The Intensification of Inequality in Iran

Many Shia Islamists have always expressed their opposition to unconditional democracy, freedom of expression and media, and the fulfillment of human rights, but they have made endless claims in two areas: social justice and spirituality. Their claim of enhancing spirituality cannot be proven with the information at hand (the increase and decrease of spirituality cannot be measured), but in the area of social justice, information published by officials and institutions of the Islamic Republic contradicts the claim of justice. The income gap increased, with the expenditure ratio of the top decile to the bottom decile reaching 13.6 times in the year 1393 (2014). (Central Bank report, January 3, 2015) The share of the bottom three income deciles decreased from 11.0 percent in 1390 (2011) to 10.6 percent in 1392 (2013) (same source). In the years 1390 and 1391, the Gini coefficient also increased. This coefficient was 0.3750 in 1390 and increased to about 0.39 in 1392. An increase in the Gini coefficient indicates an increase in economic inequality. Of course, the head of the Statistics Center, who provided false statistics regarding unemployment and poverty during Ahmadinejad's presidency, immediately came forward after the Central Bank's statistics were released to present a positive view of the situation: 'The decreasing trend of the Gini coefficient that existed until 91 (2012) continued in 92 (2013). The Gini coefficient in rural areas is 0.3243, in urban areas 0.3512, and nationwide 0.3650... According to the results of the household expenditure and income survey for the year 1392 conducted by the Statistics Center of Iran, the share of the wealthiest 10 percent of the population compared to the poorest 10 percent in the country decreased from 15.97 percent to 10.68 percent in 92 (2013), which is a self-explanatory reduction in inequality. Additionally, the share of the wealthiest 24 percent compared to the poorest 24 percent in the country decreased from 9 and 4.63 percent in 1388 (2009) to 6.57 and 3.71 percent in 1392 (2013).' (IRNA, January 19, 2015) These two statistics are contradictory. Even if neither of the two sets of statistics can be trusted, there are other reasons for the intensification of inequality in Iran that I will refer to: The gender gap is intensifying. Iranian women not only hold a very small share of power and social status but also a very small share of the community's wealth: 'Today, only two percent of the country's assets belong to women.' (Advisor to the Minister of Industry, Mine and Trade for Women's Affairs, ISNA, January 8, 2015) The economic participation rate of women is at the level of 40 years ago, around 13 percent (Farhikhtegan newspaper, February 13, 2015). This rate improved slightly during Khatami's presidency but declined during Ahmadinejad's term. The employment share of women, even by the Islamic Republic's standards (which considers one hour of work per week as employment), has been decreasing in recent years. The highest employment ratio for women in the past nine years was in 1384 (2005) at 11.6 percent, while this ratio decreased to 8.2 percent in 1393 (2014). In 1384, nearly 3 million 961 thousand of the country's workers were women, while last year this number dropped to about 3 million 145 thousand. (Donya-e-Eqtesad, September 7, 2014) Tax evasion: A member of the Planning and Budget Commission says: 'While tax revenue should replace oil revenue, there is an annual tax evasion of between 50 to 60 trillion tomans in the country.' (Fars, January 17, 2015) He does not mean unpaid taxes by foundations and economic institutions under the leadership or profitable state companies, as those institutions are exempt from paying taxes. He refers to the private sector, which does not pay taxes due to loyalty to the regime, and the government lacks the means to collect taxes from it. A significant portion of foreign currency revenues during Ahmadinejad's presidency and before and after him has left the country. Some of these resources are directly taken out by officials: 'According to the previous government's policy to control currency prices, billions of dollars of the country's money were sold to exchange offices in Dubai and Istanbul in the form of remittances or cash, and within 17 months, 22 billion dollars of the country's money was exported.' (First Vice President, January 17, 2015) Some are also taken out by individuals on the fringes of power who pay officials their share of benefits. It is estimated that during the Nowruz holidays of 94 (2015), about 6 billion dollars (January 29, 2015) were taken out of the country by the affluent and spent in regional countries, Europe, and North America. The amount of investment by Iranians in Dubai's real estate market in 2014 was about 1.225 billion dollars. (Tabnak, January 29, 2015) Iranians had about 1.5 billion dollars in deposits in a branch of a bank in Switzerland (HSBC). (Radio France Persian website, February 11, 2015) Aside from the approximately 100 billion dollars in losses due to oil sanctions, the reduction in oil revenues due to falling oil prices has brought the government in 1394 (2015) to a point where, if 70 trillion tomans in oil revenue (with oil at about 70 dollars per barrel, which is unrealistic) and 80 trillion tomans in tax revenue (which is also optimistic) are realized, the government will only be able to pay subsidies and salaries of employees and retirees. In any case, the government will print money and fuel inflation. High inflation and nearly zero economic growth (0.9 percent according to the World Bank's forecast) mean that the poor will become poorer and a significant portion of the middle class will fall into their ranks. Es'hagh Jahangiri, the First Vice President, says: 'According to statistics, the net number of jobs created in the country in the past decade is close to zero.' (Tasnim, January 19, 2015) When an economy has a zero job creation function, how can one expect inequality to improve? Increase in liquidity and decrease in purchasing power: The Central Bank announced that the liquidity volume of the country reached 683 trillion and 663 billion tomans by the end of Azar (December) of this year. (IRNA, January 27, 2015) This amount shows a growth of about 25 percent compared to Azar of 1392 (2013). In Tir (July) 1393 (2014), the Ministry of Economy published a report in the official journal of the Ministry of Economic Affairs and Finance stating that the economic power of households in the country has decreased by 25 percent and currently 31 percent of households are below the poverty line. (Jahan San'at, January 27, 2015) This figure only includes those who are in severe or absolute poverty. Those living below the relative poverty line, according to various estimates and calculations (based on minimum wages and minimum expenses in 1393), constitute between 50 to 70 percent of the population (this figure also includes those below the absolute poverty line). The factor of corruption: The Central Bank of the Islamic Republic considers deep recession, high inflation, severe inflation expectations, and rising exchange rates (which are all evident in the Iranian economy) as factors for increasing inequality, but it does not mention three essential points in increasing inequalities: 1. Corruption, which allocates a significant portion of the country's resources to the powerful and wealthy, who then take the resources out of the country; 2. Spending on wars against Assad's opponents and the Iraqi government in Iraq and Syria, and actions by Hezbollah in Lebanon, which benefit specific groups in Iran and the region; and 3. Special privileges of the ruling class that holds public resources. The public sector in Iran has made relentless and tireless efforts to plunder public assets over the past 36 years. When oil revenues are high, they engage in squandering these revenues, and when oil revenues drop, they turn to state lands, money in state banks, and state projects. This is why, in the first ten months of 1393 (2014), we witnessed a 27 percent increase in embezzlement, a 20 percent increase in collusion in government transactions, and a 40 percent increase in land grabbing. (Head of the NAJA's Criminal Investigation Police, Tasnim, January 12, 2015).