How did per capita income evaporate?

How did per capita income go down?

According to Iran Gate’s report, experts have recently announced a significant decrease in per capita income of Iranian citizens this year. This indicates an increase in the wealth gap and reflects the deteriorating living conditions of the citizens. According to economists, the main driving force behind poverty in any economic system is the inflation rate. In Iran, this driving force is highly active due to the inflation rate of nearly 50%.

According to the information published by the Statistical Center of Iran, the inflation rate has recorded a growth of 580% from 1995 until now, which is almost unprecedented among countries worldwide. Only Venezuela and Zimbabwe have managed to break such a record and have taken the lead from Iran.

Income that went down

This statement can imply a worsening of people’s living conditions due to the devaluation of the Iranian rial over the years. Meanwhile, the income of Iranian citizens, including employees and individuals with fixed jobs and incomes, has increased by a little over 300% in the past 6 years. Comparing this statistic with the inflation rate of nearly 600% during the same period indicates a decrease of approximately 50% in per capita income for this segment of society.

The depth of the tragedy of translating income into dollars

Now, if we convert the income of workers in Iran to the exchange rate, the severity of the situation will become much more apparent. According to reports, the income of government and private employees has decreased from around $620 in 2017 to around $215 in 2021. In other words, when we translate the income of Iranian citizens into the US dollar exchange rate, the numbers indicate a one-third decrease in the earnings of fixed employees in the government and private sectors in just 5 years.

This is while the catastrophe becomes even more evident when calculating the minimum wage set by the Ministry of Labor. With the approval of the Supreme Labor Council, the minimum wage in 2017 increased by 145% compared to the previous year, reaching 930,000 tomans (approximately $200) and approaching becoming a million.

However, in 2022, the minimum wage for workers was set by the Supreme Labor Council at 4,179,750 tomans (approximately $400). Now, by converting both figures to dollars, it can be said that Iranian workers received around $200 per month in 2017, but this figure has decreased to less than $96 due to price jumps in the foreign exchange market, meaning a halving of the income of Iranian workers and minimum wage earners.

The government, inflation, and soaring prices

However, during the period of 1400 and 1401, they are recognized as inflationary turning points, especially due to the surge in exchange rates. This is because in 96 and 97, the dollar rate experienced increasing fluctuations following Trump’s withdrawal from the JCPOA. However, during the 19-month period of Raisi’s government, a similar event did not occur that could be considered as a market stimulus for increasing the dollar price.

Nevertheless, Raisi’s government has only recorded a 20,000-toman increase in the dollar price in the 19-month period. In fact, the approximately 100% growth in the exchange rate has led to a halving of Iranians’ income in just a year and a half. In other words, it can be said that more than half of the decline in people’s purchasing power over the past 5 to 6 years belongs to the government, which has been in power for only a year and a half, and this leadership is still ongoing.

Looking at the trend of inflation rate fluctuations, concerns are intensified because the recent months have shown a significant increase in the inflation rate. This important economic indicator also signifies a meaning and concept beyond the decline in people’s purchasing power, leading to the widening of poverty in society and the intensification of social discontent.