A New Horizon: Iran’s Labor Ministry Proposes Groundbreaking Wage Reform
In a significant address, Gholamhossein Mohammadi, Head of Iran’s Technical and Vocational Training Organization, outlined a comprehensive new vision for labor market reform, emphasizing the critical link between skilled human resources, strategic wage policies, and national economic stability.
The Centrality of Skilled Labor
Speaking at a meeting with staff in Alborz province, Mohammadi identified a skilled workforce as the essential translation of educational investment and a primary pillar of national production. He underscored that human resources, alongside liquidity, are now the most crucial factors for business continuity. A shortage in either, he warned, significantly increases the risk of economic disruption or shutdown.
Recent economic surveys, from the latter half of last year through the first quarter of this year, have consistently flagged the shortage of skilled human resources as the most pressing issue for businesses, highlighting its paramount importance to the country’s economic health.
Addressing the Skills Gap
Mohammadi presented stark data to illustrate a critical challenge: one out of every two job seekers lacks necessary skills or has a skills deficit. Approximately 40% of the country’s university graduates fail to find employment. On a global scale, Iran ranks 136th out of 140 nations for graduate skills and 60th on the educational index.
“These statistics indicate that despite years of study, our graduates are not acquiring sufficient skills,” Mohammadi stated. “Trainings are often not aligned with the day’s professions, and the primary reason for unemployability is a lack of skills.”
A New Framework for Wages and Employment
The proposed reform centers on two interconnected pillars: skills development and strategic wage regulation. Mohammadi acknowledged that while a framework linking skills to employment exists, it has been complicated by past policy shortcomings in labor relations and human resource training.
He pointed to specific areas within the country’s labor law—including insurance, temporary contracts, worker-employer relations, and wages—that require attention. On wages, he advocated for a decisive shift away from a one-size-fits-all model.
“Last year, through stakeholder collaboration, the minimum wage increase was brought closer to the inflation rate,” Mohammadi noted. “However, our firm belief is that wages must be determined based on regional, guild, and industrial factors.”
Under the new proposal, Provincial Employment Councils would be empowered to define wage levels that ensure job sustainability across different industrial and guild sectors, taking into account local conditions and cost-of-living differences.
Overhauling the Training Model
A core part of the new strategy involves fundamentally transforming the vocational training system from a supply-driven to a demand-driven model. Mohammadi stressed the need for government organizations to act as regulators rather than direct operators, a shift intended to dramatically increase the productivity of training workshops from its current rate of less than 10%.
To ensure the sustainability of this new approach, the establishment of a “Skills Fund” to support trainees and private training institutions is on the agenda and awaiting review by parliamentary commission. Furthermore, strategic budgetary measures are being pursued to provide the organization with a stable, independent income stream in line with the nation’s seventh development plan.
Mohammadi concluded by firmly reiterating the organization’s core mission: “The Technical and Vocational Training Organization is not a leisure institution; it is a skills and educational body. Its trainings must be demand-driven, tailored to local and climatic conditions, and precisely aligned with the needs of industry and society.”
The meeting concluded with the opening of a new multipurpose hall and a visit to a permanent exhibition for products made by graduates of the Alborz province vocational training center, showcasing the tangible outcomes of skill development.