With US sanctions biting, half a million jobs at risk in the auto industry
Food prices have become prohibitively expensive. Real estate is also up. Making ends meet is harder for more and more Iranians. Major car manufacturers like Peugeot, Mazda, Citroen and Hyundai have left.
Tehran (AsiaNews/Agencies) – Iran’s financial crisis following the decision by US President Donald Trump to cancel the 2015 Joint Comprehensive Plan of Action (JCPOA) and introduce the toughest sanctions in history will have serious repercussions on employment.
In the automotive sector alone, more than 450,000 jobs are at risk, some in the coming weeks. Rising housing and food prices are making it harder for Iranians to make ends meet.
The first batch of US sanctions came into effect recently. The second is set for 5 November, including oil and gas, the main source of revenue for the Iranian government.
Iran’s Foreign Minister said that US policy will not stop the country's economy nor its crude oil; however, the first effects are beginning to bite.
Many low-income Iranians have lost purchasing power in the last few weeks as prices for imports are up. Essential goods are becoming prohibitively expensive for many. Manufacturers who need to import raw materials or parts are facing tough times.
On Tuesday the price of poultry meat went from 97,000 to 111,000 rials (US$ 2.65) per kilo. The price of red meat jumped to 600,000 rials per kilo, which is more than twice the rate of government set retail prices. A 30-egg tray costs between 136,000 and 210,000 rials.
Some reports indicate that the price of dairy products increased by 18 per cent, whilst fresh fruit went up by 64 per cent in the past week. Tea and sugar rose by 19 per cent in the same period.
The cost of housing rose on average 19 per cent in Tehran, this according to the Statistical Centre of Iran, a governmental body. However, another source reports that housing prices rose 40 to 60 per cent in some parts of Tehran as rich Iranians try to protect their capital by sinking it into real estate. The alternative is to export capital to tax havens.
Meanwhile, the cost of medical drugs has also risen forcing more and more people to give up treatment, even if drugs are available on pharmacy counters.
Unlike prices, wages have remained stagnant for some time, with workers paid on average 10 million rials, about US$ 100 in the open market (US$ 250 a year ago).
With few prospects for growth, hundreds of thousands of jobs are at risk. In the auto industry, output could decline by up to 80 per cent.
About 14,000 people have already lost their jobs and production has fallen by 50 per cent, following the departure of Peugeot, Mazda, Citroen and Hyundai.
By the end of September, car part manufacturers may not be able to meet orders if the government fails to deal with the strong dollar.