Libmonster ID: TJ-530
Author(s) of the publication: N. M. MAMMADOVA


Candidate of Economic Sciences Institute of Oriental Studies of the Russian Academy of Sciences

Iran Keywords: social policyprinciples of the Islamic legal systemGini coefficientMehr program

In the 1960s and 1970s, the Shah's model of development provided Iran with a fairly high rate of economic growth. Every year, the volume of industrial output increased by 10-15%. Modern branches of industrial production were emerging. And yet, this model has failed, mainly because the right balance has not been found in the relationship between the wealthier state and society. Yes, in general, the level of GDP per capita has grown 3.8 times in ten years (from 1966/67 to 1976/77). However, at the same time, the stratification of society also grew rapidly.1

After the 1979 Islamic Revolution, the new regime declared its primary goal to support the underprivileged. The Islamic leadership faced a challenge: what should be the specific social policy, how should it be correlated with the Islamic principles of justice?

On the eve of the revolution, the Gini coefficient 2, which shows the level of uniformity, or, in other words, equity in the distribution of income, was 0.5143 (the higher to one, the greater the income inequality).

This, of course, is not as critical as it was in other countries neighboring Iran. But the concept of inequality, like poverty, always has a subjective dimension in addition to the objective one.

The concept of subjective inequality includes various aspects - from economic to cultural. This includes the difference in living conditions, especially in the everyday life of the Europeanized stratum of the population and the traditional strata that received very little from oil money; and the difference in access to health care and education. Discontent was caused by the spread of prostitution, alcohol, and foreign influence in culture.

It cannot be said that the Shah's regime did nothing in the field of social policy. After all, the" white revolution " itself, according to the Shah's plan, assumed that the entire society should participate in the ongoing socio-economic and political reforms. At the same time, the Shah tried to give these reforms an Islamic rationale. After all, the principle of complicity (sharaqat) is the principle underlying the entire Islamic legal system.

In the period of the 60s, laws were passed on labor, on workers ' participation in profits, and on the distribution of shares of large state and private enterprises among their employees. Much has been done to eliminate illiteracy and encourage women to participate in economic and political life. When in the late 1970s the economy became unbalanced as a result of the injection of oil money into it, there was a shortage of goods on the domestic market, and the state began to fix prices for basic goods - also in the interests of the population.

Although all the reforms were officially carried out under the slogan of "participation" of the country's population in them, in fact this participation never happened. We have to admit that the regime fell not as a result of conspiracy or external interference, but as a result of mass protests against the Shah's regime, including against its social policy.


The new regime declared its main goal to support the underprivileged (mostazzefin), i.e. those who could not become a participant in economic development, as well as those who subjectively felt disadvantaged by the processes taking place in the country. In the initial period after the Islamic Revolution, many laws were repealed, and the organizations responsible for social policy created under the Shah were dissolved. But gradually, as the Islamic state matured, it began to use some of the elements of the previous social policy, more precisely, those that did not contradict the goals of the new state.

* "White Revolution" - the top social reforms undertaken by the Shah of Iran Mohammad Reza Pahlavi in 1963.

page 16

All development plans indicate that the main goal of social policy is to reduce economic inequality through a fair distribution of income. At the same time, the very concept of fair distribution at different stages was different. Thus, in the first decade, the Islamic principle of justice explained the nationalization of large property in favor of the entire Ummah. Currently, the country's religious leader also explains the need for privatization by the principle of justice, which now declares access to state property for the broad masses of the population.

Social policy has many aspects.

First of all, it is necessary to focus on the general indicators that characterize the standard of living of the Iranian population and the degree of its stratification. In 2010, gross national income per capita (GNI) was $4,520 (116th place in the world) at the exchange rate, and$11,500 (95th place) at purchasing power parity (PPP).4. This is above the global average. The Gini coefficient was estimated at 0.383 in 2005, 0.445 in 2006, and 0.425 in 2008. Thus, the level above 0.45, which is already threatening social upheavals, is currently not present in Iran, but there is still a tendency to increase it somewhat.

In 2008, the poorest (first) decile group of Iranians * accounted for 2.2% of the total income of the population, the second group -3.6%, and the third-4.7% 6. The other three lowest groups accounted for slightly more than 10% of the population's income, and the largest part of it - 72% - was accounted for by the four highest (wealthier) groups. State policy provides for the provision of social support specifically to the lower strata of the population.

What exactly is being done to eliminate poverty and inequality?

1. The level of the minimum wage, from which social benefits are calculated, is regularly increased. The amount of these payments is determined annually. From 2000/01 to 2010/11 they increased more than 4.5 times - from $57 to $303 per month7. In November 2012, amendments to the tax legislation were adopted, according to which individuals employed in the private and public sectors, whose annual income does not exceed 84 million riyals, or $6,850, are exempt from paying income tax.8

2. Even the lowest strata, especially among the urban population, have access to all basic public services. Thanks to this, there is a qualitative change in their lives. By 2010, the rural population was almost 100% provided with high-quality drinking water, electricity, and gas.

The number of Internet users in 2009-2010 was 11-13 for every 100 people9. Not only are all city schools equipped with computers, but rural schools are also equipped with computers.

3. A program for public participation in various economic projects is being implemented. How?

A) As in a number of other countries, the privatization program in Iran was initiated through the sale of shares at reduced prices for its employees. But this type of attraction of the broad masses of the population to the economy did not have any significant effect, because at the initial stage of privatization, shares were often bought up by the management of companies.

B) Through the issue of special shares, or so-called participation securities (ourage mosharekyat). The first issue of such securities was conducted by the Tehran Municipality back in 1994. Then it was directed to the modernization of factories and the reconstruction of the Navvab 10 highway. In the Islamic financial legal system, such securities are classified as sukuk, the Islamic equivalent of bonds. All proceeds from sukuk are related to actual assets or income from created assets, and are not simply received profits in the form of interest**.

These first shares, or bonds, were valid for 4 years. The annual profit was guaranteed at 20%, the real amount of dividends was 20.5%. Subsequently, shares were issued by various state-owned companies and banks. Payment for them was guaranteed by the Central Bank at the expense of budgetary funds, funds of the Central Bank of the Russian Federation.

* The entire population of any given country is divided into 10 troupes (deciles) based on their income or expenses. % is the share of each group in the total income of the population (approx. author's note).

** Due to the fact that Sharia law prohibits usury, traditional fixed-income bonds are unacceptable. Sukuk provides guaranteed income at the expense of the profit of the funded event, i.e. it is targeted (editor's note).

page 17

other banks, companies, as well as at the expense of local budgets. Funds from the sale of these shares through the Tehran Stock Exchange or banks go to strictly defined projects. So, for example, in 2011. they went to petrochemicals. Then, due to Western sanctions on the export of gasoline to Iran, the country was forced to expand its production at its own petrochemical facilities.

The most famous is the issue of participation shares under the Mehr program, which brought popularity to Mahmoud Ahmadinejad, who even in the first election campaign (2005) made slogans of justice. In the six years since the adoption of the law on the Mehr program (2006-2012), a total of 2.77 million housing units have been built and occupied for the construction of affordable housing (see photo). Individuals applying to purchase housing under this program are granted preferential loans in the amount of 25 million rubles. tumanov (approximately $20.5 thousand) with a maturity of 13 years 11.

C) By issuing equity shares. If the shares, or participation papers, assumed the participation of the population in financing various projects and making a profit on the results of their implementation, then the purpose of issuing equity shares was the participation of the population in privatization. They began to be issued after the country's leadership adopted a program of privatization of most state property in the second half of the 2000s. The categories of different population groups receiving shares and the order of distribution of shares were determined.

The first and largest group (more than 7 million people) received shares free of charge. It included families who lost relatives in the war with Iraq (1980-1988), those with incomes below the subsistence level, war invalids, and families without a breadwinner. Shares were issued by the Equity Fund, to which 20-30% of the share capital of privatized enterprises was transferred. The program was supposed to reach up to 24-25 million people. Of course, the effect of these actions can be significantly reduced in the context of sanctions - a system of discriminatory trade restrictions imposed by the United States and the European Union on Iran, but the very attempt to make the privatization process more fair deserves attention.

4. The social policy of the Islamic Republic of Iran is aimed, inter alia, at improving working conditions. The labor legislation has been brought in line with the requirements of the International Labor Organization. More attention is paid to surcharges for children, superannuation, and organization of care for young children. Dismissal of employees is extremely difficult.

Despite the measures taken, the problem of unemployment, which is painful for Iran, remains unresolved. In 2010, the unemployment rate was 11.8%. It is especially high among young people aged 15 to 24 years. Among men, it reaches 20%, among women-34%12. It should be noted that until 2009, the unemployment rate was steadily declining, but since 2009, in addition to the crisis, sanctions have had a huge impact on the economic situation. Due to restrictions on the import of components, many enterprises were forced to reduce production. Implementation of many projects has been suspended.

5. Subsidies to producers and consumers are widespread. The practice of subsidizing consumer goods, as mentioned above, was used under the Shah and was criticized by the opposition clergy. But after the revolution, especially during the war with Iraq, price subsidies were not only restored, but also extended to a much larger range of goods. After the beginning of market reforms in the 1990s, the system of virtually total state pricing was destroyed. However, maintaining prices for such basic goods and services as bread, fuel, medicines, utilities and public transport continued to be subsidized from the budget.

Subsidies for these basic goods are currently being reduced as part of what is arguably the largest economic reform in the last two decades. However, social payments are made to the low-income population in exchange for losses from price increases, so-called targeted support. A special fund was created for VAT receipts from October 2010 for goods of the highest price category. Up to 50% of the fund's funds are allocated to families in need. The rest goes mainly to support industries that used previously subsidized goods, i.e. to develop their own production facilities.-

page 18

industry, agriculture, and transport (up to 30%). Simplified transfers were introduced for any family that applied for assistance. There are 19 million such families, or almost 80% of the population of Iran. 13 Social benefits of this kind are gradually being reduced. Nevertheless, they have helped and continue to help the lower strata of the population adapt to the gradual increase in prices.

6. The current pension system in Iran allows pensioners to have a fairly decent standard of living compared to other developing countries. Social assistance is also provided through Islamic foundations, such as the Imam Khomeini Committee, the Shahid Foundation, the 15 Mordad Foundation, and the Destitute Foundation. According to various estimates, the number of religious and public charitable foundations officially operating in the country alone is about 3 thousand. Several tens of thousands of waqfs** and other religious organizations are engaged in charitable activities. In the Iranian context, this kind of assistance is typical. According to some international and Iranian experts, the budget of an Iranian family consists to a greater extent of various kinds of subsidies than from its main activity and property.


A significant place in social policy is given to education. The regime has made education a religious obligation (Khomeini fatwa). For the adult population, the anti-illiteracy program launched under the Shah was expanded. Courses on the elimination of illiteracy were granted the right to issue secondary education diplomas, which make it possible to enter universities. The network of higher education institutions has been expanded. From 1976 to 2010, the literacy rate of the population (aged 15 and above) increased from 48% to 85% .14

In 2009-2010, education expenditures accounted for about 5% of GDP and almost 20% of all budget expenditures. At the same time, it should be borne in mind that as a result of demographic changes that bring Iran closer to European trends, the share of the school-age population is gradually decreasing, and spending on education is increasing. The number of students in schools and colleges in 2010 exceeded 13 million, in higher education institutions - over 4 million. In addition, 1.5 million students study in the Azad University system* ** (Free or Open University)15.

Much attention is paid to health issues. From 1979 to 2010, men's life expectancy increased from 58 to 70 years. In women, it reached 73 years 16. Budget expenditures on healthcare and their share in the country's GDP are constantly growing (up to 5-6%). Despite the active involvement of the private sector in social infrastructure, the State's share of total health spending remains high, above 40%. A total of $836 was spent on health care per capita in 2010 at PPP and $317 at the exchange rate.

The results of social policy are also characterized to some extent by such an indicator as the human Development index (HDI)17. This index tends to increase over the period 2000-2010 in Iran, which indicates a positive trend in social development. The country's HDI grew faster than the regional and global HDI. In 2010 Iran ranked 70th in the ranking of countries by this indicator (Turkey -83), in 2011 - 88 (Turkey - 92), entering the group with a high level of 18.

* * *

Thus, some of the directions of Iran's social policy are adequate to the global ones, while others have religious overtones. But the fact that social policy is one of the priorities for the Islamic regime is obvious. Moreover, given the tightening sanctions regime and the deteriorating economic situation in Iran, when there is a high probability of reducing budget revenues, it cannot be ruled out that not everything planned by Tehran in the social sphere will be achieved. In this regard, the importance of social policy increases, the main goal of which is to maintain public confidence in the existing regime of government.

* The Fund is intended to help families affected by the anti-Shah uprising on June 5 (15 Mordad), 1963 (author's note).

** Waqf, waqf (Arabic, literally - holding) - property, in accordance with Muslim law, transferred by an individual for religious or charitable purposes (editor's note).

*** Azad Islamic University is the largest network of universities in Iran, founded in 1982. The university has about 400 branches in Iran, including small towns and even villages (editor's note).

1 At constant prices 1990/1991 Calculation based on: National Accounts of Iran. 1338-1379. Tehran. 2003. P. 49.

2 Gini coefficient - a statistical indicator of the degree of stratification of society in a given country or region in relation to any of the studied characteristics. Most often, in modern economic calculations, the level of annual income is taken as the studied feature. The Gini coefficient can be defined as a macroeconomic indicator that characterizes the differentiation of monetary incomes of the population in the form of the degree of deviation of the actual distribution of income from their absolutely equal distribution among the inhabitants of the country (approx. ed.).

3 Iran Media Guide. Tehran. 2001. P. 13.

4 World Development Report 2012. P. 392.

5 Factbook. 2012.

6 Central Bank of the IRI. Economic Report and Balance Sheet. 2008/2009. P. 198.

7 Annual Review 1389 (20102011). P. 60.

8 Vestnik Kavkaza. "Electronic journal". 01.11.2012.

9 Factbook.2012.

10 Central Bank of the IRI. Credit Department. Participation Paper, from Beginning until Now. P. 1.

11 Ibid. P. 4.

12 Factbook. 2012.

Mamedova N. M. [13] The sanctions regime against the Islamic Republic of Iran and its impact on the situation in the country / / Sanctions and their impact on Iran, Moscow, 2012, pp. 9-10.

14 World Bank. Iran, Islamic Republic at a glance. 29.03.2012.

15 Annual Review, 1389 (2010/2011). P. 61.

16 World Development Report 2012. P. 392.

17 The Human Development Index (HDI) is an integral indicator calculated annually for cross - country comparison and measurement of the standard of living, literacy, education and longevity as the main characteristics of the human potential of the study area. It is a standard tool for general comparison of the standard of living of different countries and regions (editor's note).

18 Human Development Report 2011.


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