Majority of Jobholders Lack Health, Retirement Benefits

EghtesadOnline: Sixty percent of jobs in Iran lack health and retirement benefits, which are also not entitled to government support offered to businesses during the coronavirus crisis.

News ID: ۷۵۰۳۳۳

28 June 2020

According to a report by the research arm of the Iranian Parliament, Majlis Research Center, 61.7% of working women and 59.4% of working men were employed in the so-called "unofficial sector" of the economy in the year ending March 2019.

About 38.3% of working women and 40.6% of working men were holding jobs in the official sector of the economy [entitled to health and retirement benefits] during the year under review.

Men constituted 81.2% and women accounted for 18.8% of unofficial employment while men constituted 82.6% and women accounted for 17.4% of official employment in that year.

Disproportionate Share of Unofficial Jobs in Provinces

Unofficial employment accounted for more than 50% of jobs in most Iranian provinces during the year under review: underprivileged provinces and those along the country’s borders, namely West Azarbaijan (73%), North Khorasan (72%), Mazandaran (71%), Sistan-Baluchestan, Kermanshah and Kurdestan (70%) had the lion’s share of unofficial employment.

Women, residents of rural areas and those without university education grabbed the biggest share of the country’s unofficial employment.

According to estimates made by Mohsen Ranani, a professor of economics at the University of Isfahan, cited by the Social Welfare Department of the Ministry of Cooperatives, Labor and Social Welfare, 48% of working women, 45% of jobholders in rural areas and 35% jobholders without higher education were employed in the unofficial sector in the year ending March 2004. The share of unofficial employees in the sectors of agriculture, industry, construction and services stood at 69%, 12%, 8% and 10%, respectively.

A research carried out by Zahra Karimi, a professor of economics at the University of Mazandaran, affirmed the disproportionate share of unofficial employment across the Iranian provinces. For example, in Kurdestan, the share of unofficial employment in total employment increased from 67.1% in the year ending March 2002 to 73.83% in the year ending March 2015.

She also found that 70% of working young women in urban areas and 84% of working young women in rural areas were employed in the unofficial sector of the economy. About 60% of working young men in urban areas and 71% of working young men in rural areas were employed in the unofficial sector of the economy.

Key Pillar of Employment

The MRC report also shows small businesses that employ 1-4 workers have been uniquely susceptible to the abrupt economic shock of the coronavirus. They were the main pillar of the country’s employment in the year ending March 2019, accounting for about 65% of total employment by employing 15.4 million people out of a total of 23.8 million jobholders.

The share of employment in very small businesses out of total employment was over 50% in all provinces, except Tehran (43.1%).

Seventeen percent of working women and 35% of working men in official sector of the economy were employed in small enterprises (those with 1-4 workers). Meanwhile, 83.8% of working women and 86.8% of working men in the unofficial sector of the economy were employed in small enterprises.

The services sector, which accounts for 50% of total employment in Iran, has been the hardest-hit sector of the economy by the coronavirus.

Self-employed people and independent workers (freelancers, gig workers, independent contractors, etc.) have been especially hit by the economic fallouts of the crisis.

Data suggest that nearly 37% of jobholders in the services sector are independent workers. In addition, 50% of those in services sector are without health and retirement benefits. Uninsured women and men accounted for 8% and 42% of total employment in the services sector in the year ending March 2019.

Tehran Province had the biggest share of employment in the services sector with 21% among all provinces. Fifty-seven percent of jobs in the services sector go to businesses with 1-4 workers. Independent workers had the highest share in small businesses with 63%.

During the year under review, Kurdestan and Lorestan had the highest share of independent workers of all employment in the services sector with 48% and 46%, respectively.

A total of 24.3% of the employed people in the services sector working in small businesses are insured while 75.7% are not covered by insurance. Mazandaran, Khuzestan and West Azarbaijan had the highest share of unofficial employment in services sector with 66%, 58% and 57%, respectively.

Fiscal 2019-20 Unemployment at 10.7%

Iran’s unemployment rate, the proportion of jobless population of ages 15 and above, stood at 10.7% in the last Iranian year (March 2019-20), indicating a 1.5% decline compared with the year before, the latest report by the Statistical Center of Iran shows.

Labor force participation rate—the proportion of the population of ages 15 and above that is economically active either employed or looking for job—stood at 44.1%, registering a 0.4% decrease year-on-year.

Employment is defined as persons of working age engaged in any activity to produce goods or provide services for pay or profit, whether at work during the reference period or not at work due to a temporary absence from a job, or to working-time arrangement.

Last year’s total employed population was at over 24.27 million, nearly 430,000 more than the year before.

The services sector employed 50.3% of the Iranian employed population last year, whereas industrial and agricultural sectors provided 32% and 17.7% of jobs, respectively.

The center provides two figures for the youth unemployment rate: the proportion of the population between 15 and 24 years and those between 18 and 35 years.

The youth unemployment rate of those between 15 and 24 years stood at 26%, posting a 1.7% decrease while the unemployment rate of those between 18 and 35 years stood at 17.9%, posting a decline of 1.7% YOY.

Underemployment, the condition in which people in a labor force are employed for less than 44 hours of service per week, stood at 9.9% while 38% of the country’s employed population worked more than 49 hours per week.