Minister of Labor: Cash Subsidies Have Caused 500,000 Unemployed

Radio Farda - In a letter addressed to the public, Ali Rabiei, Iran's Minister of Labor, warned that cash subsidies have caused 500,000 people to become unemployed since their inception. Mir-Ali Hosseini asked economist Fereydoun Khavand if the correlation between this number of unemployed individuals and the payment of cash subsidies can be proven from a technical perspective. Fereydoun Khavand: Mr. Rabiei, in his letter to the nation, establishes a connection between the heavy burden that cash subsidies have placed on the government's budget since 2010 and the damage incurred to development projects as a result. His main point is that development projects have been sacrificed for the sake of cash subsidies, leading to the unemployment of 500,000 individuals. Estimating the number of unemployed due to abandoned development projects is at least very difficult, and there must have been investigations conducted in this regard at the Ministry of Labor. However, despite all the uncertainties surrounding the 500,000 figure mentioned by Ali Rabiei, his argument is valid. Recently, the Minister of Oil also stated that his ministry has been crushed under the costs of cash subsidies. In the same letter, the Minister of Labor stated that this year's cash subsidy payments will be double the budget for the country's development projects. This is the most bitter statement that can be made by a senior government official in a developing economy like Iran. Does Mr. Rabiei mean that the cost of cash subsidies could have been used to complete unfinished development projects? This is one of the conclusions that can be drawn from his remarks. Unfinished projects, estimated to number around 75,000 to 80,000 at national and provincial levels, are a tangled mess for Iran's economy, visible in all sectors, from oil and petrochemicals to transportation and sports. It appears that approximately $150 billion has been spent on these projects to date, and it seems that an additional $150 to $200 billion will be needed to complete them. The Minister of Labor implicitly states that due to the cost of cash subsidies, there is no money available to finish these projects. What is the solution? Why are subsidies for those who do not need them not cut? This is one side of the issue, and the Rouhani government has shown considerable hesitation in identifying non-needy groups. Another aspect is that the eleventh government has also refrained from reforming energy carrier prices. Wasn't it supposed that these prices would gradually approach international prices? Currently, Iran pays one of the highest levels of subsidies for energy carriers. The problem is that for political reasons, the government neither reduces the number of subsidy recipients nor raises energy carrier prices. In this situation, there is no choice but to sacrifice development projects.