Iran Imposes Strict Restrictions for Fighting the Third Wave of COVID-19

ECONOMYCOMMENTARY 20.11.2020
Yasir Rashid Assistant, Economy

If the new restrictions are fully implemented, there will be significant job loss and Iran will witness further economic and socioeconomic strain, deprivation, and income inequality.

In many countries, the spread of COVID-19 has entered the second wave. In Iran, however, with a marked increase of infections and a rise in the number of deaths, the country is experiencing a third wave of the Coronavirus outbreak. Every day, thousands of people in Iran test positive for the virus and hundreds lose their lives; forcing the Iranian government to impose strict restrictions to fight against the pandemic’s third wave. According to the plan, which will be implemented from November 20, 2020, new restrictions will be enforced in cities located in the red zone. In this regard, Iran’s President said that due to the spread of the pandemic in the country, severe restrictions will be imposed in different cities. “A comprehensive plan to fight coronavirus was approved by the National Task Force for combating Coronavirus at the suggestion of the Ministry of Health,” said President Hassan Rouhani. According to this comprehensive plan, three levels are defined for cities and metropolitan areas: red, orange, and yellow; if a city is at the warning level (red status), except for the most essential jobs, all other jobs will be "closed". During the first phase, new restrictions will be imposed in 150 cities and metropolises.

The restrictions are being introduced at a time when employment in Iran is deteriorating, with millions of people losing their jobs. In this regard, the latest report from the Statistical Center of Iran shows that in the summer of 1399 (July-September 2020), Iran's employed population decreased by 5% (about 1.2 million people) compared to the previous summer. However, Mehdi Mehrpour, the editor of 90Eghtesadi, quoting Eshaq Jahangiri, Iran's first vice president, tweeted that due to the COVID-19 outbreak, in the spring and summer of 1399 about 3 million people lost their jobs; 1.5 million in spring and 1.2 million in summer.

Moreover, in addition to official statistics released by the Iranian Statistical Center, reports from Iran's domestic news agencies also indicate that employment is declining in the country. In this regard, Donya-e Eqtesad reported on the financial difficulties of several companies, which have faced workforce adjustment and layoffs. According to the newspaper, 601 small, medium, and large enterprises with the potential to create thousands of jobs have been shut down due to the coronavirus outbreak, sanctions, an unfavorable business environment, and macroeconomic instability.

Employment, a main indicator of the economy, is of great importance in establishing society’s economic stability. Paying more attention to the issue of employment can lead to increasing the level of public welfare and comprehensive development in society. However, in Iran, the economic situation and the recession in production, due to sanctions, have caused some businesses to close or to reduce their production, leading to reduced employment. Moreover, in the face of the Coronavirus outbreak, the country has again faced a sharp decline in employment and a subsequent rise in unemployment.

Consequently, if the new restrictions are fully implemented, many jobs will be lost; the country will face dire socioeconomic consequences such as a tsunami of unemployment, accompanied by poverty, deprivation, and declining social welfare. Furthermore, unemployment and inflation, currently the people’s main problem, have extremely weakened and impoverished Iranian society. Continuing this process means joining the society’s middle class to the lower deciles, which will result in a reduction in the middle class. Since the decline of the middle class means shrinking the number of people who contribute to the economic growth of society, then, the diminution in the middle class is a serious concern for Iran's crisis-ridden economy. As a result, the decline in employment will jeopardize the productivity of the Iranian economy.

Iran, COVID-19, Employment, Unemployment

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