May 03, 2017
By Roshanak Asteraki
The ongoing economic downturn in Iran has led to the closure of an alarming number of factories, manufacturing plants and production units in recent years.
According to the Statistic Centre of Iran, 2,906 industrial workshops were shut down in the country between 2007 and 2013. Additionally, hundreds of businesses, including but not limited to services, trades and agricultural production facilities have closed down during the same period.
In 2007, 17,603 medium to large scale factories were operating . By 2010, the number dropped to 14,787, showing a 16 percent reduction in the total number of production units in the country.
The data suggests that on average 480 factories shut down every year during that period. Paradoxically, Iran generated the highest ever revenue from the sale of its oil between 2007 and 2010.
Rouhani’s promise of economic revival, along with the 2015 nuclear agreement and the subsequent sanctions relief, injected some optimism into the country’s economy. However, Rouhani has failed to deliver on his promise, and the country has yet to see any meaningful windfall from the nuclear deal. Meanwhile, the government has been unable to tackle the country’s ongoing economic meltdown and rampant inflation.
Citing a report on the country’s manufacturing capacity in 2015, the deputy director of Iran’s Small Industry and Industrial Parks Organization said, “ The data shows that In 2015, around 10,183 manufacturing units, meaning 29.5 percent of all industrial plants in Iran, were operating at only 50 percent of their capacity. Another 9,927 industrial plants, meaning 29 percent of all the factories in the country, were operating at 50 to 70 percent of their capacity.”
Another study has shown that during President Rouhani’s first term, 50 percent of all the factories in Iran were either shut down completely or operated at a diminished capacity. According to the vice chairman of the Iranian Ceramic Producers Syndicate, 17 tile manufacturers have gone out of business in the past three and a half years.
During the presidential debates of 2013, then candidate Rouhani promised to revive Iran’s economy. He even promised to rescue many factories, such as Pars Electric, that had operated for decades but had fallen on hard times. The stockholders of Pars Electric, however, maintain that the company produces only a few articles every year and the situation has not improved at all since Rouhani took office nearly four years ago. Some of the more established companies which have gone out of business during Rouhani’s first term in office include Arj, Darougar, Iran Leather and Varamin Sugar.
Persistent problems have affected numerous production units. According to the chairman of the Association of Iran Textile Industries, by the end of 2016, most textile manufacturers operated only at 30 percent capacity, and lost between 25 to 30 percent of their work force for a variety of reasons.
Mohammad Esmael Saeedi, a Majlis (Iranian parliament) deputy from Tabriz, says, “We haven’t witnessed any tangible economic improvement during the President’s first term. In the past four years, numerous manufacturers have gone bankrupt. We’ve seen a record number of bankruptcy cases filed with the courts.”
What compounds the problem is that with every factory closing, dozens, and sometimes hundreds of people, lose their job. In many instances, workers and staff are not paid on time, if at all. According to Mohsen Ghiasvand, the chairman of the Stone Association of Iran, 2000 stone-cutting factories have closed down in the past four years, causing 35,000 workers to lose their job.
Some have raised the alarm regarding the increasing rate of unemployment in the country. In April 2016, Mohammad Javad Kolivand, a Majlis representative from Karaj, lambasted Rouhani’s government for failing to improve the country’s economic situation. He said,“There are 7.5m jobless in the country, of which over a million are labourers.”
Abbas Paeizadeh, a Majlis deputy from Dezful, has said that 166,000 industrial workers had lost their jobs between 2014 and 2015. Jahan Oil Company shut down its operation and laid-off 300 workers in April, 2017.
Meanwhile, the government is trying very hard to put a positive spin on its performance of the past four years, hoping to muster up support for President Rouhani in the upcoming election on 19 May, 2017.
According to the Statistic Centre of Iran, the unemployment rate increased by I.4 percent last year, raising the total figure to 12.4 percent. Unemployment rate among people 29 years and younger stands at 30 percent. The figure for young people with university degrees is 35 percent, meaning that one out of every three young people in Iran is jobless.
A recent report by the International Monetary Fund shows that unemployment in Iran has reached a critical level in recent years. The report also gives poor marks to Iran’s government for its dismal efforts to create jobs.
The top three contenders for the presidency are President Hassan Rouhani, Mohammad Baqer Qalibaf, and Seyyed Ebrahim Raisi. President Rouhani’s programs of the past four years have not improved the economy. Mr. Ghalibaf, the mayor of Tehran’s office has been plagued with accusations of corruption in the past 12 years. Mr Raisi, a powerful cleric with revolutionary credentials, who controls a vast amount of wealth as the custodian of the Astan-e Qods-e Razavi, an autonomous charitable foundation. Astan-e Qods is first among the tax exempt charities.
With the presidential election approaching, the promise to solve the country’s economic crisis and tackle the soaring unemployment rate has become the dominant campaign slogan. Each one of these presidential hopefuls is promising to usher a new era of prosperity in Iran, but there is every indication that all of these candidates would plunge the country further into the depth of economic despair.