is structural problems and institutional deficiencies." Fereydoun Khavand also emphasizes that the economic growth rate in Iran is the result of increased oil exports and sales, which does not necessarily lead to job creation and improvement in the Iranian labor market. Raghfar also emphasizes in this television program that he believes there is no complementary program for job creation in Iran and that officials' focus is solely on injecting oil revenues into an inefficient structure. As Fereydoun Khavand, an economist and economic issues analyst, states, to resolve the unemployment crisis in Iran, in addition to structural reforms in the economy, transformations in other areas, including cultural areas, must also be undertaken. According to the new report from the Statistical Center of Iran regarding the labor market situation this summer, the unemployment rate among young people aged 15 to 24 has been reported at over 30%, indicating that the situation for the youth is worse than the overall unemployment rate, and it is not in vain that concerns about the unemployment crisis have become a top priority for political officials.