Eyeing Oil Revenues, Iran’s Public Sector Workers Demand Higher Wages

In its first 200 days in office, the Raisi administration has encountered massive labour mobilisations. In late January, medical personnel across the country’s hospitals and universities joined the picket line. In February, teachers reportedly staged demonstrations in over a hundred urban areas. Last month, pensioners and welfare beneficiaries rallied in more than a dozen major cities. 

Motivated mostly by wage grievances, protestors have adopted a range of assertive slogans and demands. In one provincial city, teachers hung up a big banner that read: “Raisi, Qalibaf, this is the final message: the teachers’ movement is ready to revolt.” Pensioners called Raisi a “liar,” blamed his government for neglecting “the nation,” demanded an end to “oppression,” and called for the immediate release of political prisoners.

Commentators have lumped these labor protests together with other recent protest actions. A recent Financial Times report suggested that workers’ rallies and protests over water rights indicate growing popular discontent with the country’s economic record, leaders, and political institutions.

But these broad explanations fail to capture the undercurrents of the labour mobilisations of recent months. Iran’s economy has been doing poorly for years and dissatisfaction with the government is nothing new. It would also be wrong to assume that labour protests are motivated by general public dissatisfaction. In fact, most of the large and coordinated protests have been staged by a rather specific type of worker: state employees. These are relatively educated and privileged workers, employed in protected administrative and professional jobs in Iran’s state bureaucracy and civil service.

Protests by state employees need to be understood in the context of negotiations over the country’s annual budget. The annual budget, which sets wage levels across the public sector, is approved by the Iranian new year in late March. Workers often mobilise during annual budget negotiations, a drawn-out process involving multiple state actors and institutions. Sectoral and labour pressure tends to intensify when negotiations reach their final stages.

While budget-related protests are a routine occurrence, they have been especially widespread this year because workers are emboldened by the prospect of higher oil revenues. The international price of oil has spiked over the past months and state authorities have already revised projected oil revenues upward. Iran is also in advanced negotiations on the country’s nuclear programme, which may result in sanction relief, potentially unlocking billions of dollars in government income. 

As employees of the Iranian state, public sector workers hope to benefit from these injections of oil money into Iran’s fiscal system. State employees are mobilising now in an attempt to lock in favourable spending commitments for the upcoming fiscal year. In 2014-2015, when Iran was in similarly advanced talks with the Obama administration over sanctions’ relief, public sector workers also mobilised in large numbers. 

A final factor is the legitimacy of the Raisi government itself. Coming to power last year through manipulated elections and record low turn-out, Ebrahim Raisi has been eager to display himself as tolerant and understanding of the country’s impoverished urban middle classes. Raisi has tried to court Iran’s historically reformist-leaning middle classes to gain a degree of popular legitimacy and consolidate his tenuous leadership among various hardliner factions.

Teachers, pensioners, and nurses represent a bloc of reformist-leaning state employees that have coordinated protest actions over the past months. Rather than cracking down on their rallies, security forces have relied on containment and targeted repression—strategies which, so far, have not been successful in preventing further protests.

Teachers have staged by far the largest rallies, winning major concessions in the process. They began protesting right when Raisi came to power in August 2021. Nationwide strikes in November 2021 put pressure on parliament to finalise an expensive piece of employment law that teachers’ unions had long lobbied for. Emboldened by this legislative victory, teachers have continued to protest to make sure that the government allocates enough money to the program.

Teachers, pensioners, and nurses have long complained that government spending prioritises state employees in the armed forces, judiciary, police, and the security apparatus. Over the past months, the government has tried to address their concerns about pay discrimination by reigning in salary increases in these relatively privileged and conservative-leaning parts of the state.

Notably, in January, parliament rejected a bill on payroll spending in the judiciary. Judiciary workers and lawyers immediately responded by taking to the streets, angered by the fact that Raisi, their former boss and patron, had hit their interests so openly. The judiciary protestors argued that they too have a range of legitimate concerns, including having to rely on corruption and bribe-taking to top off their salaries.

In response, the head of the Administrative and Recruitment Organisation justified limiting spending on judiciary salaries by stating that it would “create dissatisfactions in other government bodies.” Mehdi Taghiani, a hardliner MP from Esfahan, made a similar claim. “Severe inflation over the past years has reduced the purchasing power of all workers, not just one specific group in the civil service. If we increase salaries in the judiciary, it will lead to a domino effect by which pay discrimination will eventually lead to the collapse of the government’s financial system,” he stated. 

The Raisi government has tried to sell its fiscal policies as prudent and responsible to the outside world. Iran’s finance minister recently proclaimed that the country’s new budget “includes a number of structural reforms.” Such structural reforms, he explains, include “increasing the salaries of government employees at rates less than the inflation rate.”

Yet, the final budget, which was approved several days ago, shows little evidence that the government is committed to austerity and lowering labour costs across the board. The budget increases spending on education by 40 percent, almost double last year’s raise. The government also decided to increase the official minimum wage in the upcoming Persian year by over 50 percent, which will take its real value back to 2017 levels.  

In a move away from austerity, the budget contains a variety of cuts and concessions that are part of Raisi’s strategy to mediate between various public sector demands while trying to win over sceptics and opponents. These policies will not only fail to address fundamental labour concerns, but internal rivalries and sectoral interests within the public sector will almost certainly continue to undermine labour solidarity. Teachers and judiciary personnel, for instance, have refused to express support for each other’s struggles. After the judiciary protests in early January, the Twitter feed of Mohammad Habibi, an outspoken leader of the largest teacher’s union, remained unusually quiet. Long-standing competition over the allocation of state resources have led to mutual suspicions will prove difficult to overcome.

Photo: IRNA

Iran’s Emboldened Workers Press New President for More Concessions

In the third week of September, teachers in dozens of towns and cities across Iran took to the streets, calling on the new president, Ebrahim Raisi, to fully implement existing labour laws. The authorities responded quickly and positively, promising to work on an implementation plan. But the teachers are not ready to back down. In an interview conducted for this article, a leader of the main teachers’ union said his organization will continue to use a “carrot and stick” approach to ensure that the Raisi administration makes good on its promises.

The latest nationwide demonstrations by teachers are part of a bigger protest wave that has gripped Iran over the past year. In the first few months of the year, pensioners mobilised in Tehran and other major cities. In July, residents of the southern province of Khuzestan protested water shortages. Between June and August, contract workers across Iran’s oil sector staged intermittent strikes and demonstrations. These protests are unlikely to let up. A wide range of social groups have been mobilising—organising locally, regionally, and nationally—to express socioeconomic grievances. 

As these protests have continued, the Raisi administration has defied predictions that it would quickly impose order on Iran’s restless society. Raisi was elected president in June after extensive electoral manipulation and a record low turnout. But that Iran’s new leadership came to power with little regard for the electorate has not dissuaded protestors from making demands of state authorities. According to one protest tracker, September—Raisi’s first full month in office—saw one of the highest number of protest events in the past year.

Raisi has been forced to grapple with the promises made by his predecessor, Hassan Rouhani. Rouhani launched his first term with a vow to bring inflation under control and spend government resources prudently. He exited office last August having promised financial support to a wide range of groups and sectors. Rouhani’s commitment to inflation reduction was sincere and, initially, successful. After carefully and painstakingly negotiating sanctions relief and rebalancing the economy between 2013 and 2017, his successes were quickly undone by the twin shocks of the Trump administration’s reimposition of sanctions in May 2018 and the onset of the COVID-19 pandemic in February 2020. Realising that fiscal prudence would not be enough to shore the Iranian economy, Rouhani decided to direct spending towards his core constituents, namely the urban middle classes.

As Djavad Salehi-Isfahani has shown, Tehran and urban areas were largely spared the rapidly rising poverty rates seen in Iran’s rural communities after 2018. To prevent further slides in the incomes of pensioners and public sector teachers—two important middle class segments generally aligned with reformist politics—the Rouhani administration consistently increased the budget share allocated to education and social security. As Kevan Harris observes in a recent report, education and social security together accounted for over 55 percent of the 2021-2022 budget, up from less than 45 percent just four years earlier. The more the Rouhani administration intervened to support the welfare of key constituencies, the more groups such as teachers and pensioners became emboldened, increasing their demands as the deteriorating economic situation eroded their incomes. Protest activity grew despite the growing risk of state repression. 

Still, Rouhani’s constituents suffered despite his targeted interventions. Public sector teachers saw their real wages fall by over 40 percent between March 2018 and March 2021. Middle class workers employed in the public sector suffered significantly as government spending ran out of steam. Private sector wage workers, such as those in the construction sector, have fared comparatively better as their wages rise with inflation.  

Faced with discontented workers and limited fiscal space, the Raisi administration has sought to blame their predicament on Rouhani’s recklessness, rather than the deteriorating economic situation. Hardline politicians argue that Rouhani deliberately loaded up on financial commitments in his final days in office in order to put a stick in the spokes of the Raisi government. Parliament member Ahmad Hossein Falahi recently complained that “unfortunately in the final days of the Rouhani administration a lot of things got done. This is because the managers of the previous government aimed to impose a number of policies on the incoming administration, despite the fact that the Plan and Budget Organization was supposed to safeguard this year’s budget.” Falahi added that this has created a dangerous “mentality” whereby social groups invoke Rouhani’s generosity to bargain with the Raisi government.

It is true that in his final months in office, Rouhani made a number of concessions to protesting workers that seemed extraordinarily generous given the state’s emptied coffers. For example, striking oil workers won significant concessions right before Rouhani left office. Contract workers did most of the protesting and the Rouhani administration responded by forcing employers to increases wages for contractors. But Rouhani went further and also increased the salaries of more than 100,000 workers directly employed by the oil ministry. Promises were also made to improve working conditions.

Teachers were another group benefiting from extraordinary generosity in the final months of the Rouhani administration. The 2021-2022 annual budget, approved in spring, doubled the money allocated to the education ministry’s payroll costs. Given current inflation rates, this budget increase raises the wages of public sector teachers by a massive 25 percent in real terms—the largest one-year pay increase teachers have received in at least two decades. After years of resistance, the government also suddenly agreed to several other long-standing demands about job benefits.

Still, despite the accusations now being made, it more likely that an exhausted Rouhani administration, realising it would soon leave office, relaxed its commitment to austerity, submitting more easily to bottom-up pressure for increased spending. The Raisi administration is now faced with the difficult task of managing the fiscal obligations it has inherited. The choice facing Iran’s new president is whether to prioritise the demands of constituencies that have shown a capacity for sustained protest, or whether to redirect spending in favour of workers in the judiciary, police, and military who are among his core constituents. With next year’s budget negotiations coming up soon, Iranian workers have the government on the back foot.

Photo: IRNA