Gap Between Wages And High Inflation Widen In Iran
Maryam Sinaiee
Iran International
Iran’s government has proposed a 20 percent pay raise for civil servants next calendar year (starting March 21), despite a rampant inflation of over 46 percent.
Iran International
Iran’s government has proposed a 20 percent pay raise for civil servants next calendar year (starting March 21), despite a rampant inflation of over 46 percent.
Experts say the low increase proposed by the government reflects its need to reduce expenditures and to avoid a higher budget deficit, which is at least 50 percent.
According to a report prepared by the parliament’s research center that was released last week, this year’s budget deficit may amount to $13.5 billion, or 30 percent, but independent analysts believe the deficit is closer to half the budget. In the current year the government has failed to secure half of the revenues expected from oil and gas sales and the same trend is expected to continue in the coming year.
Budget deficit amounted to $10 billion in the first four months of the current year, the report said.
The proposed small increase in civil servants’ salaries is worrisome to workers, who need to afford basic necessities amid the high inflation environment. Most of these workers are civil servants or employed by government-owned and pseudo-governmental companies.
Iran witnessed several rounds of anti-regime protests and workers strikes since 2017, and the economic crisis is believed to be the main factor in driving hopeless young people to rebel.
The Statistics Center of Iran (SCI) and the Central Bank claim that the rate of annual inflation has dropped to 45.5 percent, nearly the same level as a year ago, and the economic growth rate rose to above six percent between April and July. But official figures tend to underreport bad news and cannot be independently verified. One thing which is clear is that food prices have risen much faster than the official inflation rate, in some instances hitting 100-percent in 2022.
Many reports by local media say prices for some food items has also doubled in 2023, since the same time last year. For instance, based on the figures released by the SCI, the price of mutton and beef have risen by 151 and 132 percent respectively this year.
Economist Hadi Haghshenas, speaking to local media, expressed concern about the “alarming” rate of inflation and said the reason for the small drop in the rate of inflation is a drastic reduction in people’s purchasing power rather than economic improvement as the share of food and housing in the basic commodities basket has risen from around 50 percent to between 70 and 80 percent.
People’s actual experience of the economic realities is in contradiction with the figures that the government announces, he told the reformist Shargh daily, adding that the budget deficit, high inflationary expectations, and “ambiguity in foreign policy” all indicate that improvement in economy should not be expected.
Sanction imposed by the United States since 2018 have plunged Iran into economic crisis, but efforts by the Biden administration to resolve differences with Tehran over its nuclear program have failed so far.
Experts say the chasm between the rich and the poor is increasing, and the middle class is vanishing fast despite the promises of President Ebrahim Raisi’s government to “increase social justice”.
High inflation of over 40 percent in the past few years has been taking its toll on the poor and the middle class who are increasingly finding it impossible to afford some basic needs, particularly food and housing, as the increase in salaries and wages has not kept up with inflation. The share of education and leisure have accordingly dropped to a record low in the past few years.
Naser Rahchamani, a former member of the Supreme Labor Council, a body made of representatives of workers, businesses and the government, which is responsible for setting the minimum wage of workers, says the society has hugely become poorer this year and the purchasing power of workers has drastically dropped in comparison with previous years.
“It seems that the government has shut its eyes to the livelihood problems of the workers who constitute half of the country’s population [with their families],” Rahchamani told the reformist Etemad newspaper.
“Production did not increase…and inflation remained high,” he said while stressing that the cost of sanctions weighed on the shoulders of workers who bore the brunt of high prices.
Iranian Foreign Minister Hossein Amir-Abdollahian said during an appearance on CNN Sunday that Iran does not want the Mideast war to "spread out."
"We always had political, media, and international support for Palestine. We have never denied this," he said, adding, "This is the truth, but in relation to this operation called the Al Aqsa Storm, there was no connection between Iran and this Hamas operation, not my government nor part of my country."
Earlier in the day, Iranian President Ebrahim Raisi renewed threats to Israel and the US after Israel launched the ground offensive in Gaza. "The Zionist regime's crimes have crossed the red lines, which may force everyone to take action," he said, suggesting once again the threat of action from its proxies in the region.
White House national security spokesperson John Kirby said Sunday that he would not comment on the expanded ground operation, but he said Washington supported Israel's right to defend itself. "We're not drawing red lines for Israel," he added.
Authorities in the Iranian regime issue fiery statements, threatening escalation in the Gaza war, but they have not taken any concrete steps on the ground to underpin their claims. Media outlets affiliated with the regime and its Revolutionary Guards cite local media about attacks on US bases, but no Western source confirms such reports.
Two US fighter jets struck Iran-linked military facilities in Syria early Friday, a few hours after 900 more US troops arrived in Syria to bolster air defenses for American personnel amid a surge in attacks by Iran-backed militias. Earlier, White House spokesman John Kirby confirmed that Washington has “relayed direct message” to Iran after Biden reiterated its “warning to the Ayatollah,” referring to Iran’s ruler Ali Khamenei.
The Kremlin said Friday that the US strikes show broader regional tensions but claimed there is no danger of Russia being dragged into the conflict. The statement came as Moscow's decision to invite a Hamas delegation has outraged Israel, which urged Russia to expel the group, calling the invitation "deplorable".
The United States has moved 'naval cities' to the region, a move that can be construed as a more consequential move than the symbolic trip by President Joe Biden to Israel to see with his own eyes the aftermath of Hamas attack that killed 1,400 Israelis. What can the US president do for over 220 hundreds of hostages, including Americans, from Tel Aviv that he cannot do from the White House?
As the war between Israel and Hamas reverberates across the Middle East, the risk of war between Hezbollah and Israel remains higher than at any point since their last big conflict in 2006. Reuters cited unnamed sources as saying that Hezbollah knows that Lebanon, with a struggling economy and a crumbling state, cannot afford another war between Hezbollah and Israel. "Hezbollah has no interest in war. Lebanon has no interest in war", a source familiar with Hezbollah thinking said.
Israel has time and again explained to the international community how most regional vices are done by tentacles of the Islamic Republic regime. After all, even if it is possible for Israel to eliminate Hamas militants, they will resurrect thanks to Ayatollah’s deep pockets being endlessly fed with oil money.
Immediately after the multi-thronged operation that Hamas calls al-Aqsa Flood, proclaiming its goal of flooding Israelis out of al-Aqsa, Iran and several other countries and world bodies started urging not to escalate the conflict. Israel has started testing the waters of a ground invasion but wants the world to side with it in the war that according to Palestinian authorities has killed over 7,000 Palestinians.
Israel, which had depended heavily on its military tech and intelligence to control sporadic attacks by the Islamist attacks and was caught by surprise -- has called up hundreds of thousands of reservists, its largest-ever. To acclimate the new army, whose forces have mostly been far from the military atmosphere, the US may be stalling before the conflict enters the next phase, an idea popping up in conversations about the Mideast crisis.
The reason that Iran does not take US warnings seriously and calls them “requests” is the lack of – or very limited – response to attacks on US troops by Iran-backed forces. Iranian President Ebrahim Raisi’s deputy chief of staff for political affairs Mohammad Jamshidi “does not take President Biden’s warnings seriously,” said Jason Brodsky, the policy director at United Against Nuclear Iran. “That should tell the White House something especially after over 13 attacks on US forces in October,” he added.
No major blow has been delivered against Tehran and its proxies, except for the targeted killing of IRGC’s Quds force commander Qasem Soleimani, the architect of Iran’s vast network of militias in the region. US Senator Rick Scott (R-FL) used Soleimani as an example of how the US should deal with the menace of Iran. “If Iran attacks the United States, everything the Ayatollah loves will be a target, and as you know, our aim is very good. Ask Soleimani,” he said on X (formerly twitter).
The war of words and visits to the region along with international meetings can be a prelude to the next phases of the conflict that may set the ground for World War III, that probably ensues after China joins Russia and Iran against the West.
The US has deployed large military power to near Israel but claims it will not engage in the conflict and pursues diplomacy to resolve the crisis. Biden also emphasized that its warning was about attacks on US forces and had “nothing to do with Israel at all.” However, 'Ayatollah,' who believes “diplomacy and battleground” are two complementary things which do not negate each other, claims Israel will not exist to see 2045 and moves toward his dream with material and psychological support.