Title: Iran’s 2026 Budget Proposal: Government Employees Set for 20% Pay Rise Amid Economic Dialogue
Introduction: A Proposed Salary Adjustment
A significant salary adjustment for Iranian government employees has been outlined in the preliminary framework for the national budget of the upcoming Iranian year (starting March 2026). Reports from Iranian economic media indicate that a 20% pay increase has been proposed for state employees. This proposed figure aligns with the increments seen in previous years, which were ultimately ratified by the parliament after government proposal, suggesting a continuation of established fiscal policy.
The Official Mechanism
According to the financial directives for drafting the budget bill, executive bodies are mandated to apply a 20% coefficient increase to the salaries of government personnel compared to the previous year’s final pay scales. The finalized coefficient will be presented to the Council of Ministers for a definitive decision once the budget bill text is complete. This structured process highlights the government’s methodical approach to public sector wage policy.
Voices from the Ground: Employee Perspectives
Despite the proposed increase, the measure has been met with considerable discussion among public sector employees, particularly on social media and in public forums. Many have expressed the hope that, through constructive public discourse, the government’s final decision might be reconsidered.
The central point of discussion is the gap between the proposed salary hike and the inflation rate impacting household economies. Employees and retirees have consistently voiced expectations for their incomes to be adjusted in line with the cost of living. Critics argue that the annual disparity between wage increases and the inflation rate has been widening, deepening income gaps and eroding purchasing power.
A Call for Legislative Oversight
Yahya Azizi, a representative for employees at the Ministry of Agricultural Jihad, provided context on the long-standing nature of these concerns. He stated that employee representatives have repeatedly raised the issue of insufficient pay raises in recent years. Azizi pointed to legal frameworks, such as Article 125 of the Civil Service Management Law, which he interprets as mandating salary adjustments based on the inflation rate.
He noted that over the past six years, despite officially reported inflation rates often exceeding 40%, salary increases for government employees have consistently capped at around 20%. The consequence, according to Azizi, is a marked decrease in the purchasing power of civil servants, which can influence social dynamics and lead to a growing trend of skilled personnel leaving public service for the private sector. This, he warned, could exacerbate staffing shortages in key ministries. Azizi emphasized that the parliament should strengthen its supervisory role over such government decisions, adding that scientific calculations suggest the inflationary impact of higher public sector wages is minimal, estimated at only 2-5%.
Broader Economic Implications
The debate extends beyond core government employees. Majid Rahmati, a member of the board of the Coordination Council of Islamic Labor Councils, highlighted the ripple effect of the government’s wage policy. He stated that the salary coefficient set for state employees directly influences the wages of many workers in public and non-governmental organizations, including municipalities, municipal contracting companies, and firefighters.
Rahmati questioned the economic rationale behind the 20% figure, arguing that if wage hikes are genuinely inflationary, the government should test this theory by drafting a budget without any salary increases to observe the effect on inflation. He contended that the primary focus should be on controlling the root causes of inflation through state policy, rather than containing wages. A sustained decline in purchasing power, he suggested, could have adverse effects on administrative health and workforce motivation within public institutions. The fundamental demand, as articulated by Rahmati, is for the government to ensure that the purchasing power of employees and pensioners is at least maintained at previous levels to prevent further pressure on living standards.