By Bahram Khodabandeh
April 8, 2021
Four years ago, when Hassan Rouhani first launched his campaign for presidency of the 12th Islamic Republic government, it was claimed that his administration had already brought about a seismic change in the Iranian labor market.
Two million jobs, his supporters said, had been created in Iran under Rouhani compared to a net increase in the employment rate of close to zero throughout Ahmadinejad’s eight-year term.
Since then, however, it has been a different story. A recently-published review of official labor statistics in Iran found that between 2017 and 2021, not only were no new jobs created, but some 850,000 people left the labor market and more than 155,000 jobs have been lost.
The report by the Statistical Center of Iran states that in 2017, the country’s total active population – all those of working age and who could, in principle, be employed – was 26,588,819 and the total number of known employees that year was 23,378,613 people.
By contrast, the data held in quarterly reports for 2020-2021 indicated that the active population in the last year of Rouhani’s government had decreased to 25,737,000 people, and the working population had dropped to 23,263,000.
In the same period, about 4 million births were registered in Iran. At least one million people should have entered employment in the last four years in order for the conditions to be as they were four years ago. Not only has this not happened, but the economically-active population has somehow shrunk.
The Employment Situation in 2020-2021
The economic record of Rouhani’s second administration has been absolutely shattered over the past four years. The situation in 2020-2021 is much more volatile than during his previous term due to the outbreak of coronavirus, the reimposition of sanctions and Iran’s escalating economic crisis.
The labor market has been dealt a particularly harsh blow in the past 12 months. In 2020-2021 alone, quarterly employment data indicates that 1.43 million people left the labor market and more than 1.01 million people lost their jobs.
Women have been worse-affected than men by the recent economic turbulence, accounting for about two-thirds – 663,000 all in all – of those who lost their jobs in 2020-21, while more than 900,000 of the 1.4 million recorded as having left the labor market were women.
Even under normal circumstances, Iran is facing a significant crisis in female employment. The country ranks sixth-lowest in the world, behind only Guinea-Bissau, Yemen, Iraq, Jordan and Algeria, for rates of women’s economic participation.
The total number of women deemed “economically active” in Iran is now just 4.3 million, and the total in employment stood at 3.65 million. In other words, about one-fifth of the meager employment level of women in Iran has been lost in a year, and the fragile conditions of Iranian women on the whole have become more so than before.
What Does a Single-Digit Unemployment Rate Mean?
In the past week, some Iranian media outlets have run stories claiming that the unemployment decreased and reached “single digits” in 2020-2021. The latest report from the Statistical Center stated that “the unemployment rate for 15-year-olds has dropped by about one percent to 7.9 percent compared to last winter.”
How is it possible that while the employed population of Iran has shrunk by more than one million souls, the unemployed population and the unemployment have also decreased? The answer lies in the cynical method of calculation.
The unemployment rate is calculated by the overall active and ready-to-work population by the unemployed population. When the denominator (the active population) has decreased more sharply than the numerator (the unemployed population), it is natural that the product of division (the unemployment rate) is smaller than before.
The active population is the population over the age of 15 who declared at the time of the last census that they are ready for work and can enter an economic activity. Some of these will have found full-time or part-time jobs and are part of the employed population. Others, who have not yet been so lucky, are considered active but unemployed.
Together, they all make up less than 40 percent of the country’s population aged 15 and above. The other 60 percent are people who are not ready for work and economic activity for various reasons, such as students, housewives and retirees.
The intensification of the economic crisis has an effective role in removing people from the “economically active” sphere. When a country’s economy is booming and production is flowing in different sectors, it is natural that the desire and ability to participate increases.
But when the Iranian economy has already shrunk by a fifth in a three-year recession (2018-2021), both the space and capacity for economic activity are lost. Many people are frustrated with trying and failing to find a job, others will be shouldering new care responsibilities, and still more will have entered the informal sector or emigrated.
Prospects for Improvement in 2021-2022?
The Statistical Center’s data for the winter of 2021 indicate that the situation has improved a little compared to last spring, summer and autumn. If the coronavirus crisis is brought under control in Iran, there is a chance of some uptick next year. But despite the extent of the damage it has suffered, the Islamic Republic still has one of the lowest vaccination rates in the world.
There has also been no clarity on how the country is to go about improving economic conditions and overcoming the recession, whether or not the sanctions are lifted. Without serious improvements in the field of overall governance in Iran, it remains difficult to paint anything other than a gloomy picture of Iran’s employment situation in 2021-22.