Job Creation Tops New Government Agenda

EghtesadOnline: As 16 of the ministerial nominees proposed by President Hassan Rouhani got the parliamentary vote of confidence on Sunday, the president and his Cabinet know exactly what one of their biggest challenges in the new government is: creating sufficient new jobs to catch up on the backlog created in the previous administrations.

News ID: ۷۴۳۴۲۸

22 August 2017

Addressing the first Cabinet session of his new term on Sunday, President Rouhani referred to job creation as “the first duty of the new administration” and called on all executive bodies of the government to come up with special plans to tackle unemployment.

The Statistical Center of Iran's latest report on unemployment shows Iran’s unemployment rate stood at 12.6% in the first quarter of the current fiscal year (March 21-June 21), registering a 0.4% rise compared with last year's corresponding period and a 0.1% increase compared with the previous quarter.

The report shows 3.36 million Iranians were unemployed this spring, including 10.6% of men (2.24 million) and 20.8% of women (1.11 million) of ages 10 and above, Financial Tribune reported.

According to SCI, the unemployment rate was 14.4% for urban areas and 7.8% for rural areas.

The youth unemployment rate, i.e. the proportion of population of ages between 15 and 29, stood at 26.4% in Q1, indicating a 1.5% rise compared with last year’s corresponding period and a 0.9% increase compared with the previous quarter.

Labor force participation rate—the proportion of population of ages 10 years and above that is economically active either employed or looking for work—in spring was at 40.6% or 26.67 million people, which marks a 1.1% rise year-on-year and a 1.7% increase compared with last winter.

Men’s and women’s economic participation rates were put at 64.5% and 16.4% respectively. The rate was 39.8% for urban areas and 43% for rural areas.

Demand for white-collar jobs for the highly qualified young population has peaked over the past decade, as the prevailing policy of expanding the educational system has encouraged many to pursue higher education in the hope of getting better jobs.

While the average population entering the pool of qualified workforce each year was about 600,000 a decade ago, the number has soared to 900,000 over the past few years, thanks both to the population boom of the 1980s—21 million babies were born between 1980 and 1988—and the backlog created by diverting the working-age population to universities.

> Labor Ministry Targets 971,700 Jobs

Alaeddin Azvaji, an official with the Ministry of Cooperatives, Labor and Social Welfare, said his ministry plans to create 971,700 new jobs before the end of the current Iranian year in March 2018.

Speaking to Mehr News Agency, the official said the ministry has devised a comprehensive plan to create sustainable jobs through three broad policies.

“According to this plan, the ministry aims to create 651,900 new jobs related with the economic sectors’ activities, another 228,000 jobs related with the political sectors’ activities and 91,800 new jobs through monetary support to businesses," he said.

Azvaji noted that the government has allocated 5,000 billion rials ($130 million) from the budget as well as 200,000 billion rials ($5.2 billion) in the form of banking loans to create the targeted 971,700 jobs.

“If the parliament gives the green light, another 10,000 billion rials ($260 million) could be borrowed from the National Development Fund,” he said.

Iran’s sovereign wealth fund, the NDFI, was created in the 2000s to save oil revenues to develop Iran and invest overseas for future generations. The fund currently has $91 billion in reserves.

The target set by the Cooperatives Ministry is an ambitious one, considering that Rouhani’s team has so far been able to generate only a maximum of 700,000 jobs per year.

Interestingly, a recent study shows there's an inverse relation between the level of higher education and employment prospects in Iran.

The research, which draws on statistics and figures on the Iranian job market in the fiscal 2014-15, shows the higher the level of education, the more time it takes for people to find jobs. Moreover, people with university degrees have lower chances of landing jobs compared with those who do not pursue higher education.

The research showed that people with higher education receive 9% lower salaries in comparison with those without higher education and that pursuing higher education for men generally leads to a 10% decline in income throughout their lifetime, whereas for women, higher education leads to a 9% increase in income.

It confirms that the unemployment rate among university degree holders is considerably higher than among non-degree holders. More specifically, the case is more severe for women than for men.