Job Creation Opportunities Lost to Cash Subsidy Payments

EghtesadOnline: Iranians have been receiving a monthly cash subsidy payment of 450,000 rials ($12.4) since December 2010, which so far amounted to 2.63 trillion rials (over $68.6 billion).

News ID: ۷۴۳۴۳۱

22 August 2017

Many critics argue that if subsidies had been targeted at increasing production, it would have produced more profitable results and generated myriads of jobs, given Iran’s current unemployment rate of around 12%, Khabar Online reported.

According to the head of Arak Province’s Chamber of Guilds, creating each sustainable job in the guilds sector and in small, medium and big industries costs an average of 600 million (nearly $15,700), 3 billion ($78,400), 7 billion ($128,900) and between 10 and 20 billion ($261,200 to $522,400) rials respectively, ILNA reported.

If the cash subsidy paid to Iranians over more than seven years had been spent on creating sustainable jobs, close to 4.4 million jobs could have been generated in the guilds sector, Financial Tribune reported.

Nearly 900,000, 400,000 and between 262,000 and 131,000 jobs could have been created in small, medium and big industries respectively.

The cash subsidy scheme was initially aimed at compensating the increase in living expenses, including the rise in the price of energy, for low-income families. Yet, due to the high inflation rates over the years as well as the increase in foreign exchange rates, cash subsidies have failed to fulfill these objectives.