The results of negative economic growth of 10% on the lives of workers

Economic experts and union activists evaluate the decrease in purchasing power as one of the main reasons for the negative economic growth of the country in recent months.

With the announcement of Iran's Statistics Center that the economic growth was negative by 10% in the first half of this year, a historical record was set in the reduction of economic growth and the shrinking of Iran's economy; An issue in which the main victims are the government and managers and owners of private and public businesses; However, its effects on the lives of other social groups, including workers, retirees, and other wage-earning groups, will also be felt.

War, sea and land blockade, and expansion of sanctions are considered to be the most important problems of the first half of this year. The negative growth of 10.1% in the first quarter of the year was recorded while Iran's economy was facing one of the highest levels of inflation in the last century and until the end of August, the annual inflation was 70% and the overall point-to-point inflation was nearly 90%.

Previously, Iran's most negative economic growth was related to the two years before the end of the war (1365) with a negative growth rate of 8 percent, which was due to three reasons: the long continuation of the war, the start of Iraq's rain of missiles and the intensification of sanctions on Iran, and the global drop in oil prices.

Psychologically, the war made many producers and investors think of stopping production and investment, and the markets of precious metals and foreign currencies were so prosperous that the capital market (stock market) and the labor market were dragged into a recession.

Of course, Iran's economy had suffered a negative growth of 2 and 3 percent in 2017 and 2018 due to the withdrawal of many investors and companies due to the cancellation of the JCPOA, but until the winter of last year, there was no news of negative growth. This is while in the Seventh Development Plan document, a positive growth of 8% was assessed as a necessity for Iran's economy, considering the various needs of the country.

In such a situation, the unemployment of workers, the exit of workers and wage earners from the cycle of the country's economy and the reduction of purchasing power due to inflation are known as the reasons for the reduction of economic growth and productivity in the economy; All of these problems can be seen in Iran's economy today, but experts, economists, government officials, and especially economic ministers, rarely point directly to these structural reasons for economic stagnation.

reducing the purchasing power of workers and retirees; The origin of recession

It is clear that the economic recession is reflected in the negative economic growth rate. In the meantime, the country's labor and pension activists believe that part of the roots of the current economic recession and the closure of the units, happens to be rooted in the plight of workers whose purchasing power has decreased to less than half in the past year.

Ali Turkashund, the executive secretary of Khana Kargar and the head of Ray Shahr Retired Workers' Association, in this connection, while acknowledging the increase in the closure of units and workshops, especially in the south of Tehran province, explained: "The shutdown of economic units has increased in the last few months, especially due to the high cost of electricity, water and gas. In addition, the decrease in the rate of buying and selling goods has fueled this cycle of stagnation and the inability to pay taxes, insurance premiums and subscriptions. Of course, the second victim of the closure of economic units and the reduction of production are the workers themselves, whose income and salaries will either decrease or they will be fired.

He emphasized: "The fact is that one of the main reasons for the stagnation and closure of production and service units is the decrease in the purchasing power of workers and employees, whose salaries increase at a turtle's speed compared to astronomical inflation." In addition to this, the pensioners' arrears, which had a high value in April and May, are now being paid drop by drop, and they are not in a good mood in terms of purchasing power. As a result, the sales of production and service units, stores and workshops have fallen sharply, and it is natural that with this insignificant purchasing power of the workforce and ordinary people, economic growth will decrease and recession will prevail in an unbridled manner."

Morteza Ofgeh, professor of economics at Chamran University of Ahvaz and macroeconomic expert, explains the situation that led to the realization of this negative 10% economic growth rate: "This low economic growth was completely predictable from the point of view of us economists. For an economy that is highly addicted to oil revenues and is still dependent on it, contrary to the officials' previous claims that Iran is deprived of this income, the embargo and trade embargo is considered a serious blow.

He added: "When at the beginning of this year we faced a sharp decline in oil sales, due to the fact that the situation of other industries and businesses was already unfavorable and the public income was no longer sufficient to strengthen it through the sale of oil and gas, we faced a serious recession crisis. "When the income of the father of a family decreases significantly, this decrease in growth has a serious effect on all family members who are here as members of the society and different economic sectors, including workers and employees."

This economics professor of Chamran University of Ahvaz noted: "It is true that the government has filled the warehouses of basic goods for people's consumption, but it is not clear that this trend of storing goods can continue, and secondly, the purchasing power of these goods is constantly decreasing due to inflation." This trend will be aggravated by the government's inability to sell oil, and we will face a crisis of shortage of goods and a decrease in purchasing power at the same time."

In the end, this macroeconomist emphasized the unbearable growth of inflation in case of the continuation of the war and sea blockade and said: "Let's remember that we started the negative trend of the economy in 2017. This process continued slowly from 1403 with the weakening of mother industries and continued in 1404 with the occurrence of two wars; These events accelerated the path of economic collapse. Iran's economy and its industries are dependent on the import of intermediate goods, machinery and raw materials. With these economic and global conditions, the path to retrenchment and closing of many economic units, which leads to widespread unemployment, will be more smooth than in the past.