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The Unemployment Problem

An interview with Dr. Jaleh Shaditalab, Professor of Tehran University
Kar va Kargar (Work and the Worker) Morning Daily
Thursday, March 9 - 1995, Vol. 5, No. 1267

The daily "Kar va Kargar" had an interview with Dr. Jaleh Shaditalab, a professor of Tehran University, about unemployment and low worker productivity in Iran. Dr. Shaditalab has a doctorate degree in sociology from the United States and is a development specialist. For 9 years, she has been the deputy planning director for agriculture at the Plan and Budget Organization. At present, she is a member of the education board of the Department of Social Sciences of Tehran University. She has conducted four years of research pertaining to social indexes for development for the International Organization for Development. What follows are excerpts of the interview:

Q. What is the index of unemployment and worker productivity in the country?

A. Unemployment is a social and economic problem and within the framework of social development, we must take into account the productivity of the work-force in the country. To achieve development, it is true that we must employ our human resources properly. In other words, in the development process, we need a highly qualified manpower pool. This is an issue which has often been considered in national macroeconomic projects and we believe that if we fail to employ our labor resources actively, we will be facing employment problems.

Considering our existing scenario, the question must be viewed within this context: Basically we have a problem in employing our human resources in order to attain development. This is not because of the size of the country's labor force. Actually, at present, we are not experiencing any difficulty with regards to the labor supply as we have a young population; many people are at an employment age and they are willing to work as evidenced by the big number of job applicants who are ready to enter the employment market. It is therefore clear that we do not suffer from a shortage of workers.

Statistics reveal that the rate of unemployment in 1372 (1983/94), was 11.4 percent, which is three percent lower compared to unemployment rate during the first years of the First Development Plan. The main argument is that a progressing country needs an effective work-force, because a work-force that is low in skills will hamper the pace of development.

Human development means that we make the necessary investments in order to improve the productivity of the work force and our human resources. Nowadays, investments in areas such as education and health are considered basic. Those states which have paid attention to these fields are expecting positive results as the quality of manpower depends upon the amount of money invested for the productive harnessing of labor resource. Of course, at times, investments on the work-force have not rendered the desired results and unemployment still persisted.

Now, let us examine the effects of investment versus employment and non-investment versus unemployment in our country. According to statistics released by the Plan and Budget Organization, at present, 48 percent of our manpower is not properly employed. This means that aside from the 11.4 percent unemployed in the country, we have another 34 percent of unproductive workers. This makes the problem of unemployment in our country far more complicated.

If we look at our gross national product (GNP) for the years 1355 to 1365 (1976 to 1986), we will observe that per capita productivity of the employed population during the expansion period has gone down instead of going up. Using 1353 (1974-75) as the base year, the GNP for 1355 (1976-77), when we had seven million workers, was 3,986 trillion rials. In 1365 (1986-87), when we had a work force of 11 million, the GNP dropped to 3,064 trillion rials. This shows that the addition to our labor resources in 1355 to 1365 had not contributed to the GNP and per capita productivity during this period as these economic indicators even declined.

Let us tackle another question. Does the main problem concern the 12 percent unemployed or the 34 percent unproductive work-force? This issue moreover comes at a time when women play no active role in the rate of unemployment in the country as their share is very negligible.

Q. How is it that in our First Development Plan we had about 2 million unemployed people and 34 percent of our population had no role in the country's economic growth?

A. In reply to your first question concerning the 2 million unemployed, I must say that the reason is due to the incompatibility between training and employment programs in the country. It has been some time that there has been no coherence between education programs and employment opportunities in our country. The needs of industries and other sectors for manpower have never been spelled out hence, the education sector can not make the necessary adjustments in anticipation and in response to the requirements of the economy. This is one reason why a part of our unemployed population are illiterates.

Statistics reveal that 25.6 percent of those who were out of jobs possess secondary education, which is an indication that as a result of the lack of coordination between education and employment programs, the investments made in this area have not yielded the desired results.

Meanwhile, two percent of the unemployed have taken specialized courses in higher education centers but they are jobless. On the other hand, 37 percent of the employed population in the industrial sector are illiterates and only two percent of this work-force have availed of higher education. Thus we see that our industrial sector does not have an appropriate manpower base, and an industry staffed with 40 percent illiterate workers cannot be self-sufficient.

When manpower training does not conform to the demands of the employment market, initially, apparent unemployment surfaces. And when these unemployed people get hired to work, hidden unemployment develops. This is caused by the fact that those people who have been employed have not undergone the necessary training to become skilled and active in the performance of their jobs. A matter that should be well considered by the industrial and economic sectors is that, under these circumstances, they must prepare and submit a 20-year program outlining their objectives and requirements so that our universities and education centers, on the basis of such requirements, can make adequate preparations in their manpower training curriculum. For example, the agricultural and industrial sectors must specify the number of people they will need in the future and with what specific qualifications. Then the education centers could institute these requirements as criteria in the acceptance of students. This way, the investments plowed into the education sector would not result in unproductive manpower, as is currently the case, and the money thus spent will result in a rational turnover. Due to the incompatibility between existing jobs and the qualifications of those who have been educated, a portion of the population are unemployed in the true sense.

Q. Based on what you said above, what unemployment rate do you anticipate in the country in the future?

A. Taking into account the present circumstances prevailing in the country, it is not far-fetched that if the trend continues, the problem of unemployment will persist in the future and we will experience the same difficulties, and far more acute, during our third and fourth development programs. Considering the rate of population growth at the beginning of Revolution, which was 3.4 percent per year, the size of our manpower pool will be far larger during the implementation of the third and fourth plans.

If we succeeded in fixing and stabilizing the rate of unemployment during the First Plan, it was because great economic potentials existed in the country after eight years of war and these helped us generate new employment with the injection of a little capital. At present though, we do not enjoy such affluence and in order to create new jobs we must make greater investments. In the year 2007, when our projected population is 100 million, we will have a work-force of about 24 million. If we consider the size of the active manpower in 1986, which was 11.5 million people, in less than 20 years, between 1986 to 2007, our job applicants will increase to 24 million persons. To provide work to these job seekers, we must create 600,000 new jobs each year and this requires an investment of two billion rials annually.

Experience has shown that over the last 10 to 15 years, there were 250,000 new jobs every year in the country. But in view of the fast growth of the population expected in the coming years, our manpower pool will likewise increase and if we fail to provide gainful employment to these new entrants, we will be confronting a serious crisis within the next 10 years.

Q. What is the impact of unemployment and what is the solution to this problem?

A. The most important effect of unemployment in the country will be the flight of manpower resources, which are one of the basic factors for economic development. This occurs at a time when Iran is considered as one of the most favorable areas for development given its rich natural resources and its manpower base.

If we are intent on having an efficient and effective labor pool for our country's development, we must provide a favorable working environment so people will feel satisfied and be pleased to work and perform their duties; this way, the feeling of uselessness and lack of drive in our workers and staff will vanish.

Enjoyment of one's work greatly enhances productivity and is a key factor for the progress of advanced countries. Therefore, we see that our unemployment problem does not only refer to the 12 percent unemployed, but also to the 34 percent of our manpower resources who do not enjoy their work and, as a result, are unproductive. This is a great hindrance to the country's progress.

To study the other adverse effects of unemployment, we must refer to the dwindling welfare and the ensuing shortcomings and social abnormalities. People must realize that the problem of unemployment is not a segregated issue but a general problem of a system or government, and if not corrected, it will harm all the members comprising that system. Therefore, we may conclude that unemployment in our country is not limited to those who are currently without jobs but also includes those who appear to work but in reality have no role in the economic development of the country.