Friday, December 28, 2012

Iran is in social and economic meltdown

From Commentator, 26 December 2012 by Wahied Wahdat-Hagh*


With unemployment soaring and the advent of hyperinflation, the plight of ordinary workers just gets worse and worse

Begging in Tehran
Workers' strikes and protests are gathering pace in Iran. In 2012, there were more labor protests than for longer than many can remember. Vast numbers live below the poverty line. Non-payment of wages for months at a time is a fact of life for millions. Inflation is soaring. Beggars in veils line the streets.
And this is not merely a product of sanctions, though they are certainly biting. Gross mismanagement by Mahmoud Ahmadinejad's government is doing terrible damage to the social fabric all on its own.
Many blame the ham-fisted manner in which Ahmedinejad has sought to privatize significant swathes of the economy.
As BBC Farsi reported in April 2012, privatization led to mass layoffs across the country. Iranian newspapers reported cases in which workers had not been paid for as much as two years.
Corruption and incompetence in the banking sector also play a big role in the disastrous Iranian economy. In one widely reported case, a pipe-making company went bankrupt following privatization only for an entrepreneur promising to resuscitate it to secure a hefty loan from an Iranian bank and then promptly leave the country, taking the cash with him. That is not an isolated example.
Unsurprisingly, people are not taking this lying down.
According to Radio Farda, the Persian broadcasting service of Radio Free Europe/Radio Liberty, 20,000 Iranian workers wrote an open letter to the Iranian Minister of Labor in September 2012 complaining about non-payment of wages and the fact that the most Iranian workers live below the poverty line.
Typical monthly wages range between $240 and $320 as against an official poverty line of $800 a month. But it's even worse than it looks. Steve Hanke, Professor of Applied Economics at the Johns Hopkins University, reckons that following the collapse of the Iranian currency earlier this year, monthly inflation rates may be running at 70 percent.
With average wages already so far below the poverty line, hyperinflation is making it increasingly difficult for large numbers of Iranians to put food on the table.
In such conditions, unemployment is predictably soaring. Nobody believes the official reports that the jobless rate (as reported for the first three months of the year) stands at around 13 percent. Most analysts believe it is at least double that level and rising fast.
Working conditions for many who do have jobs are appalling, According to human rights activist Shirin Ebadi, five workers die daily as a consequences of accidents at the work place. In the past decade 9,625 workers have died at their place of work. A report from Radio Farda on December 18, stated that in 2012 alone around 1,100 miners died in Iran, and that figure is the official one. Again, analysts fear the true number may be greater.
As a response to the growing wave of strikes, companies are firing contracted employees and replacing them with casual labor. Speaking recently to the Iranian newspaper Rahe Daneshju, the Iranian trade unionist Fathollah Bayat said that in 2012, approximately one million contract workers were simply dismissed. He added that day-labor hiring practices were becoming ever more common.
On the other hand, the regime has created a kind of "Islamist labor aristocracy" which remains on fixed contracts in order to secure their loyalty. The Iranian dictatorship and its entrepreneurs fear organized strikes (which remain legal, though frowned upon) and must be painfully aware of the parlous state of the economy.
In February 2006, Ahmadinejad pledged to make Iranians richer. He promised Iranian families so called "justice shares" -- financial gifts funded through the sale of state shares. In theory, many millions would have been entitled to up to $800. In reality, few received their dues, and many who did were likely to have been among the most loyal supporters of the regime.
But social justice cannot be achieved through ideological promises. Ahmadinejad didn’t end poverty during his presidential term, though some of his followers did become richer.
Meanwhile, a social catastrophe in Iran continues to unfold.
*Wahied Wahdat-Hagh is a Senior Fellow at the European Foundation for Democracy (EFD) in Brussels

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