Year of Job Creation

As he addressed both the people and policy-makers, the Supreme Leader named this year “The Year of Economic Resistance, Production and Job Creation.“ In the year of presidential elections, his guidelines have certainly not fallen on deaf ears.

The 1979 Islamic Revolution was followed by a baby boom that persisted for the better part of a decade. The country’s new leadership pursued an agenda of population growth and reinforced its vision by rewarding families with financial incentives for each additional child. In 1988, when the Ministry of Health and Medical Education concluded a seminar with the recommendation to implement family-planning and birth control policies, Iran’s population had nearly doubled.

Over time, the bubble in Iran’s demographics shifted from infants to adolescents, and now the generation has found itself confronted with the limits of Iran’s economic inflexibility. In the first decade of this century, the children of the 1980s were knocking in droves on the doors of universities. Now, they are in dire need of jobs. In recent years, youth unemployment has increased to an unsettling rate of 30%. Among graduates, the problem is particularly pressing, with unemployment standing at 41%. The growing economic participation of women is an engine for growth in the long term, but adds to the unemployment rate Iran faces at this moment.
President Hassan Rouhani has certainly not sat back since he took over office in 2013. Having generated around 630,000 jobs in the past Iranian year and around 2 million during his first term as President, he finds Iran among the top-five countries worldwide in terms of job creation. But, as each quarter over 300,000 Iranians—most of them university graduates—enter the labor market, his efforts have been perceived as sticking plaster on a wooden leg.

Some have come to Rouhani’s defense even as unemployment proves to be one of the central themes in the heated presidential election campaigns. The administration of his predecessor, Mahmoud Ahmadinejad, is said to have concealed the emerging unemployment problems. By promoting university enrollment rather than stimulating the job market, unemployment rates were artificially held low. With universities as shock absorbers, unemployment was postponed for the future administration to address. Yet, to the millions of young Iranians without a job, the question of who is to blame is of little importance. Rather, they want to see concrete measures that can improve their situation, and they will feel supported by the New Year’s appeal of the Supreme Leader.

As the country is watching to see if Rouhani can deliver on the promises of his reelection, there is no doubt the president is determined to achieve meaningful results. He has recognized job creation as the top priority for his second term and announced a national apprenticeship initiative. This plan is currently piloted in two provinces and will be laid out nationwide in early 2018. However, the scale of the challenge that Iran is faced with will require a more comprehensive plan, one that could very well already be in place. Rouhani has pointed out that the key to tackling unemployment is attracting around USD140 billion in foreign investments to modernize its commodity industries as well as the transportation and ICT sectors. These investments could enable Iran to extend the value chain of its raw materials and trigger an increase in non-oil exports.

The integration of Iran in the global economy has been Rouhani’s lodestar. Thus far, the cornerstone of his political legacy is his signature under the JCPOA, also know as the Iran nuclear deal. With investments increasingly flowing into the country, Rouhani is on the way to reaping benefits of his first term’s main accomplishment. This year may really become the year of economic resistance, production, and job creation.