Spring Unemployment at 12.6%

EghtesadOnline: Iran’s unemployment rate in the first quarter of the current fiscal year (March 21-June 21) stood at 12.6%, registering a 0.4% rise compared with last year's corresponding period and a 0.1% increase compared with the previous quarter.

News ID: ۷۷۷۴۱۲

05 July 2017

The new data in Statistical Center of Iran's latest report also show 3.36 million Iranians were unemployed this spring, including 10.6% of men (2.24 million) and 20.8% of women (1.11 million) aged 10 and above.

According to SCI, the unemployment rate was 14.4% for urban areas and 7.8% for rural areas.

The youth unemployment rate, i.e. the proportion of population of ages between 15 and 29, stood at 26.4% in spring, indicating a 1.5% rise compared with last year’s corresponding period and a 0.9% increase compared with the previous quarter, according to Financial Tribune.

SCI put the first quarter’s labor force participation rate—the proportion of population of ages 10 years and above that is economically active either employed or looking for work—at 40.6% or 26.67 million people, which marks a 1.1% rise year-on-year and a 1.7% increase compared with last winter.

Men’s and women’s economic participation rates were put at 64.5% and 16.4% respectively. The rate was 39.8% for urban areas and 43% for rural areas.

Part-time employees constitute 10.2% of Iran's employed population.

Ardabil and Khorasan Razavi provinces had the highest labor force participation rate (45.3%) and Sistan-Baluchestan had the lowest (30.8%). Tehran registered a 41.1% participation rate.

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 services sector employed 49.8% of the Iranian population, whereas industrial and agricultural sectors provided 31.5% and 18.7% of the population with jobs respectively.

The sector consists of wholesale and retail trade; restaurants and hotels; transport, storage and communications; financing, insurance, real estate and business services; as well as community, social, education, health and personal services.

Six provinces, namely Markazi Province (7.4%), Semnan (8.8%), Hamedan (8.9%), Fars (9.8%), Hormozgan (9.2%) and Mazandaran (9.8%), registered single-digit unemployment rates in spring.

Alborz Province filed the highest unemployment rate of 20.4% among all Iranian provinces. Tehran Province, wherein lies the capital city, registered an 11.2% unemployment rate.

Iran’s unemployment rate in the last fiscal year (ended March 2017) stood at 12.4%, registering a 1.4% rise compared with the year before.

> Iran's Major Economic Challenge

Economists are unanimous that high unemployment is among the gravest challenges facing Iran's economy.

Although the country is said to be among the top five countries in terms of job creation, as it generates as many as 704,000 jobs annually on average, according to senior presidential advisor, Masoud Nili, the trend is largely negated by the sharp rise in the number of job-seekers.

Nili said the huge wave of young people seeking employment were ignored by planning officials in the past and now President Rouhani’s administration is caught up in its thrall.

In the first decade after the Islamic Revolution of 1979, Iran experienced a baby boom and the population became larger and younger.

The Iranian population is now estimated to be about 80 million, with roughly 60% of ages 30 or younger.

“There were 9.3 million infants and children in the country in 2007-8, according to the National Population and Housing Census of that year. Ten years later, those children became teenagers and Iran had around 20 million students, which brought additional pressure on the Education Ministry,” he said.

Slamming the mushrooming higher education centers in the past 10 years, Nili said the unemployed baby boomers were somehow put out of sight, thanks to their widening participation in higher education.

According to the presidential advisor, former governments kept a lid on unemployment rates since the growth of universities acted as shock absorbers, offsetting the impact of this vast labor force.

The economist has put the unemployment rate of graduates at 41% and said youth unemployment has had serious repercussions for the government.

“There were 50,000 job applicants a year in the past, but today one million educated, young job-seekers are on the waiting list for employment. During the past two years, as many as 308,000 unemployed were added every quarter,” he said.

“Twelve out of 100 women were willing to work in the past. The figure has now risen to 16, thanks to the development of higher education.”

> Long-Term Unemployment Alarming

A new study shows long-term unemployment has reached alarming levels, especially among college graduates and women.

Out of the 2.7 million people seeking jobs today, 1.1 million have been searching for over a year to no avail, according to a study by the High Center for Education and Research on Management and Planning—an organization that operates under the president.

The study analyses data for the second quarter of the fiscal 2015-16. Jobs data in Iran are scarce and this is one of the few studies dealing with long-term unemployment. The previous study was conducted by Iran’s chamber of commerce in 2013-14.

Under the definition of the US Bureau of Labor Statistics, the long-term unemployment category includes those who remain jobless for 27 weeks or more. Most people become discouraged and drop out of the labor force after six months.

The study in question has expanded the time horizon for the definition to over 52 weeks, which lowers long-term unemployment numbers, but makes the numbers more worrisome.

Based on the data, 40% of Iran’s jobless fall into the long-term unemployed category. The ratio is higher among women at 52%, while over a third of jobless men have been searching for work for over a year.

The crisis is more acute among college graduates who are deemed more skilled in general, with 49.2% of unemployed graduates seeking a job for over a year. The figure falls to 33% for those without university degrees.

According to the 2013-14 study, nine out of 10 people that joined the workforce from 2006 to 2011 did not find jobs. The situation has worsened after the 2012-13 financial crisis in Iran, as it further suppressed the job market.

Long-term unemployment can be self-sustaining, as it is harder to find a job the longer one is out of work.

These results have far-reaching implications. For one, unemployment among the youth is worse, as they comprise a considerable section of Iran’s population. With most state pension funds already in trouble, this mass of jobless people will cause trouble for these funds up until their age of retirement.

Also, fertility rates, already falling in Iran, tend to drop off and life expectancy can decline when unemployment rates are high. The repercussions of Iran’s jobs crisis are multi-generational and will plague the Iranian society for years to come.