Will Economic Growth Alone Reduce Unemployment?

Addressing the employment issue has been one of the priorities and central issues of the country's economy in the sixth development plan, which aims to alleviate unemployment alongside economic growth. Although government officials claim that this year - marking the beginning of the implementation of Iran's sixth economic development plan - will be a year of economic growth, there are not many positive reports coming from Iran's job market. According to the latest statistics released by the Statistical Center of Iran, the unemployment rate in the spring reached 12.2%, which is an increase of 1.4% compared to the spring of last year and nearly half a percent compared to last winter. The first question that arises is how close this statistic is to reality. However, contrary to the recently published statistics, Salman Khodadadi, the head of the Social Commission of the Parliament, states: "Currently, there are officially 6 million unemployed and unofficially up to 11 million unemployed in society." He added: "A significant portion of the unemployed are among the educated workforce, with some fields showing a 40% unemployment rate; therefore, there is only one way to solve unemployment, which is job creation through investment in production and increasing production centers." Meanwhile, Mohammad Baqer Nobakht, the Deputy for Planning and Strategic Supervision of the President, recently stated: "The active population of working age is divided into two groups: one group manages to find work, with 21 million out of 23 million currently employed, while 2.5 million are considered active but have no job opportunities." According to Nobakht, the number of unemployed is the same 2.5 million, which does not align with the 6 or 11 million unemployed mentioned by the head of the Social Commission. Thus, the employment and unemployment rates have become one of the most contentious issues between the government, opposition, and Parliament. Beyond this statistical inconsistency, it remains to be seen whether Iran's economic growth in the coming years can lead to a reduction in unemployment. According to the latest report from the International Monetary Fund, known as the World Economic Outlook, economic growth is projected to be 4.5% this year and 4.1% next year. However, the same institution predicts that the unemployment rate in Iran will reach 11.3% this year and 11.2% next year, which is a slight decrease and, even with an optimistic view, cannot solve the massive unemployment problem in Iran. Official statistics indicate that every year between 800,000 to 1 million people enter the job market, while a significant number become unemployed due to industrial obsolescence and recession. The levels of employment and unemployment are interconnected with many economic variables. The positive process of these economic variables is a factor in increasing employment and consequently reducing unemployment. The first variable to mention is the increase in the capacity for activity and production in production workshops. Iran's economic growth rate can only lead to increased employment if it continues sustainably for several years and if the growth rate is high, exceeding 8%. Moreover, the employment trend typically appears with a delay. The current economic growth rate, even if it continues in the coming seasons, is still not high enough. An examination of various sectors of the Iranian economy shows that sectors with extensive employment generation have not yet become sufficiently active. The services sector created the most jobs in the spring of this year, followed by industry and agriculture. Although employment in the services sector, especially in creating temporary jobs, is important, the construction sector, which is the most employment-generating and indicative of the job market in Iran, has not yet managed to achieve widespread job creation despite some minor activity. Therefore, a robust job market will still require a relatively long time. According to the director general of the Economic Statistics Department of the Central Bank, despite the achieved economic growth, the total production level of large enterprises with over 100 employees is still below the production level of 2011. Furthermore, Iran's foreign trade level has not yet reached the levels of previous years. The volume of investment is also not at an adequate level. Beyond these constraints, solving the employment problem, which has now become an international issue faced by many countries, requires structural reforms in the economic, political, social, and educational spheres. Based on the evaluation presented here, it seems that even with limited economic growth in the coming years, the employment problem will still be felt, especially for groups such as youth and women. This assessment aligns with recent studies from the Research Center of the Parliament, which state, "The goal of reducing the unemployment rate to 7% by 2021 is a dream, and based on maintaining the current situation, the unemployment rate will be 15% by 2021." Therefore, even with the most optimistic outlook, economic growth cannot solve the unemployment crisis in Iran alone. Experiences from other countries indicate that in the future, self-employment and entrepreneurship in the form of small enterprises, especially in the services sector, can play a significant role in reducing unemployment. Implementing such policies in Iran, however, is contingent upon fundamental reforms in educational institutions and the business environment towards rent-seeking elimination and economic liberalization.