Council Agrees to Double Housing Allowance of Workers

EghtesadOnline: The Supreme Labor Council has agreed to raise workers’ housing allowance from 1 million rials ($5.6) to 3 million rials ($17), the cooperatives, labor and social welfare minister said.

News ID: ۷۵۰۱۹۰

08 June 2020

“The increase, however, needs to be approved by the Iranian Cabinet before taking effect,” Mohammad Shariatmadari added.

The council, which consists of representatives of the government, employers and workers, also deducted 750,000 rials ($4.2) from workers’ severance pay base and added the sum directly to their minimum wage.

The current year’s minimum wage will see a 26% increase compared with last year’s to reach 19.11 million rials ($108.5).

In their previous session on April 8, the council increased minimum wage from the monthly 15.17 million rials ($86.1) last year’s (March 2019-20) to 18.34 million rials ($104.2) this year, indicating a 21% year-on-year growth.

They set worker’s monthly coupon at 4 million rials ($22.7) and daily wage at 611,809 rials ($3.4). The severance pay base was set at 17.5 million rials ($99.5) and the housing allowance at 1 million rials then. The wages of workers of other pay levels (above the minimum) were raised by 15% plus a monthly fixed sum of 910,000 rials ($5.1).

According to Iranian Labor Law, workers’ wages must be set based on inflation rate and living wage i.e. the minimum income necessary for a worker to meet their basic needs. The living wage set for the current year is 49.4 million rials ($280) for a 3.3-member Iranian household, which is 11.8 million rials ($67) more than last year (March 2019-20).

The average goods and services Consumer Price Index in the 12-month period that ended on March 19, 2020, increased by 34.8% compared with the corresponding period of the year before, latest data released by the Statistical Center of Iran show.

Referring to the gap between inflation rate and the small increase in minimum wage stipulated by the government and employers at the council, the representatives of workers failed to sign off the minutes of the April 8 meeting to show their disagreement.

Since then, they have been vocal in their criticism of what was seen as the violation of the country’s labor law. Eventually, they managed to win over the officials and obtained their consent to hold a new wage bargaining meeting at the Ministry of Cooperatives, Labor and Social Welfare on Saturday.

“The employers have made their position on the issue crystal clear,” Jamal Razeqi-Jahromi, the representative of employers at the council, said.

“They are against a further increase in wages. With coronavirus in full swing and its economic fallouts for businesses, employers are incapable of adding even one more rial to what has been approved previously. Any further pressure on employers would shed labor force employed at economic enterprises and promote a gray market in labor.”

“The decline in the purchasing power of workers is to blame on the depreciation of the national currency against foreign currencies; you need to find a solution to the problem at the macroeconomic level,” he was quoted as saying by Otaghiranonline.ir.

Studies by Majlis Research Center, the influential research arm of the parliament, show per capita income or average income of the Iranian people saw a 34% decline between the fiscal 2011-12 and 2019-20.

According to a report read out on parliament floor on Sunday by Mohammad Qasemi, the caretaker of MRC, despite the nominal increase in household income, their purchasing power has been eroded by one-third over eight years.

“It would take at least six years for families to regain the buying power they had in the fiscal 2011-12, provided the country registers an 8% annual economic growth from this year onward,” he was quoted as saying by Fars News Agency.

The Statistical Center of Iran has estimated a 7.2% decline in Iran's GDP in the last fiscal year, adding that excluding oil production, the economic growth is estimated to stand at 0%.

SCI's latest report showed Iran's gross domestic product, excluding production in the oil sector, recorded a positive growth rate of 0.9% in the third quarter of last fiscal year (Sept. 23-Dec. 21).

“The overall GDP growth, including the production in the oil sector, however, stood at -1.7% for the period,” new data provided by the head of Statistical Center of Iran, Javad Hosseinzadeh, show.

The average goods and services Consumer Price Index in the 12-month period ending May 20 increased by 29.8% compared with the corresponding period of last year, latest SCI data show.