Iran's Min Wage in Coming Year 1395 (March 2016 - March 2017)
Feb., 2016
Vistar Business Monitor
Official reports show that the average expenditure of a household in urban areas exceeds 30 million rials each month. This is the fact while the minimum wage is set to be increased 10 percent in the next year’s budget law, reaching 7.83 million rials per month. The increase is even lower than inflation, which hovers around 13 percent.
The decision how much the minimum wage should be increased each year is made by the Supreme Council of Labor. The council’s decision affects almost 60 percent of the total labor force in the country.
Article 41 of the Labor Law is the criteria for wage increases. According to the article, “The minimum wage of a worker must be increased each year after inflation is taken into consideration in a way that basic needs of a household, whose numbers would be determined by authorities, would be met.”
In the last year, the contractionary policy of the government led to a drop in the inflation rate, but the fall in prices was not enough for workers to meet their needs in a proper way. Rising pressure on the workers have led them to call for a large wage increase, disregarding the inflation rate. Representatives of the labor unions claim that the average expenditure of a household was 22 million rials per month in the last year but increased to 32 million rials this year. They note that the expenditure in metropolitans could even be more. Workers are under rising pressure to pay for rents, transportation costs, and food.
The minimum wage changes in the past decade
|
Year
|
Minimum Wage
(in rial)
|
Year-on-Year Increase %
|
|
1380
|
567,900
|
24
|
|
1381
|
698,460
|
23
|
|
1382
|
853,380
|
23
|
|
1383
|
1,066,020
|
23
|
|
1384
|
1,225,920
|
14
|
|
1385
|
1,500,000
|
18
|
|
1386
|
1,830,000
|
22
|
|
1387
|
2,196,000
|
17
|
|
1388
|
2,635,200
|
17
|
|
1389
|
3,030,000
|
13
|
|
1390
|
3,303,000
|
9
|
|
1391
|
3,897,000
|
18
|
|
1392
|
4,871,250
|
25
|
|
1393
|
6,089,060
|
25
|
|
1394
|
7,124,250
|
17
|
|
1395
|
7,836,675
|
10
|
Many of the workers in Iran are not able to afford their monthly expenditure as they receive as low as 70 million rials – the minimum wage for the current year. The question is how much the minimum wage should be fixed for the upcoming year. In the last year, the government opposed a 14 percent increase in the minimum wage in the Iranian month of Azar, when inflation was 17.2 percent. In other words, the government had correctly predicted that inflation would reach 14 percent by the end of the fiscal year. For the current year, one can claim that the government may be certain that inflation will reach 10 percent by March, when the Iranian year ends. The following table shows that the minimum wage has never been increased in accordance with inflation in the past years. That means workers have been getting poorer every year.
If the minimum wage rises by 10 or 11 percent, it will reach 78.3 million rials or 79 million rials in the next year. However, given the inflation rate of 13 to 15 percent, the minimum wage should reach 80.5 to 81.9 million rials in the coming year. Given the increasing poverty among workers, none of the minimum wages mentioned above seems to be sufficient for a labor household to meets its monthly needs.