Title: Economists Call for Structural Wage Reform to Address Broader Economic Challenges
A Deeper Look at the Compensation Debate
Economic experts in Iran are highlighting that the national wage issue has evolved into a critical and persistent challenge that requires immediate and comprehensive attention. While recent adjustments to pensioner benefits are acknowledged as a necessary step, analysts argue that such measures alone are insufficient to resolve the deep-rooted problem.
Beyond Stopgap Solutions
Prominent economist Hossein Raghfar has described the pension adjustment as a “belated necessity” but one that falls short of a cure. He explains that the baseline salary for active workers is so low that even a 20 to 30 percent raise fails to bridge the gap with the minimum standards required for a decent human livelihood. Consequently, when the foundation for active workers’ wages is weak, it naturally leads to meager incomes for retirees. Therefore, while periodic adjustments are needed, they do not constitute a fundamental solution.
The Brain Drain Consequence
Raghfar further warns that the long-term governmental inattention to wage structures has become a primary driver of skilled labor emigration. In an interconnected world with transparent communication, no one remains unaware of the value of their services. He illustrated this by comparing a nurse’s monthly salary in Iran, approximately $200, to the $2000 a similar professional can earn in Oman. This stark disparity incentivizes Iran’s specialized workforce to seek opportunities in countries that offer more realistic valuation for their skills.
The Inflation-Paycheck Disconnect
Echoing this analysis, another economist cited in the report, Vahid Shafaee Shahri, emphasized that the annual debate over wage increases occurs against a backdrop of persistent structural inflation, which continuously deepens the chasm between purchasing power and the real cost of living. He pointed out that over the last decade, workers have largely been excluded from the cycle of economic growth, as wages have consistently failed to keep pace with inflation. With cumulative inflation surpassing 400 percent in recent years, while total wage increases have not even reached half that figure, the outcome is clear: a shrinking household budget for workers, declining welfare, and increasing psychological and social pressure on the salaried class.
Addressing the Root Cause
Raghfar also addressed a potential side-effect, noting that increasing pensions could inadvertently encourage early retirement. An employee who sees little difference between their active salary and their pension might opt to retire early and seek a secondary job. He stressed that this phenomenon stems from the weakness of salaries for active workers, not from the pension adjustments themselves. If the wages for employed individuals were sufficient and realistic, the incentive for early retirement would diminish significantly.
A Call for Systemic Change
The report concludes that without a fundamental reform of the wage structure, neither the problems of retirees nor the future job security of the youth can be assured. Economists are calling for structural reforms to the wage system, advocating for its alignment with real-life cost indices to ensure long-term economic stability and social welfare.