Gov't Rejects, Later Consents to Wage Hike

EghtesadOnline: In the new Iranian year that starts on March 21, the raise in wages for government employees and retirees was approved by the Majlis. The raise is 4 million rials (about $30).

News ID: ۷۴۶۸۴۶

05 March 2019

The proposal was approved as an amendment to next year’s budget amid heightened controversy among lawmakers and the government.

Opposing the measure, government officials earlier argued that it would add to the government’s already heavy burden. Mohammad Baqer Nowbakht, head of Plan and Budget Organization, said the move is at odds with MPs’ concerns about social justice and supporting low-income groups.

He added that the proposal also violates the provisions of the Sixth Five-Year Economic Development Plan that stipulates the government is responsible for deciding the wages of its workers, according to Financial Tribune.

However, he tweeted on Monday that despite hardships, the government is ready to implement the law, apparently backtracking from his earlier opposition after a host of MPs criticized his comments.

“Despite feasibility of the government proposal for salary raise and various executive drawbacks with the parliamentary decision, the government is committed to implement it,” he wrote.

Some MPs interpreted the government’s opposition to the proposal an egregious disregard towards the Majlis decisions. In response to an MP’s vocal warning, Majlis Speaker Ali Larijani sharply chastised comments by government officials about unfeasibility of the wage measure, saying that the government is duty-bound to implement whatever the Majlis decides.

As per the amendment, apart from the fixed annual pay raise, the government is also allowed to increase wages of its employees by up to 10%.

Hamid Reza Hajibabaee, the MP who made the proposal, says if the government complies with the 10% increase, it should be based on a fixed percentage for all employees without exception.

“If, for example, the government decides to increase salaries by, say 8%, all workers should be eligible,” the parliamentary news website ICANA quoted him as saying.

However, as the implementation of 10% increase is not mandatory, most observers say that will not happen given the government’s economic problems and budget deficits.

Hossein Ali Hajideligani, a member of the Majlis Planning and Budget Commission, had said earlier that the decision was made to help compensate for the runaway inflation and alleviate economic pressure on the fixed-wage earners.

“It is normal for the government to propose different models for increasing wages in the annual budget. Nevertheless, experience has it that such procedures do not serve justice, especially for those getting lower wages,” the lawmaker told Mehr News Agency.

“If all employees receive a fixed 4 million rials, the percentage of rise would range from 6.9% to 40%. This is while an employee with 6.9% salary raise has to pay more tax… this is far from justice,” Nowbakht rued.

As for taxation , workers with monthly wages below 27 million rials are exempted from income tax, those getting 27-40 million rials pay 10%, 40-80 million rials pay 15%, 80-100 million rials about 20%, and above 100 million rials pay 25% tax.