Wage Lagging Behind Inflation for 43 Years; Workers' Purchasing Power Has Decreased by 65%

The newspaper 'Ham Mihan' reported on Tuesday, December 26, that 'since 1980, the purchasing power of workers earning the minimum wage has decreased by more than 65% and has fallen to less than half.' It stated: 'The real minimum wage for workers this year has reached its lowest level in the past 28 years.' According to the report, 'Despite a nominal increase of 27% in the minimum wage this year, due to a 53% inflation rate, the real value of this variable has decreased by 26%.' Ham Mihan added: 'In 1979, the minimum wage for workers was set at 1,701 tomans per month, which increased to 1,905 tomans the following year and remained unchanged until 1984.' Previously, independent labor activists and organizations had repeatedly referred to this period as a suppression of workers' wages, while consumer goods prices and costs had risen. According to Ham Mihan, 'Since 1986, the minimum wage for labor has been revised and increased almost every year.' The newspaper claimed that during the '70s and 80s, wage growth generally exceeded inflation rates and led to an overall improvement in the labor situation, but since the end of the 80s, with the imposition of foreign sanctions against the Iranian economy, inflation rates have sharply increased, while the resources available to the government have not been sufficient to adjust employee wages in line with inflation.' The report also mentioned issues such as management practices in Iran over the years, along with the Islamic Republic's assistance to its proxy groups and the exemption of many economic entities under the Supreme Leader's oversight. In another section of the report, Ham Mihan identified 'concerns about the inflationary consequences of increasing labor wages' as another factor preventing fair wage growth, resulting in a continuous decline in the purchasing power of salaried employees. Concerns about the inflationary consequences of wage increases, which have been raised repeatedly by government officials and employers in recent years, have been rejected by several economists and labor activists, including organizations recognized by the Islamic Republic. In this context, the Tasnim news agency reported last week, quoting Mohammad Reza Tajik as 'representative of workers in the Supreme Labor Council,' that 'the share of wages in the total cost of services and goods is between 8% and 13%, and the share of wages in forming inflation is less than 3%.' Previously, Ali Hossein Rahiti Fard, Deputy of Labor Relations at the Ministry of Cooperatives, Labor, and Social Welfare, announced in August that 'expert assessments indicate that the inflationary impact of this increase is only 3% to 5%, and certainly liquidity in the market and various issues related to the dollar have had a greater impact on inflation.' Two clauses of Article 41 of the Labor Law emphasize that the minimum monthly wage for workers should be determined based on the inflation rate and the living costs of a household. Nevertheless, even as emphasized by labor organizations recognized by the Islamic Republic, the Supreme Labor Council has never considered living costs in determining wages. The minimum monthly wage for workers covered by the Labor Law, married and with children, is currently about 8 million tomans, which does not meet their needs. Meanwhile, the wages of workers and salaried employees not covered by the Labor Law are even lower than this amount. In this regard, the Tasnim news agency noted on December 20 that about 70% of workers' income is spent on rent, forcing them to take on second and third jobs to cover living expenses. Meanwhile, Sadegh Kargar, a labor activist residing in Norway, pointed out that the government intends to increase the wages of government employees and retirees by 18%, which is less than half of the official inflation rate, and has stated to Voice of America that reports suggest a similar increase for next year's workers' wages. He emphasized that in this case, another 25% of the purchasing power of workers, government employees, and retirees would be reduced. Mr. Kargar added: 'The government's policy, which until last year was to freeze wages, has changed to reducing wages since the rise of the Raisi administration.' This situation has led to what Sadegh Kargar described as an 'expansion of the protest capacity in society, which we are currently witnessing in the form of daily street protests.'