Minimum Wage Covers 38% of Urban Households’ Expenses

EghtesadOnline: Workers' wages cover only 38% of their living costs in urban areas and 69% in rural areas.

News ID: ۷۵۱۳۹۲

01 November 2020

The gap between a worker's annual salary and the costs of living is 300 million rials ($1,075) in urban areas and 80 million rials ($286) in rural areas.

As a result, households are seeking other sources of income to protect themselves against the rising inflation.

According to the Statistical Center of Iran, inflation stood at 34.8% in the last fiscal year (March 2019-20) and stood at 34.4% and 37.3% for urban and rural areas respectively.

According to the Ministry of Cooperatives, Labor and Social Welfare, the average annual expenses of an urban household increased by 21% in the last Iranian year to exceed 480 million rials ($1,720) compared with 400 million rials ($1,433) in the preceding year.

Their annual income, on the other hand, grew by 24% from 449.5 million rials ($1,611) to 540 million rials ($1,935), the Persian-language daily Etemad reported.

Over less than a decade from the year ending March 2012 to the year ending March 2020, urban households’ income increased 315% from 130 million rials ($466) to 540 million rials ($1,935). The highest growth was registered between March 2019 and March 2020 with 24.4%.

Expenses increased by 262% over the eight-year period, from 134.74 million rials ($482) to 486.43 million rials ($1,743). The sharpest growth in expenses in urban areas was posted in the years ending March 2019 and March 2020 with 20.7%.

Expenses of a family living in rural areas increased 211% between the years ending March 2012 to March 2020, from 85 million rials ($304) to 265.96 million rials ($953).

The average income of rural households climbed 275% from 80 million rials ($286) to 297 million rials ($1,064). The highest jump in income and expenses of rural households was registered in the years ending March 2019 and March 2020 with 27.4% and 22%, respectively.

The report noted that more than half of the urban households’ income come from “other sources of income”, including gains from renting their residential properties, cash subsidies or pensions.

Last year, “wage and salary” accounted for 32.5% of the income of urban households. “Other sources of income” and “wage and salary” accounted for 35.8% and 30.7% of rural households’ income last year respectively.

The share stood at 55.2% and 29.4% for urban households and 45.4% and 26.8% for rural households in the year ending March 2012 respectively.

Statistics indicate that over these years, people have become more interested in regular employment (jobs that are paid directly by employer). The rise in economic instability, namely sanctions, decline in oil sales, sudden decisions regarding imports and exports have forced people to look for permanent income, though these jobs might not be their main source of income.

The ministry’s report also surveyed the ratio between the annual minimum wage of workers to urban and rural households’ annual income: 34% of income resources of a worker with minimum wage came from “wage and salary” last year as the average annual salary of a worker stood at 184.55 million rials ($661). The gap between a worker’s annual salary and an urban household’s average annual income were filled by other sources of income. Between March 2012 and March 2020, last year recorded the biggest gap between a worker’s “wage and salary” and an urban household’s average annual income with 360 million rials ($1,285).

This gap was narrower for rural households: Last year, the ratio between the annual salary of workers to their average annual income was 62%, which is a gap of 113 million rials ($405); the biggest gap over eight-year period.

The ratio between the minimum annual salaries of a worker to the average expenses over a year stood at 38% for urban households. In other words, if a household intended to meet their expenses only through “wage and salary”, they could only cover 38% of their expenses. The ratio stood at 69% for rural households.

The gap between minimum “wage and salary” and annual expenses is 302.99 million rials ($1,085) in urban areas and 81.41 million rials ($291) in rural areas.