High Cost of Living Hassles Tehranis

EghtesadOnline: High cost of living, residents’ inability to save money, frantic pace of inflation and the ever-rising population of people living in poor neighborhoods are some of the hardships people living in Tehran Province experience.

News ID: ۷۸۳۷۶۹

26 August 2018

Official figures show that the cost of living in Tehran is 40-45% higher than in other provinces.

The income of households living in Tehran averages at 35 million rials ($368) per month. The figure is 15 million rials ($157) more than the national average. But do the locals of Tehran feel financially secure? The response of the head of Management and Planning Organization of Tehran Province is negative.

According to Nematollah Torki, despite the higher income made by residents of Tehran compared to their compatriots in other provinces, their costs are 40-45% higher than the national average, Financial Tribune reported.

In other provinces, people are capable of saving up to 35% of their income of 20 million rials ($210) but Tehran’s households cannot afford to save on such an income, the Persian weekly Tejarat-e Farda reported.

As for Tehran’s labor market, the latest statistics say labor force participation rate in Tehran stood at 41.1% in the first quarter of the last fiscal year (March 21-June 21), indicating a higher participation rate than the average for the country (40.6%).

Labor force participation rate is the proportion of the population of ages 10 years and above that is economically active either employed or looking for work.

In the same period, Tehran’s labor force participation dropped to 40.1%, which is lower than the average of 41.1%.

The same trend is true about two other labor indexes: The average employment rate in the country was 35.5% in the same period while it was 36.5% in Tehran. The employment rate improved to 36.1% for the country in the first quarter of the current year while it fell by 1.3% to hit 35.2% for Tehran in the last quarter.

The unemployment rate in Tehran increased from 11.2% in last year’s Q1 to 12.3% in the current year’s Q1. The average unemployment rate in the country decreased from 12.6% in the last year’s Q1 to 12.1% in the current year’s Q1.

These are not Tehran’s worst economic indexes. Tehran registered the highest monthly urban inflation rate among all provinces with 7.6% in the month ending July 22.

While the year-on-year consumer price index for the country increased by 13.8% in this month, it grew by 17.4% in Tehran, suggesting that households living in Tehran had to spend 3.5% more to purchase goods and services compared to households living in other Iranian provinces.

The goods and services CPI of Tehran in the 12-month period ending July 22 is fairly better, yet it is still 1.2% above the average for the whole country. The 12-month period inflation rate, ending July 22, stood at 9.9% for Tehran compared with 8.7% for the country.

Strong Suits

What do residents of Tehran get in return for the costs they bear for living in the province wherein the namesake capital city lies?

Tehran is the second province of the country with the highest gross domestic product, excluding oil. It is even ranked third on the list of provinces in terms of GDP, including oil revenues.

According to figures released by the Ministry of Cooperatives, Labor and Social Welfare, oil revenues account for 1.38% of Tehran’s gross domestic product.

Some 50% of home sale contracts in the country are signed in Tehran.

Tehran accounts for one-fifth of the country’s foreign trade.

According to Tehran Municipality, close to 25% of Iran’s GDP, 35% of industries, 72% of services, 50% of knowledge-based companies and 80% of inventions originate from Tehran.

In view of these figures on Tehran’s significant share in the economy, it’s no wonder the pace of immigration to the province is so high. Latest figures show Tehran accounted for 20% of total immigration of the country in the fiscal 2016-17, up from 17% in the fiscal 2011-12.

The positive features of the city of Tehran, as surveyed by the Ministry of Culture and Islamic Guidance, include more jobs, higher income, more public facilities compared to other cities and greater likelihood of making advancement.

Out of 4.2 million households living in Tehran, four million live in urban areas and 200,000 in rural areas. About 93% of Tehran’s 13.2 million population are literate.

The findings of the recent National Population and Housing Census show population growth in Tehran is mainly due to a large influx of migrants, rather than the natural increase in population, i.e. the difference between the birthrate and death rate.

Tehran’s migrant population has increased to 20.2% of Iran’s total number of migrants from 17.7% in the fiscal 2011-12. Migrants constitute as much as 88% of the increase in Tehran’s population (1.084 million) over the past five years, the Ministry of Roads and Urban Development reported.