Population, Labor and Employment

Iran's economy is confronted with a serious employment problem, manifested in double-digit rates of unemployment, low returns to labor and a massive shift of the work force into services. Some improvement has occurred since the end of the war with Iraq in 1988. But the social objectives of the Government in regard to the alleviation of poverty and greater equity cannot be achieved unless and until productive employment is available to all those who are able and willing to work. This implies that public policies should pay greater attention to the employment implications of the growth process and of the structural reforms underway. This is even more necessary as the growth in the labor force is likely to accelerate in the next few years, thereby tending to exacerbate the present imbalance between supply and demand for labor.

The main purpose of this article is to assess the dimensions of the employment problem in Iran and to explore options for its alleviation. It begins by considering population and labor force trends before turning to an analysis of several aspects of the employment problem, more particularly the changes in employment structure, unemployment and earnings. Some policy issues are discussed next in the light of the past experience in Iran, the likely future trends in Key variables, and the success of certain Asian countries in employment promotion. These have to do with the continuing need to reduce population growth; accelerate economic expansion through a more determined mobilization of national resources; increase the efficiency of resource use; emphasize the development of human resources; enhance the employment intensity of growth through agricultural development and the use of more appropriate technologies; institute measures designed to strengthen the informal sector and promote its integration into the economic mainstream; and promote the employment objective more directly through labor-intensive investment in infrastructural projects.

* Abstract prepared by the author

Hamid Tabatabai and Farhad Mehran
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