Parliamentary Think Tank Puts Q1 Jobless Rate at 24 Percent

EghtesadOnline: The official unemployment rate, according to the Statistical Center of Iran, stood at 9.8% in the first quarter of the current Iranian year (March 20-June 20), indicating a 1.1% decline compared with the same period of last year.

News ID: ۷۵۱۵۷۴

25 November 2020

But the true rate is much higher than the official figure of 24%, when taking into account people who dropped out of the labor force during the period, a report by Majlis Research Center, the research arm of the Iranian Parliament reads.

Given the significant rise in the number of economically inactive people, the unemployment rate is a misleading economic indicator when it comes to analyzing the impact of coronavirus crisis on the labor market.

Salaried workers make up a small fraction of total employees in Iran. In actuality, self-employed people account for the bigger share of employment.

The impact of Covid-19 has been more pronounced on the labor market participation rate rather than the unemployment rate. This is important because SCI does not count people as being unemployed, if they’re not in the labor force. To be counted as such, people must be prepared to work and actively looking for a job.

SCI put Q1 labor force participation rate—the proportion of the population of ages 15 and above that is economically active either employed or looking for job—at 41% or 25.46 million people, registering a 3.7% decrease year-on-year.

Men’s and women’s economic participation rates were 67.9% and 14.1% respectively in the same period.

According to SCI, 21.07 million men and 4.39 million women of ages 15 and above were economically active in Q1, i.e., they were either employed or looking for job.

Two Plans

At present, the government is pursuing two plans to tackle unemployment during the pandemic: Loan payments and unemployment insurance payments.

Studies by the Ministry of Cooperatives, Labor and Social Welfare show that the unemployment insurance plan has been more welcomed by people, since the government has failed to employ incentive mechanisms to protect the employed for economic entities. It has pit the unemployment insurance scheme against the loan payment plan rather than making the two policies complementary.

The MRC report goes on to say that when compared with other provinces, underprivileged provinces have benefited less from these two plans thanks to the higher share of unofficial employment there, i.e., jobs without health and retirement benefits.

The underprivileged provinces are bound to suffer more from the consequences of the outbreak of coronavirus, if the government fails to address concerns in this regard, MRC said.

According to SCI, South Khorasan Province filed the lowest unemployment rate of 4% among all Iranian provinces in Q1 while Lorestan Province registered the highest unemployment rate of 21%. Tehran Province, wherein lies the capital city, registered an 8.8% unemployment rate.

Sixteen provinces, namely South Khorasan (4%), Ardabil (6%), Mazandaran (6.2%), Markazi (6.5%), Ilam (6.5%), Zanjan (6.6%), Fars (6.6%), Khorasan Razavi (7%), Yazd (7.6%), Hamedan (7.8%), Semnan (8.1%), Tehran (8.8%), East Azarbaijan (9%), Gilan (9%), Qazvin (9.1%) and Bushehr (9.8%), registered single-digit unemployment rates for people of ages 15 and above in Q1.

Hormozgan had the highest labor force participation rate (46.1%) and Sistan-Baluchestan Province had the lowest labor force participation rate (33.4%), whereas Tehran registered a 40.3% participation rate in winter.

Zanjan registered the highest employment rate of 41.9% while Sistan-Baluchestan filed the lowest employment rate of 29.1% among all Iranian provinces. Tehran’s employment rate stood at 36.8%.

According to SCI, a total of 2,505,336 Iranians were unemployed in Q1, such that men’s unemployment stood at 9% while the rate for women hovered around 13.7%.

Over 1.9 million men and 602,074 women of ages 15 and above were jobless in Q1, according to the latest SCI report.

The unemployment rate was 10.7% for urban areas (2.03 million people) and 7.3% for rural areas (472,634 people).

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 24.5% in Q1, posting a 2% decrease while the unemployment rate of those between 18 and 35 years stood at 16.7%, posting a decline of 1.5% YOY.

Underemployment, the condition in which people in a labor force are employed for less than 44 hours of service per week, stood at 7.9%, down 2.1% year-on-year and was higher for men and those living in rural areas.

The Q1 underemployment rate for men and women stood at 8.9% and 3.2%, respectively, while it was 6.6% for urban areas and 11.5% for rural areas.

Unemployment rate for university graduates stood at 13.5% in Q1, posting a 3.3% decrease YOY. Higher education unemployment rate for men stood at 10.3% and that of women stuck around 20.2%.

The share of higher education unemployment from the total unemployed population was 36% in Q1, which indicates a decrease of 4.4% year-on-year.

The unemployment share of male and female graduates from the total unemployed population stood at 24.7% and 71.9%, respectively, while the share of higher education unemployment from the total unemployed population were 38.8% in urban areas and 23.9% in rural areas during the period.

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.

The total Q1 employment rate was 36.9% (22.96 million), down 2.9% compared with the same quarter of last Iranian year. Employment rates for men and women were 61.8% and 12.2%, respectively, which constituted 19.17 million men and 3.78 million women in Q1.

Employment rate was 35.7% or 16.99 million in urban areas and 40.8% or 5.97 million in rural areas.

The share of employment of university graduates stood at 25.2% of the total employed population, wherein male and female graduate employment was 21.3% and 45.1%, respectively. Graduate employment rates in urban and rural areas stood at 31.3% and 7.8% of the total population of job-holders.

Q1 statistics show that 33.5% of the country’s labor force worked more than 49 hours per week, indicating a 5.8% decrease over the same period of last year.

SCI Chief on Coronavirus Impact

The outbreak of coronavirus and its associated challenges have had a significant impact on Iranians in terms of labor force participation—the proportion of the adult population (ages 15 and above) who are employed or seeking jobs—employment and hours worked.

“A total of 2.76 million people [1.3 million men and 1.46 million women] were added to the number of inactive labor force in the first quarter; 14.8% of the employed population and 37.2% of unemployed population of the same period of last year were added to the population of people outside the labor force this year,” says Javad Hosseinzadeh, the head of SCI.

"A decrease in unemployment rate isn’t necessarily a sign of an improving economy. When people stop looking for jobs and drop out of the labor force, the unemployment rate will decline even though the true employment situation hasn’t improved. For an economy to run satisfactorily, the decline in unemployment rate must couple with an increase in both economic participation and employment rates," he said.

The SCI chief referred to an unprecedented decline in average working hours due to the pandemic and said the average working hours have decreased from 45.8 hours per week in Q1 of last fiscal year to 40.4 hours per week this spring.

“Generally, during the first quarter of the current year, 56.1% of the employed population worked 44 or more hours per week and 36.7% put in fewer than 44 hours while 7.2% were temporarily absent from work,” he said.

And in a further sign of the impact of coronavirus on Iran’s labor market, Hosseinzadeh said, “Out of 20 groups that economic activities are divided into, only five groups reported an increase in their employed population in Q1 compared with last year’s similar period. The highest increase in the number of employees was posted for healthcare and social workers, and the sharpest decline was registered in fields, including agriculture, industries and manufacturing, retail and wholesale, transportation, education as well as hotels and restaurants.”