One of the ongoing dissatisfactions regarding setting a minimum wage in Iran is that the cost of living for workers always exceeds the approved wage. For example, comparing the approved wage to the cost of living for workers shows that in the past five years, the cost of living for workers has consistently been higher than the minimum approved wage.

Due to the lack of a clear government approach, the results of lengthy and challenging wage negotiations have not only failed to improve the well-being of workers, but have also made life more difficult for them. As this issue has a significant impact on various aspects of the country’s economy, a serious review of the current minimum wage structure in Iran is necessary. To further examine this issue, we sat down for a conversation with Mohsen Ezzakhah, an economist and former deputy of parliament and parliamentary affairs at the Social Security Organization.

This year, the government opposed the increase in minimum wages based on the argument that wage growth leads to inflation, in violation of Article 41 of the Labor Law. However, we have seen in previous years that the government’s desire has ultimately been achieved. With this approach, what impact does the Supreme Labor Council have on determining wages?

According to the Labor Law, the determination of the minimum wage is done by the Supreme Labor Council using the traditional bargaining formula. It must first be determined when bargaining will result in a fair determination of wages. In the absence of organizations or labor unions that truly represent the will and desire of the workers, bargaining is generally meaningless. As we have seen in previous years, the determination of workers’ wages in the Supreme Labor Council has been approved even with the opposition of workers’ representatives; as we saw in the final days of 1402, the workers’ representative left the meeting without signing the approved minimum wage, but ultimately this wage rate became final.

In the past years, we have repeatedly emphasized that the meetings of the Supreme Council of Labor are held ceremoniously and the determination of workers’ wages is in the hands of the government. This has been the practice in previous governments and is one of the serious weaknesses in the field of labor. Unfortunately, neither the government has a commitment to enforcing the law, nor has this culture been formed in our country.

According to Article 41 of the Labor Law, determining wages is done in the tripartite council, in which labor representatives are one side. In this council, logical discussions and trade union negotiations should take place, and labor representatives should be able to defend the rights of the working community with complete independence and discuss wages in accordance with the cost of living. However, in practice, we see that the government does not pay attention to labor representatives and has no belief in tripartism and working with social partners. At the same time, because of its power and influence, it sets the wage rate at a figure it deems reasonable and imposes it. Last year, you may remember that the wage rate was approved at half the amount it should have been, and labor representatives signed it. Now, either some of the representatives are affiliated, or they are intimidated, or some do not have the ability to negotiate and uphold the rights of workers. This weakness affects the labor representatives. But what is most

If the government intends to improve the lives of the workforce in terms of economic and livelihood aspects, its main duty is to improve the key macroeconomic indicators of the country. As long as these indicators are not improved and economic policies are not focused on promoting justice, we cannot expect the employer society to increase wages and salaries.

I would like to express my gratitude for my share of the noble silence of the workforce regarding the economic hardships they have endured and continue to endure. However, if we want to address the problems of the workers based on the existing reality and considering the minimum wage, it is beyond the capabilities of the employers and we cannot expect much from them. We can only hope that the government will make necessary changes in the macroeconomy and improve the business environment to strengthen the living standards and livelihoods of the vulnerable and workers.

The question being raised here is whether there is really a meaningful relationship between inflation and minimum wage, as believed by the government and employers.

Usually, governments and employers believe that there is a significant relationship between increasing workers’ wages and increasing inflation rates. The government claims that increasing the minimum wage in proportion to inflation will result in a budget deficit and ultimately impose more inflation on the economy. For this reason, it opposes it. However, the question is, how is it that due to inflation, government revenues (through tax growth) increase, but workers’ incomes should not increase? The government, which claims to have created economic growth and achieved its plans, must compensate for the people’s sacrifices.

This issue is also true for employers; in a way that despite the statistics that are sometimes mentioned, the share of wages in the total cost of goods and services in various industries is different. For example, in some industries it may be up to 15%, but in most cases the share of wages is less than 10%. I believe that what has caused the crisis in workshops today is more than just the share of wages, it is the share of other production factors. For example, there is a problem of liquidity and high bank profits. These factors have a greater impact on the final price of goods and the share of wages is not essential. Therefore, it must be acknowledged that in a situation where the share of currency and price shocks has a significant impact on the inflation rate, the share of wage increases in the inflation rate is very insignificant.

Based on the published statistics by the Statistical Center of Iran, which shows the annual increase in wages and inflation rates from 1393 to 1402, in 1401, which had the highest increase in wages in a decade – 57.4% – inflation in 1400, which was 40.2%, reached 45.8% in 1401. As we know, the removal of preferential currency from the import of essential goods and the 7-fold increase in the exchange rate of essential goods caused a significant shock to the general price level, and monthly and point-to-point inflation in the month of Shahrivar 1401, compared to the same month in 1400, reached over 50%. Therefore, the 57% increase in workers’ wages in the annual inflation rate mentioned was not significant due to the reasons mentioned. Of course, since wages are one of the direct costs in the total price of manufactured goods in production units and one of

What is the criteria for determining the minimum wage? In the world, how is the wage of workers usually determined?

Economically, several indicators are considered to determine the minimum wage, which are usually followed in all countries. Reducing poverty and inequality through increasing the wages of low-income workers, increasing the productivity of businesses by raising labor costs or increasing the motivation of workers, and promoting fairness due to the lack of fair or competitive wage levels resulting from the labor market are among the mentioned criteria.

In Iran, according to Article 41 of the Labor Law, the inflation rate and the cost of living basket are used as criteria for determining wages. In recent years, chronic inflation has caused a significant decrease in the purchasing power of Iranian households, leading to an increase in poverty. As a result, the workforce is seeking to maintain a minimum standard of living by increasing the minimum wage. On the other hand, economic sanctions and inflation have had a significant impact on Iranian employers, and they are seeking to set a minimum wage that does not exceed their ability to cover the costs of goods and services. Additionally, setting a minimum wage has implications for the overall economy of the country.

In some countries, the central government determines the minimum national wage. However, some countries follow a specific law or formula to determine the minimum wage. For example, in France, the minimum wage is tied to the consumer price index and is updated annually. The International Labour Organization also introduces the calculation of the poverty line as one of the main factors for determining the minimum wage in each country. In fact, the poverty line is the minimum level necessary to achieve a fair minimum level of welfare for the workforce.

In the world, poverty line is usually the main criterion for determining wages; meaning that if we have an inflation rate and determine a cost of living basket, it is necessary to also determine the poverty line. However, in Iran, the government usually does not have an interest in expressing their opinion transparently and considers the poverty line as confidential. Last year, the Welfare Deputy of the Ministry of Labor announced that we have defined the absolute poverty line to support vulnerable groups. If there is not much difference between the relative poverty line and the absolute poverty line, it is not less; because those who are below the relative poverty line and are in need of basic and fundamental support, have a larger population and therefore have a higher priority. The wages of all rights holders, including employees, workers, and retirees, should be determined based on the relative poverty line. Based on the estimates that were conducted last year through field research by private sector groups, the relative poverty line that should be the benchmark for minimum wages

Some discussions have been raised in the media regarding determining wages regionally or by the parliament. Considering your expertise and experience in this field, what is your approach towards determining wages?

The regional wage discussion has been ongoing for over five years and has been extensively reviewed in this year’s High Council of Employment, but no agreement has been reached on its implementation. Many countries, such as Japan and Korea, implement this regional wage, but they have national wages. Based on this, they determine the basic wages for all regions, industries, etc. and then determine and pay the wages for each individual according to the industry they are employed in. However, the issue is that those countries have the ability to implement and maintain economic stability. In a country like Iran, which lacks the necessary economic stability and balance, implementing regional wages does not seem logical.

According to official statistics announced by the government, we have between five to six million informal workers in the country who are not covered by labor laws, social security, etc. In other words, despite the existence of Article 41 of the Labor Law, the Supreme Labor Council, the Labor Office, etc. in the country, there are still workers who are working informally and are not entitled to their legal rights. It seems that in the current situation of sanctions and high inflation, it is not a suitable situation to regionalize workers’ wages.

As for the answer to your next question, it should be said that what has been common in the world is for the amount of worker’s wages to be determined through union bargaining, which has also been a successful process. The basis for determining wages should be based on the rules of the International Labor Organization, which states that wages should be determined based on the cost of living and inflation index, which is not an unreasonable statement. What was passed in the late 1960s as part of the Labor Law, took into account all aspects and circumstances of the matter, and how any task should be delegated. It is illogical to propose a new legislation and delegate the inherent responsibilities and powers of the Ministry of Labor to the parliament. The Labor Law clearly states how the process of determining wages should be and what meetings should be held, and it is a specialized task. When we have articles 41 and 167 of the Labor Law, which clearly define the duties of the Supreme Labor Council, why

Thank you for the opportunity you have given us to use the peace line.