Last updated:

January 2, 2026

Ineffective criteria in determining minimum wage/ Ehsan Haghani

Work and using one’s own hands to provide for their own and their family’s needs has been one of the most common ways of life for humans since ancient times. The emergence of the Industrial Revolution and the expansion of industries, along with the increase in demand for labor on one hand and the effort to reduce production costs in the realm of economic competition on the other, have presented serious and important opportunities and challenges for workers, who gradually came to be known as the “working class” and became a significant and influential part of society.

The main economic, social, and political issue for industrial owners and employers in general has always been hindering the equal and balanced contractual relationship between them and the working class. Wherever there is no interference or supervision from a force beyond the worker and employer, and there are no rules to ensure minimum standards in the work process, exploitation of workers and their decline in status to mere tools and instruments of production has occurred. This set of human concerns has prompted intellectuals, especially legal scholars, to go beyond a simple contractual relationship and examine the relationship between workers and employers with more conscience and strictness. Furthermore, the efforts and struggles of workers to obtain their rights against employers have ultimately forced governments to enact laws and regulations that cannot be ignored or set aside even by the agreement of both parties (workers and employers) in order to minimize the possibility of neglecting and disregarding the rights of workers.

One of the most important elements that plays a fundamental role in the relationship between workers and employers and determines its fairness and balance is the “minimum wage” of the worker. This issue is of such importance that it has been mentioned in important international documents such as the Universal Declaration of Human Rights. Article 23, paragraph 3 of the declaration states: “Everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.” Article 7 of the International Covenant on Economic, Social and Cultural Rights also addresses this issue and in particular, paragraph (a) of this article provides criteria for determining workers’ wages. This article states: “The States Parties to this Covenant recognize the right of everyone to the enjoyment of just and favorable conditions of work which ensure, in particular, remuneration which provides all workers, as a minimum, with: (a) Fair wages and

A- A wage that provides at least the following for all workers:

1. Fair wages and equal pay for work of equal value without any discrimination, especially ensuring that women are not in a lower position than men and receive equal pay for equal work.

2- Sufficient benefits for them and their families according to the regulations of this covenant.

In “Contract No. 131 of the International Labour Organization on the Determination of Minimum Wages”, which was announced as mandatory on April 29, 1972 (9 Ordibehesht 1351), the subject of minimum wages and their determination is discussed in detail and in a specialized manner. Article 1 of this contract deals with the system and procedure for determining minimum wages, and in paragraphs 1 and 2 it is stated as follows: 1- Each member of the International Labour Organization that approves and joins this contract is committed to establishing a minimum wage system that covers all wage-earning groups whose employment conditions will be suitable for inclusion in this contract. 2- The competent authority in each country is obliged to determine the wage-earning groups covered by this contract with the consent or after full consultation with representative organizations of employers and workers – where such organizations exist.

In Article 3 of this contract, criteria have also been proposed for determining the minimum wage as follows: “Factors that are taken into consideration in determining minimum wages, to the extent possible and in accordance with national conditions and customs, must include these cases:

The needs of workers and their families, taking into account the overall level of wages in the country, cost of living, social security benefits, and relative standard of living compared to other social groups.

Economic factors, including the necessities of economic development, productivity level, and the desire to achieve and maintain high levels of employment.

In different countries around the world, laws have been passed to protect the rights of workers and especially to determine a minimum wage, following international rules and influenced by the struggles and protests of workers and labor unions, and under the guidance of human sciences. In France, the first legal action to determine a minimum wage was taken in 1915. However, this law only applied to female workers and only in the clothing industry. The first comprehensive law in this regard was passed on February 11, 1950, in which the authority to determine the minimum wage was entrusted to a council known as the “Supreme Council for Collective Labor Agreements.” Since then, various laws and regulations have been enacted to suit the circumstances of the time. The provisions related to determining the minimum wage are detailed in the third section of the second book of the French Labor Law. The main criteria considered in these articles include the purchasing power of workers, their contribution to the country’s economic development, and the type of work

In the legal system of Iran, the first labor law was passed in 1325 and in the ninth chapter and the first clause of article 24 of this law, the method of determining the minimum wage was addressed. Clause 1 of article 24 stated: “Clause 1: The minimum wage of workers in different parts of the country must be such that it covers the cost of living and their family (according to relevant regulations). The amount of minimum wage in different parts will be determined by the aforementioned committee in article 31 at the beginning of each year for a specified period of one year and will be implemented in a timely manner with the approval of the Supreme Council of Labor. If, within a year, due to extraordinary circumstances, it is necessary to change the amount of minimum wage, it will be reconsidered upon the request of workers or employers. ” Article 34 of this law also established an institution called the “Supreme Council of Labor” which continued to exist under the

In 1958, another law with the same title, the Labor Law, was passed, which also addressed the procedures and criteria for determining minimum wages. Article 22 of this law stated: “The minimum wage for ordinary workers should be such that it can provide for the livelihood of a man, a woman, and two children, taking into account the essential needs and cost of living in different parts of the country. The minimum wage in different parts of the country or for different industries shall be proposed every two years by a committee composed of representatives from the government, employers, and workers, in accordance with a specific regulation, and after being approved by the Ministry of Labor and the Supreme Council of Labor, it shall be implemented in a timely manner. As long as a new minimum wage is not determined, the previous minimum wage shall remain in effect.”

After the 1357 revolution, the approval of the new labor law faced many obstacles and difficulties, the main one being the opposition of the Guardian Council to some of the provisions of this law. The heavy burden of fiqh (Islamic jurisprudence) always struggled with new issues and the modern world in general, and was unable to keep up with society. The fiqh scholars looked at the provisions intended to protect workers with doubt. The labor contract, which according to fiqh is not much different from renting individuals (Articles 512 to 518 of the Civil Code) and is considered similar to renting objects, is a private contract in which the government and the legislator have no right to interfere. The only criterion for determining the worker’s wages is the satisfaction of both parties (worker and employer) in each contract, even though this satisfaction may be achieved under unequal conditions and lead to exploitation of the worker. Finally, after the Guardian Council did not back down from its inflexible position,

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1- The minimum wage of workers is determined based on the inflation rate announced by the Central Bank of the Islamic Republic of Iran.

2- The minimum wage should be sufficient to support a family’s life, without taking into account the physical and mental characteristics of workers and the nature of the assigned work, as announced by official sources.

Directive – Employers are obligated to pay no less than the newly determined minimum wage to any worker for work performed during the designated legal hours, and in case of violation, the guarantor will be responsible for paying the difference between the wage paid and the new minimum wage.

As it can be observed, among the various criteria that can be considered in determining the minimum wage and making it fairer according to the conditions of society and its changes, the legislator has only set two criteria: providing for the needs of the worker and their family, and the announced inflation rate by the central bank. These criteria, recommended by the International Labor Organization to countries, as well as criteria used in developed countries to motivate workers and involve them in the development and progress of the country, are not evident in the current labor law of Iran. Even the reference to the announced inflation rate by the central bank for determining the annual increase in workers’ wages is not appropriate, as it is a foreign and unrealistic reference to the economic realities of the country. This is because the announced inflation rate by the central bank is largely influenced by the economic policies of this government institution and is far from the tangible realities of society. As a result, it cannot be a suitable criterion for updating workers’ wages and

In Article 167 of the Labor Law, the composition of the Supreme Labor Council is also specified. According to this article, the members of the Supreme Labor Council include: A- the Minister of Cooperatives, Labor and Social Welfare as the head of the council, B- two knowledgeable and informed individuals in social and economic issues, proposed by the Minister of Cooperatives, Labor and Social Welfare and approved by the Council of Ministers, one of whom will be chosen from the members of the Supreme Industrial Council, C- three representatives of employers (one from the agricultural sector) chosen by employers, D- three representatives of workers (one from the agricultural sector) chosen by the Supreme Council of Islamic Labor Councils.

As the government in Iran is considered a major employer in the economy, and what has happened in the past three decades under the name of privatization has led to an increase in the share of government-affiliated institutions and even the government itself in the country’s economy, as a result, workers in this council have had their hands tied and have not been able to have much influence in determining the annual minimum wage. To the extent that sometimes, as happened in the final days of last year, they have been denied the right to attend the meeting of the Supreme Council of Labor to determine the minimum wage for workers.

Therefore, it can be concluded that in the current legal system, the will of workers as a major part of stakeholders, does not play a significant role in determining the minimum wage and there are no real, up-to-date and effective criteria for its determination in the law. The result of this legal inadequacy has a growing impact on the livelihood of the working class and increases their vulnerability.

Created By: Ehsan Haghi
April 20, 2024

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