November 5, 2014 | Policy Brief

Iran’s Hidden Unemployment Figures

Iran’s President Hassan Rouhani came into office in August 2013 promising better governance and economic reform. His administration launched investigations into corruption, which flourished under Mahmoud Ahmadinejad. Rouhani’s appointees to economic ministries and even publicly owned companies are far more competent and experienced. Domestic supporters have touted his government as driven by “hope and wisdom.”

But exactly how much has Iran’s economy really improved since Rouhani took office? Beyond macroeconomic indicators suggesting a modest recovery, a little over a year into his first term Hassan Rouhani has failed to improve the lives of ordinary Iranians. The latest unemployment figures point to a failure to deliver structural change to ordinary citizens.

In a recent speech citing the newest report by the Statistical Center of Iran, Rouhani announced that as of this past summer, Iran’s unemployment rate dropped below the two-digit threshold, to 9.5 percent. Amidst signs of economic recovery and growth across all economic sectors, he touted this achievement as an indicator that the combination of sanctions relief and savvier economic policies is having its salutary effects and benefiting all strata of society.

Ordinary Iranians responded by berating Rouhani’s claims on social media. To the many still struggling to find a job, Rouhani’s claims were meaningless.

There are good reasons for this: Rouhani’s unemployment figures do not reflect a successful policy of creating jobs. In fact, Iran has actually lost 670,000 jobs in the twelve months since Rouhani took office. In the summer of 2013, 22.17 million Iranians worked in industrial, agriculture, and service sectors. One year on, and the figure is now down to 21.5 million.

Indeed, Iran’s lower unemployment rate is deceiving. The jobless numbers are lower because almost a million abled-bodied Iranians stopped looking for a job. They joined another 40.1 million Iranians who, by age and skills, can work but are not active in the labor force.

In the summer of 2013, the participation rate in the labor force was 39.1 percent of the Iranian population. By the summer of 2014, that figure dropped to 37.2 percent. This means two thirds of Iranians – and a whopping 62.8 percent of Iranians who could be working – are unemployed and, in all likelihood, will remain so in the foreseeable future.

Despite Rouhani’s campaign promises, and the popularly-held view that his economic reforms have provided a boost to Iran, fewer Iranians have gainful employment today than under Ahmadinejad. Even fewer Iranians hold hopes of finding employment under the present circumstances.

Emanuele Ottolenghi is a Senior Fellow at the Foundation for Defense of Democracies, where Saeed Ghasseminejad is an Associate Fellow.