Workers’ Minimum Wage to Rise by 14.5%

EghtesadOnline: After a 12-hour session, the Supreme Labor Council agreed to raise workers’ minimum wage for the next fiscal year (March 2017-18) by 14.5% to 9.3 million rials ($244.7) per month.

News ID: ۷۷۴۶۸۷

19 March 2017

The council also agreed to raise other wage levels by 12%, increasing it by 6,768 rials ($1.78) per day till the yearend.

The trilateral session, which was the third one held in 10 days, started on Tuesday and concluded the next morning. It was attended by government officials such as Minister of Cooperatives, Labor and Social Welfare Ali Rabiei, and the representatives of workers and employers.

Most of the 12 hours was spent on bargaining, Mehr News Agency reported.

According to Financial Tribune, workers' representatives were seeking a 30% growth, while government officials put their foot down on a maximum of 10%. Wednesday’s outcome suggests that they resolved their differences after all.

This is while in their first meeting in early March, the council agreed to determine the living wage and consider it as a base for setting next year’s minimum wage. It agreed upon a monthly income of 24.8 million rials ($661) as the living wage for a family of three and a half members. It took the council more than two decades since the introduction of the Iranian Labor Law to determine this figure.

A living wage is necessary for a worker to meet one’s basic needs. These needs include shelter and other essentials such as clothing and nutrition.

As stated before by the skeptical representatives of workers, the recognition of living wage by the government did not lead to any substantial rise in minimum wage.

“Article 41 [of the labor law] clearly indicates that the minimum wage, aside from the type of the work done, must sufficiently cover the material needs of a family whose size is indicated by the Supreme Labor Council. But to this day, both the government and the employers are reluctant to implement the law,” Ali Khodaei, workers’ representative in the council, was quoted as saying by the Persian daily Etemad.

> Minimum Wage and Inflation

According to Mehr News Agency, the 14.5% rise in workers’ minimum wage is one of the lowest wage growths witnessed in the last 10 years, though the economy has also experienced one of the lowest inflation rate in a decade.

The law indicates that the minimum wage for each year must be set in accordance with inflation during the previous 12 months. And for the period, the minimum wage growth exceeded inflation for five years.

The minimum wage stood at 1.83 million rials and grew the most compared to inflation in the fiscal March 2007-8, which was 22% versus 11.9% respectively. Its lowest growth, reaching up to 6 million rials, was also recorded in the fiscal March 2014-15, as inflation soared to 34.7% the year before but wages grew only 25%.

There’s also the expectation of rising inflation next year. The International Monetary Fund, in its latest report, predicted that Iran’s inflation will average about 9% in the fiscal 2016-17, before temporarily rising to just over 11% in 2017-18 due to the pass-through from a recent exchange rate depreciation.

In its latest report, the Central Bank of Iran announced an average inflation rate of 8.73% for the 12 months to February 18, indicating the first major rise since June 2015.

All in all, according to Hassan Sadeqi, the deputy head of Workers’ House, the rise in workers’ salaries was 27% less than CBI’s official inflation during 2010-13.