42 years minimum wage battle in Iran

Abbas Goya

February 2021

What should be the selling price of the worker's labor power? The answer to this question has been the subject of debate between workers and employers for the past few centuries. There is no magic formula for determining the worker's wage, what there is is a balance of power, to the extent that the worker can realize their power, they can demand a wage rate from the owner of capital that is consistent with a decent life. In this regard, there are achievements that I will mention below. 

The minimum wage is the bourgeois formula for determining the wage rate. The minimum wage model has unfortunately been accepted even by a significant segment of socialist labor activists as the ultimate formula for determining wages. It is necessary to pause for a moment about the concept of minimum wage itself.

Minimum wage[1] refers to the wage with which the wage earner can meet his subsistence costs, that is, his minimum living conditions. The minimum wage is the exchange value of labor power, which is synonymous with the cost of subsistence. How can the cost of subsistence be measured? 

Jamshid Hadian, the translator of Marx's Capital, says: 

"Like any other commodity, labor power has a value equal to the time spent on its production, and nothing else, that is, the value of labor power in theory is this "subsistence". But Marx does not say that the "right of the worker" in the real world is this "subsistence", this minimal life. Marx considers the determination of the wage level or the standard of living of the worker, that is, the determination of the working class's share of the wealth of society, to be a function of the working class's fighting power - a share that can, and should, be raised to take over the entire wealth of society."

Why and where should the minimum wage line be drawn? The worker has no reason to draw such a line. Naturally, they, like any other human being, desire a prosperous life. But the owner of capital benefits with drawing the minimum wage line. If it were up to them, they would prefer the minimum wage to be close to zero so that their profit rate can be maximized. But the employer has to pay the minimum cost of reproducing labor power, otherwise he will have no labor power left to exploit in the process of producing goods. 

How then can the minimum wage be determined? If the criterion of science is, at a relatively abstract level, the physical regeneration of the body is achieved through the supply of calories, that is, pure nutrition of protein, fat, sugar plus the necessary vitamins and minerals. The necessary amount of the above substances can be provided either by the best and therefore most expensive fruits, vegetables and meat, or by a few glasses of sugar water and some beans and vitamin tablets. 

The workers' representatives may include a list of the cheapest possible foods - instead of the capitalist's glass of sugar water and beans - in the worker's food basket, as a minimum subsistence. But the question is: why should the worker's body be regenerated by the cheapest foods? Why should the worker be deprived of the freshest, organic, and high-quality food in his life basket and be content with the bare minimum in his subsistence basket? If high-quality food is for human consumption, why should we assume that the worker is not human? The above argument is not difficult, but it is never effective or sufficient in the fight for higher wages. I will return to this.

Hadian continues: 

“There is a world of difference between the ‘means of subsistence’ and the ‘means of life’ that I have spoken of (and which is also Marx’s exact German equivalent). [To understand the difference] just ask yourself why we never talk about the capitalist’s ‘livelihood’? Why should the worker have a ‘livelihood’ and the capitalist a ‘life’? When we use the word "livelihood," which is something a little more than a survival, we are saying that I, the worker, and my family do not want to go to the seaside, we do not want a vacation abroad, my child does not need to go to university, my family and I do not need to have a computer, we do not need culture, my family and I do not need ..., just having our stomachs full, a roof over our heads, and clothes to wear is enough for us. Interestingly, from a theoretical-political (or political economy) perspective, "livelihood" has been something that economists who defend capitalism have used, and still use, because they really consider the worker's right to be able to come back to work tomorrow and produce children (i.e., future workers)."

As soon as the wage negotiation season begins in Iran, the negotiating parties take up the abacus to show what the "real" minimum wage rate is. The employer and the government are greedy, and the labor unions and sometimes the socialist political organizations are generously calculating the same equation to determine the minimum wage. This fight ends in favor of the government and the employer because the worker has entered the negotiations with the employer with the white flag of minimum wage from the very beginning. 

The minimum wage is a tool of the employer and the government to determine the wage rate of the worker. It is not a tool to protect and defend the interests of the worker. By taking up the flag of the minimum wage, the worker sits at the negotiating table with the employer as a tool of the employer! In Canada, the provincial governments of British Columbia and Ontario have initiated the increase in the minimum wage to save the capitalists! How? 

The minimum living wage, especially the cost of housing in these two provinces, has become so disproportionate to the minimum wage that workers have begun to migrate from these two provinces, especially the cities of Vancouver and Toronto, to other cities. If the minimum wage is not increased today, which no single capitalist has any incentive to do at present, the labor market will soon face a shortage of labor, and in that case the increase in the price of labor will certainly be much higher than the rate of increase proposed by these two governments today. So the state, as an instrument to serve the interests of the entire capitalist class, believed that by increasing the minimum wage, it has taken a preventive measure to prevent an "excessive" wage increase along the way.

Wage setting in every corner of the world

In none of the Scandinavian countries - Iceland, Finland, Sweden, Norway and Denmark - or Germany - which recently implemented a minimum wage with government intervention - or Italy and Switzerland, where workers receive the highest wages in the world and have the highest welfare facilities, is there a uniform and universal category called the minimum wage. In Austria, the minimum wage is set only for workers who are not organized. What exists in these countries is an agreement on wages. Legally, no one can stop the employer in these countries from paying very low wages. But why doesn't the employer do this? Because the worker is organized and has established rights and entitlements. On the other hand, there is no minimum wage in Qatar - where the news of brutal exploitation of workers has been in the news due to the death rate of 1,200 people in work accidents during the construction of the Olympic stadiums -, Yemen, Somalia, Ethiopia, Uganda, Maldives and South Sudan, countries where exploitation and lack of rights of workers are skyrocketing because workers are deprived of the right to organize. In Egypt, only government workers are included in the minimum wage. The minimum wage in Bangladesh varies in each industry. Despite the recognition of the minimum wage, according to statistics from 2017, its rate in Haiti is 25 cents per hour, in Georgia 5 cents, in Gambia 13 cents, in Kyrgyzstan 8 cents, that is, officially forced labor rates. In India, China, Canada and the United States, the minimum wage rate varies in each province or state.

Ultimately, the selling price of labor power is imposed by the buyer of labor power, not the worker. For the worker, any progress in determining the wage rate requires some degree of organization. Organization is the secret of worker power. Only organized workers who appear in the capacity of a class can keep wages high, at the level of the means of subsistence. The worker in Iran, like the organized worker in Scandinavia, can base his negotiations not on a minimum subsistence level but on a dignified life. Why should the worker have to count the number of calories and protein he needs daily to determine the cost of a minimum of low-quality food? Why should the worker choose the price of a room the size of a prison cell as housing? Where is the law of nature in this? The main problem for the worker in determining the wage rate is organization, not reasoning to prove the amount necessary to cover the cost of his daily consumer goods.

Forty-two years in Iran

With a historical look at the struggle over wage determination in Iran, perhaps one can find its weak points and strengths.

The monthly minimum wage in 1978, before the Bahman uprising and with the inflation rate and the parity of the dollar updated, was 258 US dollars.[2] The minimum monthly wage increased to $437 immediately after the revolution at the beginning of 1979 due to the existence of labor councils that were formed in the wake of the 1979 revolution. It almost doubled. This increase was the largest jump in the worker’s wage in the history of capitalism in Iran. It had nothing to do with determining the minimum subsistence level, but rather was the result of a balance of power in favor of the worker. 

The difference from previous years was that the workers were able to take the struggle forward in their favor with the tools of labor councils and impose their demands on the employer and the government. However, this achievement was withdrawn simultaneously with the suppression of the revolution, so that the minimum monthly wage has fallen to $79 this year 2021. In other words, the purchasing power of the worker today is close to one-sixth of his purchasing power in 1979.

This degree of reduction in the wage rate means poverty and misery for the worker. Now add the non-payment of this amount of wages to the above equation, and then the protests of January 2017 and November 2019 seem inevitable. If we were to calculate a worker’s monthly wage in rials and compare it to his purchasing power in 2015, that is, assuming the same rate of $437, the worker’s wage this year would have been ten million, five hundred and thirty-one thousand tomans per month. For 2019, the worker’s basic wage would need to increase to 13 million tomans (1 toman=10 rials) to equal his purchasing power in 1979.

When we add up the items necessary to calculate wages, including housing costs in large cities, car or public transportation costs, education and childcare costs, entertainment costs, and digital devices that were sometimes not included in the items of life in 2019, the worker’s standard of living has decreased by one-sixth compared to 2015 and by one-third compared to 2018. It is not without reason that nostalgia for the “good times of the Shah” has become common among some workers. But it should be remembered that the 2018 revolution doubled the minimum wage! The immediate achievement of the 1957 revolution for workers was not an increase in wages, but the formation of independent workers' councils - independent of the government. Thanks to the existence of such organizations, the minimum wage took an unprecedented leap in 1979, doubling. 

In contrast, the suppression of the 1979 revolution is not limited to the mass killings of the 1980s, but also included the suppression of protests, the arrest and execution of labor leaders, the disintegration of existing organizations, and the banning of labor organizations and councils. The medieval repression of the 1960s was a sharp reduction in workers' wages. In parallel with the prohibition of the right to organize and strike, workers' wages were frozen from 1980 to 1988, i.e., exactly in line with the political repressions of the 1980s, while the inflation rate during that period was an average of over twenty percent per year. In other words, by freezing workers' wages, they not only rolled back the 1958 wage increase, but also reduced the wage level to below what it was during the Pahlavi "tyrant".

It is worth noting that inflation is a common form of wage rate reduction. The reverse is not true, i.e., wage increases cause inflation.

It does not inflate, but rather reduces the rate of profit. The capitalist, with the help of the government, reduces the wage rate by creating inflation - by increasing the volume of money. Governments cause inflation for various reasons by increasing the volume of money, which in any case causes a decrease in the wage rate.

In addition to the prohibition of the right to organize and strike for workers, in addition to the direct and open suppression of workers and independent labor organizations, in addition to monetary policy and the creation of inflation to keep the wage rate low to the level of literal slavery, another factor in keeping the worker's wage low in Iran has been the phenomenon of unemployment. If we consider unemployment from the market perspective as an increase in the supply of labor, this phenomenon has caused the labor force to have multiple rates. The unemployed are largely satisfied with a lower rate than the minimum wage, even with labor schemes such as "internship", which in turn lowers the general minimum wage rate for all employees. For this reason, the worker even accepts the delay in payment of his wages. In any case, the road to the collapse of the worker's wage was paved by the elimination of the workers' councils, or independent workers' organizations, and the prohibition of their right to organize and strike.

Conclusion

The main and vital factor in the unprecedented increase in the worker's wage in 1979 was the existence of independent workers' organizations - independence from the government - and specifically the workers' councils, which had spread and been formed throughout Iran thanks to the 1979 revolution. This achievement was only taken back by the suppression of workers and leaders of the workers' councils and then by the prohibition of the right to organize and strike. Since the nationwide suppression of workers until today, the purchasing power of the worker, taking into account the nominal and rial increase in the minimum wage, has not increased even a single rial, and has decreased by an average of 4 percent annually. The purchasing power of the worker in 1979 is one-sixth of his purchasing power in 1979. 

First of all, this version of the worker's poverty and misery has no union response. The money lenders who have determined to drink the blood of the worker at any price will not be generous at the negotiating table on the minimum wage. 41 years of experience in negotiating for a minimum wage increase is proof of this claim. It is necessary to reiterate that the minimum wage has decreased by an average of more than four percent annually over the past 41 years. 

The final and definitive solution to the wage problem is to get rid of the entire capitalistic government apparatus in Iran. The Islamic Republic must be swept out of the way and replaced by a government whose foundation is the abolition of wages, whose goal is to organize production not for profit but for consumption, and whose goal is the welfare of society. But what should be done in the struggles at the end of 2019 over a minimum wage increase?

As shown above, the problem of increasing the minimum wage is the problem of independent labor organizations. The problem of the worker in the struggle for a wage increase is not to convince the employer and the government to provide the minimum means of subsistence. The problem is how to impose an increase in the wage rate on the employer. To impose a wage increase, one must have appropriate tools, one must have executive power. The worker can and must seize all the power, the worker must take steps towards gaining political power. The instrument that can represent the power of workers and implement it at the mass level is independent workers' councils. 

In addition to participating in the March struggles to increase the minimum wage, labor activists need to set themselves the goal of creating such organizations. This could be the beginning of the formation of a dual power. Given the protests and aggressive spirit of workers over the past year, achieving such a goal is quite possible.

***

Notes

[1] In this note, the minimum wage is used synonymously with the subsistence minimum, although the two are not necessarily the same. The minimum wage has a "valid" logic, which is the legal determination of a wage rate so that no worker is paid less than it. But this wage rate should in no way be equal to the subsistence minimum, but the minimum wage should be a wage that corresponds to the cost of living with a decent standard. The problem is that the minimum wage and the subsistence minimum are often used interchangeably. That is why I replaced the minimum wage with "wage rate". Otherwise, the very act of legislating a basic wage or minimum wage, assuming it provides a decent living, is "valid".

[2] The math

1) Minimum wage in 1978 was 6300 rials equivalent to US $63 Dollar @ 1978 rate 100 rials per dollar, after 2021 dollar inflation adjusted it was $258/month

2) Minimum wage in 1979 increased to 17010 rials, converted to US dollar per 140 rials for dollar was $121.5 and then adjusted for dollar inflation up to 2021 results in $437/Month

3) Minimum wage in 2021 was 19 million and hundred & ten thousand  19,110,000 rials converted to US dollar at the time of this writing in Feb based on 241000 rials per dollar results $79/Month