Drivers Account for Majority of Coronavirus Loan Applications

Out of 492,510 applications registered at Kara.mcls.gov.ir, the website of the Ministry of Cooperatives, Labor and Social Welfare for extending government-backed coronavirus bailout loans, 289,000 were filled out by public transportation operators, educational centers and beauty salons, IRNA reported. 

Following the government’s approval of a 750 trillion-rial ($2.78 billion) package for low-income households and struggling businesses impacted by the coronavirus outbreak and its economic consequences, three million enterprises from 14 main groups of businesses and 850 subgroups were identified. 

Of these businesses, 1.3 million have insurance codes and 1.7 million are without. They have 2.8 million insured employees and three million uninsured employees. 

According to Governor of the Central Bank of Iran Abdolnasser Hemmati, banks have paid 44 trillion rials ($163.26 million) worth of coronavirus loans to businesses over the past one and a half months, Mehr News Agency reported.

 

 

CBI's List of Distressed Businesses 

The Central Bank of Iran's list of businesses directly hurt by the new coronavirus is as follows:

- Businesses, institutions and companies responsible for any meal prepared in restaurants, buffets, reception halls and coffee houses. The Ministry of Industries, Mining and Trade is responsible to determine whether these businesses would be eligible to receive government aid. 

- Businesses active in tourism and hospitality sector, namely hotels, apartment hotels, tourist centers, centers hosting pilgrims, guesthouses, eco-lodges, leisure centers and museums. The onus is on the Ministry of Cultural Heritage, Handicrafts and Tourism to determine the eligibility of these businesses for receiving government aid. 

- Transportation companies operating in air, road, rail and marine sectors. The Ministry of Roads and Urban Development will determine whether these businesses qualify for receiving the government aid.

- Intra-city public transport companies. The Interior Ministry will be responsible to find out whether they are eligible to receive government loans. 

- Travel agencies. The Ministry of Cultural Heritage, Handicrafts and Tourism will ascertain the eligible businesses. 

- Apparel manufacturers and distributors. The Ministry of Industries, Mining and Trade will decide the eligibility of these businesses. 

- Manufacturers and distributors of footwear and bags. The Ministry of Industries, Mining and Trade will verify the eligibility of these businesses.

- Confectionaries and shops selling nuts, dried fruits, ice-cream and fresh juice. The Ministry of Industries, Mining and Trade will confirm which ones get the government loan.

- Gyms, sports and leisure centers. The onus is on the Ministry of Sports and Youth to attest whether they are qualified to receive government aid. 

- Cultural, educational and art centers, as well as media groups. The onus is on the Ministry of Culture and Islamic Guidance, Education Ministry and the Ministry of Science, Research and Technology to determine whether these businesses qualify for the government’s financial support. 

- Handicrafts manufacturers and distributors. The onus is on the Ministry of Cultural Heritage, Handicrafts and Tourism to determine their eligibility for receiving government aid. 

- Health Ministry’s licensed private-run health and treatment centers, including laboratories and those providing para-clinical services.

- Driving schools, barber shops and beauty salons. The Ministry of Industries, Mining and Trade needs to clarify their loan eligibility.

- Privately-held kindergartens working under the supervision of the State Welfare Organization of Iran

- Companies offering exhibition services, including exhibit organizers

- Businesses operating in free trade zones and special economic zones

- Broiler chicken farms, greenhouse producers, horticulturists, floriculturists and businesses involved in ornamental fish rearing.

 

 

2.8m Businesses, 6m Jobs Hit Hard

The coronavirus has hit hard an estimated 2.8 million businesses and close to six million jobs in Iran, according to Alaeddin Azvaji, the director general of Policymaking and Job Department of the Ministry of Cooperatives, Labor and Social Welfare. 

“By being hit hard, I mean, these businesses were either forced to close or reduce their capacity substantially,” he said.

Early projections by the ministry put the number of jobs at stake at approximately one million; these jobs were mostly in businesses whose main activities revolved around the Iranian New Year holiday (March 20-April 5) and purchases of spring merchandise. 

In May, the impact of the disease on businesses went deeper and wider. At first, getting past the coronavirus crash seemed like a V-shaped recovery but then it transformed into a W-shaped recovery, following the second wave of coronavirus in late June, which eas not as severe as the first in March and April.

“The ministry had devised a few scenarios to manage the potential levels of the pandemic’s impact on jobs and businesses. Between 50,000-80,000 billion rials [$185-296 million] were needed to carry out these plans. Paying a fraction of small enterprises’ remunerations in the form of ‘income subsidy’ or insurance incentives for the workers of large companies were among our plans to prevent job losses and even help create more employment opportunities,” he told the Persian-language daily Shargh.

Noting that a total of 850,000 insured workers have applied for three-month-long coronavirus unemployment benefits, the official said, “Estimates show that the outbreak of coronavirus has hit more than 1.2-1.3 million economic enterprises with more than 2.6 million uninsured workers. These figures might have changed over the past six month; some of this unemployed population might have been reemployed.”

In April, the government announced it would allocate 50,000 billion rials ($185 million) to Unemployment Insurance Fund to support those who have lost their jobs amid the outbreak of coronavirus. Applicants were urged to fill out online forms for unemployment benefits at the newly-designed website Bimebikari.mcls.gov.ir within 30 days, rather than going personally to the ministry’s bureaus.

“The government tried to stimulate demand by handing out loans worth 10 million rials ($37) to households. The second measure was to grant loans to private sector employers, the self-employed and the uninsured. The program included 14 groups, including 880 businesses. This was the first time a mechanism was provided to identify uninsured workers through executive organizations. Studies show unofficial workers, those without health and retirement benefits, are more vulnerable to the crisis. Under the program, individuals who were working in sport clubs, education and services sectors received the government’s coronavirus loans,” the official added. 

Azvaji noted that the Economic Taskforce of the National Coronavirus Headquarters provided a total of 200 trillion rials ($742 million) as loans with a lending rate of 12% and a repayment period of two years among banks. 

“Estimates show economic enterprises have applied for nearly 120 trillion rials [over $445 million] ... We tried to make the registration process for taking out loans quick and easy. As we speak, banks are in different stages of approving the application, signing the contract or paying the loans. [However] some eligible businesses are yet to register for loans,” he concluded.  

 

 

Service Providers Constitute Majority of Unemployed

Fifty-nine percent of all workers who lost their jobs due to the outbreak of coronavirus were service providers, says Masoud Babaie, an official with the Ministry of Cooperatives, Labor and Social Welfare. 

“Sixty-two percent of businesses affected by the virus were also involved in the services sector. Workers in the industrial and agricultural sectors accounted for 31% and 1% of the jobless due to coronavirus respectively. Nearly 31% and 3% of the virus-affected businesses were in industrial and agricultural sectors, respectively,” he said. 

“Close to 12,500-13,500 people typically file for unemployment benefits annually. However, over 871,400 applied for unemployment insurance following the outbreak of coronavirus by July 31, of whom 730,882 were subject to the three-month relief program. Since then, 107,000 new unemployment claims have been registered. These individuals will be subject to Article 7 of Iran Unemployment Insurance Law,” he was quoted as saying by Mehr News Agency. 

According to Article 7 of Iran Unemployment Insurance Law, the total duration of the payment of the benefit since the beginning of its allocation shall be a maximum of 36 months for single persons and 50 months for married persons or those with dependents.

Insured persons, ages 55 or older, receive unemployment benefits up to retirement age. The minimum benefit is 55% of average earnings which must increase by 10% for each of the first four dependents. However, the total benefit should not be less than the minimum wage or exceed 80% of average earnings of the insured. 

The unemployed insured person’s average daily wage or salary for the calculation of unemployment benefit shall be the total insured person’s income in the last 90 days before unemployment, divided by the working days in this period.