Wage Rise Exceeds Inflation Routinely Under Rouhani

EghtesadOnline: Over the years of the first term of President Hassan Rouhani (Aug. 2013-17), the government ensured that the rise in civil servants’ salaries exceed inflation, which has been the case since 2014-15.

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07 October 2017

Wage increases outstripped inflation rate in the current fiscal year (March 2017-18) for the fourth consecutive year. The minimum wage set for the current year saw a 14.5% rise compared to last year to stand at 9.3 million rials ($238) per month.

According to the latest report released by the Central Bank of Iran, the average goods and services Consumer Price Index for urban areas in the 12 months ending Sept. 22 increased by 9.9% compared with last year’s corresponding period.

The Economy Ministry expects inflation rate to remain below 10% by March 2018, Financial Tribune reported.

According to a government directive, salaries of government employees will increase by 10% with an average inflation rate of below, but close to, 9% forecast for the next fiscal year (March 2018-19).

Workers’ wages will have the same rise next year, but as per Article 41 of the Iranian Labor Law, the Supreme Labor Council—which consists of representatives of the government, employers and workers—will finalize workers’ minimum wage in the final month of year (starting Feb. 20, 2018).

“The government’s budget will provide for 5% of this pay rise and the remaining half will be funded by organizations and governmental bodies,” Government Spokesman Mohammad Baqer Nobakht said last week.

Nobakht is also the head of Planning and Budget Organization, one of the largest governmental establishments in Iran tasked with preparing the country’s budget.

According to a report by the Persian newspaper Iran, seven years out of 13 years between the fiscal 2005-6 and 2018-19 saw the rate of inflation outpace the average salary increase of civil servants.

The widest gap between these two was registered in 2008-9 when the rise in wages of government employees was 18.1% less than the inflation rate. That year, the average inflation rate was 25.4% whereas civil servants’ salaries rose by 7.3%.

The second and third most significant imbalance between the rise in inflation rate and salaries can be spotted in 2012-13 and 2013-14 when inflation was 16.5% and 14.7% more than the rise in public servants’ salaries respectively.

This comes as the rise in government employees’ salaries exceeded inflation rate most significantly in 2009-10. The inflation rate posted for this year was 10.8%, nearly 7.5% less than the growth in civil servants’ wages.

The rise in workers’ wages lagged behind that of inflation rate in four years out of the period reviewed by the newspaper. Over these years, the widest gap was posted in 2012-13 when the inflation rate increased by 31.5% and workers’ salaries by 18%. Inflation outpaced workers’ wages by 12.5% and 9.7% in 2011-12 and 2013-14 respectively.

The rise in workers’ salaries exceeded inflation rate the sharpest in 2006-7, when inflation stood at 11.9% and pay rise was 22%. The second best positive imbalance, in favor of workers, between the increase in inflation and workers’ wages is registered for 2014-15, as workers’ salaries rose by 9.4% higher than inflation rate in that year.