Iranians Battle With High Unemployment and Soaring Inflation

March 24, 2015

5 min read

Iranians Battle With High Unemployment and Soaring Inflation

The Iranian people struggle financially on a daily basis for a variety of reasons, including low wages, high inflation and unemployment rates, and a continuing housing crisis, revealed a survey presented to IranWire’s Persian readership.

The poll, which was published on the site on Friday March 20, asked readers what their biggest financial burden was. More than a third of respondents, 36 percent, responded that “unemployment” was their biggest hindrance, 27 percent selected “inflation,” narrowly followed by “low salaries” with 26 percent of voters, and just 11 percent of people choosing “housing.” Although there was no option to answer, “I have no financial burdens, ” individuals could opt out of the poll if this were the case.

Unemployment, the most popular response, was in many ways unsurprising. According to the Statistical Center for Iran (SCI), unemployment rates remain elevated in Iran, especially among the country’s youth, of whom 24.8 percent are without jobs, a figure that is more than double the national average. Given Iran has a population of 77 million, 60 percent of which are under the age of 30, this means there are more than 11 million unemployed young people in Iran. Unofficial sources estimate the overall unemployment rate to be even higher, affecting one in five Iranian citizens. During a speech in August last year, President Rouhani told reporters he would create new jobs as the economy continued to grow but failed to mention how he would go about doing this. Little has changed since then.

Equally, inflation, which occurs when the price of essential commodities such as milk, meat, clothing, and medical services rise or the value of money declines so that it takes more currency to buy the same goods or services as it previously did, was for the most part a predictable response for many Persian-language IranWire readers. High and volatile inflation, which is generally deemed to be anything over the three or four percent annual range, is widely agreed by economists to be damaging to consumers, businesses and economies at large.

Iran has struggled with high inflation for several years, especially since international sanctions were introduced, reaching a peak of 45 percent in July 2013. Although inflationary pressures on the economy have subsided since then, largely facilitated by a number of factors including the appreciation of the Iranian Rial, the decline in global prices for key staples and the easing of international sanctions, inflation remains high. According to World Bank projections for 2014 to 2015, the inflation rate in Iran will be 23 percent, although in January 2015, it was just short of 16 percent.

Last year, President Rouhani predicted that inflation rates would drop below the 20 percent mark by the end of 2014, something he has delivered on, and said Iran would enjoy its first single-digit inflation rates for 40 years in 2017, although time will tell whether this will happen.

In the meantime, inflation remains high, affecting what Iranians can afford to buy on a daily basis. In recent months, everyday goods, such as chicken, tomatoes and bread have become increasingly unaffordable. For instance, bread more than doubled in price in the town of Ardabil late last year, while the cost of tomatoes staggeringly rose from 30 to 60 cents per kilo to nearly four dollars per kilo just a few months later. The price of poultry rose to such a degree that a social media campaign was started to reverse the trend.

To counteract these effects, the government has introduced anti-inflationary measures but these, alongside other factors such as international sanctions and falling oil prices, have impeded the health of trade in Iran and the Tehran Stock Exchange (TSE). In less than three months, the Tehran Stock Exchange (TSE) Index fell by 15 percent, from 76,850 in October last year to 65,055 as of January 21, and this shift in prices means a reduction in the value of stocks and, therefore, often the life savings of investors as well. Since January, the TSE Index has plateaued for the most part, with it standing at 65,531 at the time of writing.

The poll also demonstrated that just over a quarter of respondents felt that low salaries were their biggest financial burden. Iran has an average monthly salary of $394 but minimum wage, which is 17 percent higher than last year’s minimum wage after the commission responsible for setting the wage increased it this month, is just over $250 per month. Despite the increase, the sum remains insufficient to satisfy the needs and demands of workers. Other professions are equally frustrated with low pay, including teachers who protested about it in many towns across Iran earlier this month.

And, finally, a little more than a tenth of our Persian-speaking readers said housing was their biggest financial problem. Housing prices in Tehran soared in 2012, soon after western powers imposed their toughest round of economic sanctions against Iran. This created uncertainty in the Iranian economy and its future and drastically weakened the Rial so Iranians turned to real estate as a way to safeguard their money. With state home loans being capped at about 180 million rials ($15,000), Iranians typically use savings and money borrowed from friends and family to pay for homes. However, with Iran’s economic future still shrouded in uncertainty, and with much resting on the outcome of nuclear talks at the end of March, the housing market is at a standstill. Sellers do not want to sell in the hope that prices go up, and buyers do not want to buy in the hope they go down.

Reaching a nuclear deal is fundamental in many ways; it will move the housing market along, create many new jobs as Iran enters the global economy, help curb inflation and increase wages in the country. However, as it stands, many Iranians are struggling on a daily basis, finding it increasingly difficult to buy everyday goods, or to find work, and even if they do manage, they are paid insufficient wages to support themselves and their families. With less than a week to go before the deadline for a nuclear deal, Iranians will be following developments with eagerness and anticipation.