Gov’t, Workers, Employers Deadlocked in Setting Minimum Wage

EghtesadOnline: With only a day left for the Supreme Labor Council to set the minimum wage for the upcoming Iranian year, negotiations are still ongoing among representatives of workers, employers and government officials after they failed to reach an agreement in a dozen sessions.

News ID: ۷۸۲۲۸۸

10 April 2018

Representatives of workers, going to bat for close to 15 million Iranians, are united behind the demand for an increase in the minimum wage based on the living wage—a theoretical wage level that allows an individual to afford adequate shelter, food and other necessities.

This comes as the employers’ representatives believe the country’s industries are not seeing an increase in productivity and earnings, and any sharp rise in minimum wage would put a damper on companies and businesses.

Yet, both groups believe that workers’ wages should exceed the inflation rate, which has been the case since 2014-15, Financial Tribune reported.

According to Cooperatives Minister Ali Rabiei, the proposed wage hikes range from 8.2% to 30%, but the three sides are moving closer to a compromise.

“It is my hope to see all three parties sign off on the agreement, and not just two of the partners,” he was quoted as saying by IRNA early Sunday.

Last Tuesday, the Supreme Labor Council agreed to set the living wage for a 3.3-member household in the current year (March 2017-18) at 26.7 million rials ($568), close to 1.81 million rials ($38.5) more than that of last year.

Food and beverages expenditures accounted for 25.7% of the figure and non-food items made up 74.3% of the households’ expenditures.

It is two years now that the council sets the living wage of Iranian households for the following year. But a look at the outcome of the council’s meetings shows the government and the employers were always after setting the minimum wage based on the average inflation rate announced by the Central Bank of Iran.

The decision to determine the living wage came after more than two decades since the introduction of the Iranian Labor Law. Clause 2 of Article 41 of the law calls for a balance between minimum and living wage but, according to a workers’ rights activist, government and employers’ failure to comply with the law has created a huge gap between what workers need and what they receive in actuality.

“There are two approaches to setting workers’ wages: Either to determine the minimum wage based on the average inflation rate or to calculate the living wage and consider it as a base for setting the minimum wage,” the Persian weekly Tejarat-e Farda quoted Hassan Sadeqi as saying.

“The average inflation rates posted for 2013-14 and 2012-13 were 35% and 30% whereas the workers’ salaries saw a rise of 25% in both years. In 2011-12 and 2010-11, the inflation rate stood at 21.5% and 12% compared to the 18% and 9% rise in wages. All in all, the rise in workers’ salaries was 27% less than CBI’s official inflation between 2010-11 and 2013-14,” he said.

Workers’ wages exceeded inflation rates routinely under President Hassan Rouhani, “but the 23% gap between worker’s income and inflation rate compared to 2010-11 is still there”.

The current year (March 2017-18)’s minimum wage stood at 9.3 million rials ($197), 14.5% more than the last fiscal.