Iran's poorest citizens still waiting for some semblance of parity after 39 years
Iranian authorities need to muster the courage and will to tackle fundamental tax and subsidy reforms to remedy the gaping wealth inequality in the country.
When the 1979 Islamic Revolution in Iran took place, its overriding objective was social justice achieved through helping the poor and ensuring political freedom. However, after almost four decades, the income of low-wage earners nationwide has plummeted as the wealthy have grown wealthier.
Comprehensive studies of the Iranian economy show that the income gap in Iran is significantly higher than in other nations that have successfully lowered their standing on the Gini index of household wealth distribution, the most commonly used measure of inequality. A survey presented in December at the Iranian Economy Conference in Tehran showed that people who earn the most (those in the 10th decile) spend 14 times more than the most underprivileged people (those in the first decile). This conclusion was based on monthly average per capita expenditures during Iran's fiscal year that ended March 20, 2017.
Using the Gini index, the lower the score, the better the equality; zero represents absolute equality. In the past 10 years, Iran's Gini coefficient improved when it slid from a high of about 44 in 2006-07 to about 37 in 2013-14. However, Iran's index started to worsen again to just shy of 40 in the fiscal year that ended in March 2017.
The core argument that can justify the changes in the Gini index is how much people's earnings have grown compared with inflation. Since the general wage growth of the poorest segment of the population has commonly been far below inflation, when inflation rose that segment's net disposable income was destined to drop. Thus, the real rate of income growth for these people turned negative. Furthermore, when the economy shrinks due to recession, the poorest pay the highest price as they are often the first to lose their jobs.
