Oversized Gov’t Imposing Crushing Burden on Iran Economy

EghtesadOnline: In Iran, there is one civil servant for every 26 to 28 people whereas the international average is one for every 600 to 800 people, Iran Productivity Association announced.

News ID: ۷۷۶۷۰۷

03 June 2017

The excessive number of government employees has become a recurrent subject of discussion among officials and experts these days.

“The surplus workforce [in state bodies] is consuming 90% of the current budget, leaving no breathing room for other activities,” said Parliament Speaker Ali Larijani last year.

Oil Minister Bijan Namdar Zanganeh has also complained of 100,000 excessive workforce in the ministry under his watch, saying they were all employed during the eight-year tenure of former president, Mahmoud Ahmadinejad, the Persian daily Shahrvand reported.

Last month, according to Financial Tribune, the ministries of energy and education also announced that they have 25,700 and 50,000 workforce in excess respectively. Every now and then, other ministries and governmental organizations speak of the same problem.

Presidential advisor, Mohammad Ali Najafi, said 40% of the workforce employed in Iranian governmental bodies are either redundant or incompetent.

“This lowers productivity. The nepotistic hiring of under-motivated staff has deteriorated conditions in state organizations,” he said.

According to Najafi, in Iran Khordo, Iran’s biggest and oldest auto manufacturer, for instance, some 12,000 surplus staff have been employed.

“The Fifth Five-Year Development Plan (2011-16) stipulated that a third of Iran’s economic growth was to be derived from growth in productivity. Yet, inept management over governmental organizations’ workforce prevented us from achieving that goal,” he said.

The five-year development plans, prepared by the Planning and Budget Organization in consultation with the parliament and the Guardians Council, provide broad directions for a wide range of economic reforms and social priorities.

Last Iranian year (ended March 20, 2017) marked the final year of the Fifth Plan after the 1979 Islamic Revolution.

The solution, says Najafi, is to bring about a major reform in the economic structure, one where the private sector is fortified and can play a more significant role.

The problem, according to lawmaker Abdolreza Azizi, stems from the Iranians’ inherent and old-school tendency to be employed by the government.

“Such a mindset has an important role to play in the country’s unemployment rate,” he said.

Economist Mehdi Pazouki is of the opinion that the process of employing civil servants is often based on nepotism and preferential treatment rather than competence.

“Therefore, governmental bodies are increasingly struggling with lack of expert and efficient workforce. There has been a visible ineptitude in the management of these bodies,” he said.

“Competent graduates from Iran’s most renowned universities are reluctant to work for the government as they see high positions are held by inept people in those places and don’t wish to subject themselves to unfair treatment. They prefer to work in the private sector instead.”

First Vice President Es’haq Jahangiri has also censured the large size of the government, blaming it for the disarray in state finances.