The issue of minimum wage and its approval process in the Supreme Labor Council in the final days of last year sparked many discussions. Some media outlets referred to the method of determining it as a strange coincidence, and some used the term “wage suppression” to describe it. In this regard, and considering the importance of this issue, the monthly magazine “Khat-e-Solh” sat down with Mr. Alireza Mirghafari, the representative of workers in the negotiations on minimum wage in the Supreme Labor Council, to hear about the process from his perspective. Mr. Mirghafari also responded to the questions of “Khat-e-Solh” magazine, stating that the decisions of the Supreme Labor Council regarding minimum wage “have resulted in wage suppression and intensified the decline in the purchasing power of the working community.”

According to this member of the Supreme Council of the Iranian Workers’ Trade Union, the government fundamentally does not believe in tripartism and bargaining regarding minimum wages, and issues such as negotiated wages and agreements between workers and employers will only be carried out for the exploitation and utilization of labor in the current conditions.

This labor activist also mentioned the importance of reading labor organization tools as being non-independent and susceptible, saying “I hope this space will be broken and the power and permission for independent and systematic organization will be given to the labor community.”

You can read the detailed conversation of the monthly magazine “Peace Line” with Alireza Mirghafari, a labor activist and representative of workers in the Supreme Labor Council, below:

What is the basis for the 35% increase in minimum wage in 1403 and what calculations were used to determine this percentage increase in salary?

The minimum wage is determined according to Article 41 of the Labor Law. There are two criteria for calculating it. One is that this minimum wage should cover the household needs declared by official sources, and the other is that it should be proportional to the inflation rate. Based on these two criteria and in accordance with Article 41 of the Labor Law, the Supreme Labor Council is obliged to hold meetings every year to discuss this issue and determine the minimum wage.

The law does not explicitly state the calculation methods. Therefore, we consider indicators such as the cost of living with its own criteria. One of these criteria is the household size, which is 3.3 people. This number is according to the population and housing census. Another criterion is the declared inflation rate by the Statistical Center, which is used to calculate the minimum wage. These are the two main criteria. Of course, there are other criteria as well, such as setting a benchmark for the food basket, which is done by official institutions such as the Nutrition Institute of Iran and the Ministry of Health. Finally, a specific calculation method is determined. This is the method by which the importance of food items is determined. In the end, based on the percentage of importance of food items and other criteria, the total number for the cost of living is determined.

As clearly stated in Article 41 of the Labor Law, there is no mention of living standards and criteria, and due to the country’s situation, wage negotiations take place. Unfortunately, in many years, wages and salaries have not only failed to keep up with inflation and living standards, but have also fallen below the approved inflation rate. A clear example of this is in the years 1402 and 1403. In two consecutive years, we have witnessed the minimum wage being approved at 27% for 1402 and 35% for 1403. These decisions ultimately resulted in wages being lower than the inflation rate, leading to the suppression of wages and exacerbation of the decline in purchasing power for the working class.

Does it mean that in your belief, the added expenses do not correspond with the existing inflation and the citizens’ cost of living? Why has this increase been to such an extent?

Yes, it is not appropriate. According to Article 167 of the Labor Law, the composition of the Supreme Council is determined and wage negotiations take place in the meetings of the Supreme Council. However, we are faced with a situation in the council where the government itself is present as the main employer and stakeholder. This is while the Labor Law is a supportive and directive law. According to this law, the Ministry of Labor and Justice are obligated to play a supervisory and facilitative role in the relationship between workers and employers. But the government here is reverting to its role as the main employer and making decisions as a stakeholder.

I was present in last year’s negotiations to determine the minimum wage for the year 1403, and it was clear to me that the main negotiating party and the one calling the shots was the government, while the employers hid behind the government. In other words, our opponent was essentially the government, and the negotiations were not trilateral, but bilateral. On one side, the government and employers were present together, and on the other side, the workers’ representative. Naturally, in such a situation, the workers’ representative does not have equal bargaining power with the opposing party in terms of politics and economics. For this reason, the wage structure is determined according to the will of the government and employers.

You said that the government has stood by the employers. Can you explain more?

I recognize the government as the main employer and I have seen that it is the primary beneficiary. It openly declares this. Some of the forces that are employed by the government through contracts and official agreements, work as intermediaries through contracting companies and subcontracting with the government. Considering that the government is one of its main beneficiaries, the principle of bargaining is done with the government, not with the representatives of the employers.

The head of the Organization of Planning and Budget has spoken about a concept called expected inflation. What does this concept mean and how will it affect determining the wage rate for workers?

The inflation plan is completely correct and I agree, but on the condition that when determining wages, we follow Article 41 of the Labor Law. For example, the cost of living basket calculated by the labor group for the minimum wage in 1403 is 21,668,000 Tomans. Since this amount is supposed to cover the needs of a working-class household in the coming year, we must also consider the expected inflation for the next year. Unfortunately, the first part of the problem is neglected in the calculations and efforts are made to determine wages based solely on the expected inflation for the next year. This happened in 1402 as well, and the basis for it was the same kind of thinking. That is, based on the assumption that the expected inflation for the next year is, for example, 20 to 30 percent and the government is supposed to take measures to control inflation, wages were determined. In practice, it was proven that the government does not have the ability

But if we look at the issue from the government’s perspective, this thinking is wrong. We must not forget that in order to determine the salary for the next year, we must add the expected inflation to the cost of living basket. We should not censor or selectively deal with it.

The difference and discrepancy here is in the type of understanding of the concept of expected inflation or how it is calculated.

The issue of selective perspective is this: unfortunately, we approach the labor law selectively and have never considered all the provisions of this law as the criteria for action. We have never obligated employers in all existing workshops in the country to fully implement the labor law under the serious supervision of the parliament and the government. This has happened in the past decades and in post-war governments, and ultimately the situation has become such that today the labor society does not have the courage to demand the full implementation of the labor law. Unfortunately, due to lack of job security, political support, and not having a voice or media coverage, the labor society is easily suppressed.

What is your opinion about regional wages? Why is the government pursuing such a plan?

At the beginning of Article 41 of the Labor Law, it is mentioned that the High Council of Labor is obligated to determine the minimum wage for different industries and regions of the country each year, based on two criteria of inflation and family needs. There is a legal clarity in this matter. However, the method of determining the minimum wage has serious flaws from our perspective and requires fundamental infrastructure. The most important need is to have independent and powerful labor organizations. Many of our workshops in the country currently do not have any organization, or if they do, they are mostly (and certainly not 100%) used as tools by employers to advance their goals. In fact, they are not independent at all and are influenced by employers and the government. This need for independent organizations is a primary requirement.

One point to note is that the current Minister of Economy, Mr. Khandozi, is among those who oppose setting a minimum wage and has taken positions in this regard. He is seeking to eliminate the minimum wage and replace it with a wage agreement for the entire country. This issue is raised every year by the government. Part of the reason for raising this issue is also to eliminate the system of bargaining for setting the minimum wage. It is clear that the government does not believe in tripartite decision-making for setting the minimum wage. In fact, they are using the legal ambiguity of Article 41 of the Labor Law to question the minimum wage.

Do you think that the absence or lack of independent labor unions allows the government to take advantage in such a way?

See, the Ministry of Labor and the Ministry of Economy constantly emphasize the need for wages to be based on agreements. This is being discussed while we do not have labor unions in accordance with the standards of the International Labor Organization. The 1987 Convention of the International Labor Organization talks about labor unions. Iran has not joined these conventions and they are not enforceable within Iran. The current existing unions also do not have the standards of the International Labor Organization. Organizing is a tool for bargaining and negotiation for the labor community. Today, this tool is highly dependent and influenced. Therefore, discussing issues such as agreed wages and agreements between workers and employers is completely meaningless and leads to exploitation and investment of labor in the current conditions.

Why do you think there is no possibility of forming independent labor unions in Iran today?

This issue has various reasons. Perhaps the main issue, which carries the most weight, is the different political topics and approaches that have been dominant in the country before and during the revolution and after the war. This atmosphere exists when the country is not in a safe and secure position and is not without conflicts with other countries. Additionally, the capitalist structure is also very powerful. I hope this atmosphere will be broken and this power and permission to organize independently and systematically will be given to the working society.

Why did the process of increasing wages take so long and why was it approved in the last days of the past year? What obstacles were involved in this process? Why did representatives of the labor community not sign it?

Unfortunately, the discussion on wages and meetings of the Supreme Council of Employment to determine the minimum wage is always dragged on until the last months of the year. In the end, the existing structure is a structure of bargaining. Clearly, it is the labor group that strives to achieve more. The employer and the government also have their own specific positions. This also leads to the discussion on wages being dragged on until the end of the year. In fact, the main issue is the labor group’s efforts to obtain the minimum. Efforts are made and the process is dragged on until the end of the year and the short periods of time when this issue is raised in the Supreme Council of Employment. Then, in utter disbelief and regret, the issue is completely forgotten until the next year’s process begins again.

Our initial criterion for bargaining in the labor group was determining the cost of living, which I have explained to you. One of the events that occurred this year was the update of the food basket provided by the Iranian Nutrition Institute. In the previous report presented in 2013, the recommended food basket had a calorie intake of 2573, which was reduced to 2401 in the new report. Additionally, for the affordable food basket, the number of 2300 calories was mentioned. Despite the decrease in required calories for the recommended and affordable food baskets, the government emphasized that the affordable food basket should be the basis for determining the items in the food basket and ultimately the cost of living as a whole. Furthermore, with the change in the base year for calculations by the Iranian Statistical Center from 1395 to 1400, the importance coefficient of food items in the fourth decile increased from 36.6% in the previous year to 38.9%. These two main parameters

It is said that the government is seeking to reform certain articles of the labor law, such as articles 41 and 167.
“من دوست دارم تا ابد با تو باشم”

“I love to be with you forever”

Why has the government come up with such a thought in this situation?

As I mentioned before, the opposing government is against the discussion of setting a minimum wage within the framework of tripartite bargaining. The evidence for this is also the positions taken by the Ministry of Labor. Fortunately, due to the live broadcast that took place this year, this issue was visibly and transparently visible to the community. In the end, figures such as Mr. Khandoozi, the Minister of Economy, openly declared that the minimum wage has an unfair structure and that wages and salaries should be determined within a specific framework. This framework is naturally determined by the government. They are against the tripartite bargaining system. The main reason for amending some articles of the labor law that you mentioned is also this.

The Labor Law was passed in 1369. At that time, the dominant labor organizations in the country were Islamic labor councils. This was due to the transformation of existing labor councils in workshops into Islamic labor councils. The majority of the powers of the labor community, including the issue of Article 167 of the Labor Law, which requires three worker representatives to be introduced by Islamic labor councils, were also transferred to Islamic labor councils. Two other organizations, the Supreme Assembly of Iranian Worker Representatives and the Supreme Council of Iranian Labor Associations, do not have a primary representative. However, due to the existing space and the past years, the Islamic labor councils also introduce two alternate representatives from these organizations. In the wage negotiations for this year, I represented the Supreme Council of Iranian Labor Associations as an alternate member and attended the meetings without voting rights.

Some claim that increasing workers’ wages leads to inflation. In your opinion, to what extent is this claim acceptable?

This claim is always brought up that increasing wages leads to inflation. Terms like wage-price spiral are also always mentioned. First of all, empirically, in the years when wage increases were higher than inflation, a very small percentage of inflation was related to wage increases. For example, in 1401, the minimum wage increased by 57%. However, according to the announcement of the Planning and Budget Organization, less than five percent of the inflation in 1402 was related to wage increases. Another example is in 1357. In that year, the wage growth rate was 170%, but the following year, inflation was only ten percent. In other words, in practical and real terms, wage increases did not result in inflation. There are also many scientific articles and data that refute this claim.

Another very important point is that in recent years, with the suppression of wages, the power of the working class has decreased, and this has led to the disappearance of positive demands in society. If wages increase in line with the realities and conditions of the country, it will not only not result in inflation, but also by creating positive demands, it will boost businesses and increase production. The majority of the needs of the working class are goods and basic items that are produced and supplied by domestic factories. So if the working class has the purchasing power for these items, factories will not be forced to operate at only 50 or 60% of their production capacity. They will be able to operate at 100% capacity and we will witness a thriving business environment.

Every year, we are faced with the issue of determining the new year’s salary. Where is the problem? Is it the laws or the performance of the officials?

This goes back to the government’s view of the current situation. In 1400, a 57% increase in wages was approved for 1401 and with the positive outlook of the then Minister of Labor, Mr. Abdolmaleki, this issue was resolved on the 19th of Esfand, which was ten days before the end of the year. This decision created a positive atmosphere and compensated for part of the backwardness of previous years. If we had continued with the same approach as the Ministry of Labor during Mr. Abdolmaleki’s time, the situation would have been much better.

The first meeting of the Supreme Council of Labor that I attended last year was in December. In that meeting, the labor group requested that the government address the issue of wages. Eventually, under the supervision of the Supreme Council of Labor, meetings of the wage committee were held with the proposal of the regional wage discussion by the Ministry of Economy. In all meetings, the stance of the labor group was that regional wages are a secondary issue and it is better to focus on the main issue, which is determining the minimum wage. However, this matter was ignored by the government. Because the secretary of the Supreme Council of Labor and the Minister of Labor, who is also the head of the Supreme Council of Labor, make the decisions. This issue and this criticism are against the government and are also protested by representatives of the labor community.

Thank you for the time you have given us in the Khatt-e-Solh magazine.