42 years minimum wage battle in Iran

Abbas Goya – February 2021

Introduction

What determines the wage of a worker?

For centuries this question has been the central conflict between labor and capital. Economists often attempt to answer it through formulas and calculations, but in reality wages are determined by something far simpler: power.

Where workers are organized and capable of collective action, wages rise. Where they are weak or unorganized, wages fall toward subsistence.

The concept of the minimum wage is the dominant bourgeois framework for determining wage levels. Unfortunately, even a significant number of socialist labor activists have accepted the minimum wage as the ultimate formula for wage determination. For this reason, it is important to pause and critically examine the concept itself.

Minimum wage refers to the wage that allows the worker to cover the cost of subsistence—the minimum conditions necessary for survival. In economic terms, this corresponds to the value of labor power, or the cost of reproducing the worker’s ability to work.

But how is this cost determined?

Jamshid Hadian, the translator of Capital into Persian, explains:

“Like any other commodity, labor power has a value equal to the time required for its production. In theory, this value corresponds to subsistence. But Marx never claimed that the worker’s right in the real world is limited to this minimal existence. The level of wages—the share of the working class in society’s wealth—is determined by the fighting power of the working class, a share that can and should rise to the point where workers take control of the entire wealth of society.”

This raises a crucial question: why should the wage be defined by a minimum at all?

Workers have no reason to draw such a line. Like all human beings, they desire prosperity and a full life. The concept of a minimum wage primarily serves the interests of capital. If employers could set wages freely, they would push them toward zero in order to maximize profits. Yet they must at least pay enough to reproduce labor power; otherwise there would be no workers available for exploitation in the production process.

The Absurdity of “Scientific” Subsistence

Attempts to determine subsistence scientifically quickly become absurd. At an abstract level, the human body requires a certain amount of calories and nutrients: protein, fat, carbohydrates, vitamins, and minerals.

But these nutrients can be obtained in vastly different ways. One could obtain them from fresh vegetables, fruits, and quality meat—or from a few glasses of sugar water, some beans, and vitamin tablets.

During wage negotiations, workers’ representatives often attempt to calculate a “realistic” subsistence basket consisting of the cheapest available foods. But the fundamental question remains: why should workers be expected to survive on the cheapest possible food?

Why should workers be deprived of fresh, high-quality nutrition? Why should they be excluded from culture, education, travel, leisure, and technology? If these are elements of human life, why should workers be denied them?

Although this argument is morally compelling, it rarely determines wage levels in practice. The decisive factor remains power, not reasoning.

Hadian therefore emphasizes an important distinction:

“There is a world of difference between the ‘means of subsistence’ and the ‘means of life.’ Notice that we never speak about the capitalist’s ‘livelihood.’ The capitalist has a life, while the worker is expected to accept mere livelihood. When we speak of livelihood, we implicitly accept that workers do not need vacations, higher education for their children, culture, computers, or leisure. Food, clothing, and shelter are considered sufficient.”

Historically, the concept of subsistence has been promoted by economists who defend capitalism. For them, the worker’s right is simply to survive long enough to return to work the next day and reproduce the next generation of workers.

Wage Negotiations in Iran

Every year in Iran, the negotiating parties begin calculating competing estimates of the “real” minimum wage. Employers and the government attempt to minimize the figure, while labor unions—and sometimes socialist organizations—calculate a more generous subsistence basket.

But the outcome is almost always the same: the government and employers prevail.

Why? Because workers enter the negotiations having already accepted the framework of the minimum wage. From the beginning they approach the bargaining table using the employer’s logic.

The minimum wage framework does not primarily protect workers. It is a mechanism through which the state and employers regulate the price of labor power.

The Role of the State: A Canadian Example

Even in advanced capitalist economies, minimum wage policies often serve the interests of capital rather than workers.

In provinces such as British Columbia and Ontario, governments have increased the minimum wage partly to stabilize the labor market. The cost of living—especially housing—in cities such as Vancouver and Toronto has become so high that many workers have begun leaving these areas.

If wages had not increased, the labor market would soon have faced severe labor shortages. Under such conditions wages would rise far more rapidly than the modest increases proposed by the government.

By raising the minimum wage in advance, the state acted as a representative of the broader capitalist class, preventing a more dramatic wage increase that could have emerged from market pressures or labor unrest.

The political function of the minimum wage is not unique to Iran. Similar dynamics can be observed even in advanced capitalist economies.

Wage Determination Around the World

In several Scandinavian countries—including Iceland, Finland, Sweden, Norway, and Denmark—as well as in countries such as Italy and Switzerland, there has historically been no universal statutory minimum wage. Instead, wages are  primarily determined through collective bargaining agreements between unions and employers. Because unions are highly organized, these agreements effectively establish high wage floors across entire industries.

Legally, employers in these countries could pay very low wages. In practice they do not, because workers are highly organized and possess strong collective bargaining power.

By contrast, countries such as Qatar, Yemen, Somalia, Ethiopia, Uganda, the Maldives, and South Sudan either lack meaningful minimum wage systems or fail to enforce labor protections. In these countries exploitation is extreme, largely because workers lack the right to organize.

In Bangladesh the minimum wage varies by industry. In Egypt it applies mainly to public-sector workers. In India, China, Canada, and the United States, minimum wage levels vary by province or state.

These examples demonstrate that the key factor determining wages is not legislation but worker organization.

The Wage-Profit Relationship

Wages are not determined in isolation—they are intimately tied to the profit interests of capital. Capitalists aim to extract as much surplus value as possible from workers, which sets an inherent limit on how high wages can rise without reducing profits. Even when workers organize and demand higher pay, any wage increase threatens the rate of profit, which capital seeks to defend through cost-cutting, technological substitution, or price increases. This is why inflation, unemployment, and underemployment are often used not as economic necessities but as tools to discipline labor. In other words, the wage struggle is not merely a question of subsistence or bargaining skill—it is a direct confrontation over the distribution of the wealth produced by labor, reflecting the structural logic of capitalism itself.

Forty-Two Years of Wage Struggle in Iran

A historical examination of wage struggles in Iran reveals both the strengths and weaknesses of the workers’ movement.

In 1978, before the Bahman uprising, the monthly minimum wage was about $258 (in inflation-adjusted dollars).

Immediately after the 1979 revolution, the wage increased to approximately $437 per month. This dramatic increase—the largest in Iran’s modern history—was not the result of scientific calculations of subsistence. It was the result of a balance of power in favor of workers, created by the emergence of workers’ councils during the revolutionary period.

Workers were able to impose their demands on employers and the state through collective organization.

However, these gains were reversed after the suppression of the revolution. By 2021 the minimum monthly wage had fallen to roughly $79.

In other words, the purchasing power of Iranian workers had declined to about one-sixth of its level in 1979.

This dramatic reduction has produced widespread poverty and social misery. When wage delays, unemployment, and inflation are added to the equation, the protests of January 2017 and November 2019 appear inevitable.

The Role of Inflation

Inflation is one of the most common mechanisms for reducing real wages.

Contrary to popular belief, wage increases do not necessarily cause inflation. Rather, inflation reduces real wages by eroding purchasing power. Governments often contribute to inflation by expanding the money supply, a policy that indirectly benefits capital by lowering real wage levels.

Unemployment and Wage Suppression

Another factor contributing to low wages in Iran is widespread unemployment.

From a market perspective, unemployment increases the supply of labor. This creates downward pressure on wages and allows employers to impose multiple wage rates. Many unemployed workers accept wages below the legal minimum—or work under programs such as “internships”—which further lowers wage standards across the labor market.

The collapse of workers’ wages in Iran was therefore made possible by several interconnected developments:

* The destruction of workers’ councils

* The prohibition of independent labor organizations

* The banning of strikes

* Persistent unemployment

* Inflationary monetary policies

Conclusion

The decisive factor behind the dramatic wage increase of 1979 was the existence of independent workers’ organizations, especially workers’ councils formed during the revolutionary period.

These organizations allowed workers to impose their demands on employers and the state.

The subsequent suppression of the workers’ movement—including arrests, executions, bans on labor organizations, and the prohibition of strikes—reversed these gains. Over the past four decades, despite nominal wage increases, the purchasing power of workers has steadily declined.

The experience of the past forty years demonstrates that the minimum wage framework cannot solve the wage problem. Employers and the state will not voluntarily grant workers a dignified standard of living.

The fundamental issue is not persuading employers to raise wages. The issue is power.

Forty years of negotiations over the minimum wage have demonstrated one clear lesson: workers cannot secure a dignified life through calculations at the bargaining table.

The decisive factor is organization. Only workers who act collectively--as a class--can impose higher wages and defend their standard of living.

The experience of Iran confirms a broader historical truth: where workers build independent organizations, wages rise. Where those organizations are destroyed, wages collapse.

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Notes

1. In this essay, the term minimum wage is often used interchangeably with subsistence minimum, although the two are not identical. A legally established minimum wage could theoretically provide a decent standard of living, but in practice it is often reduced to a subsistence level.

2. Wage calculations:

• Minimum wage in 1978: 6300 rials ($63 at 100 rials per dollar). Adjusted for dollar inflation to 2021: approximately $258 per month.

• Minimum wage in 1979: 17010 rials ($121.5 at 140 rials per dollar). Adjusted to 2021 dollars: approximately $437 per month.

• Minimum wage in 2021: 19,110,000 rials. Converted at 241,000 rials per dollar: approximately $79 per month.

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