The collapse of the Iranian economy and unemployment

ncr

The Research Center of the Iranian regime’s Majlis (Parliament) has issued a report recently about the situation of the Iranian economy, explicitly citing numerous problems.

Independent economists had previously said that the situation of the Iranian economy has been increasingly dire since the presidential elections of 2009. Reduction of investments in most fields, especially oil and gas, has worsened the economic situation with much dire circumstances expected in the future.

The report says, “The business atmosphere in Iran is extremely unfavorable compared to other countries. For example, according to the criterion of “business and employment” of the World Bank in 2010, Iran is ranked 137 among 187 countries. The ranking of the country in other categories is not must better.”

The report warns that the unfavorable loss of investments, unemployment and other problems have brought economic institutions to the brink of bankruptcy.

The economic crisis and rising unemployment is a huge threat for low-income sectors. Layoffs and lack of job security, bankruptcy of plants and factories, delays in paying salaries, a production slump, lack of independent workers’ organizations, and extreme suppression of apolitical protests are also some of the challenges for the regime.

The Majlis report refrains from explicitly citing the unemployment rate, but says, “From 1989 to 2006, the country has never had single-digit unemployment.” The report explicitly refers to the lack of investment by the private and government sectors as factors contributing to the rate of unemployment.

According to the Majlis report, the average unemployment rate in the world is 9.7 percent and 6.9 percent in the region. At the same time, some observers put that rate at 25 percent in Iran.

Another topic mentioned in the report concerns lack of economic stability in Iran. Although this problem has existed since the clerical regime’s inception, apparently the current unstable situation has made it worse.

Purchasing power of the people in Iran continues to drop. According to the Heritage Foundation, Iran is 9th among 161 countries when it comes to lack of economic freedom. “This means,” the Majlis report says, “that among the 161 countries, only 8 are worse than Iran in terms of economic freedom.” At the same time, regional neighbors are doing much better, with Turkey rated at 100th and Saudi Arabia at 80th.

The report calls on the Mahmoud Ahmadinejad to enact measures to increase production and investments, while “establishing a national standards organization in Iran tied to the president’s deputy in planning and strategic supervision.” In his first term, Ahmadinejad disbanded the planning and budget organization to remove even semi-official institutions that could monitor government spending.

The Majlis report has also recommended that “the probability of confiscation of property” be reduced so that the private sector can make more investments.

The report does not mention other analysts’ views about the consequences of increasing role of the Islamic Revolutionary Guard Corps (IRGC) in the fields of manufacturing and services industries. This is among the factors that hampers private business activities and restricts competition in the Iranian economy. However, the report says that currently “underground and unproductive economy” is becoming more powerful.