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Characteristics of Labor Force Developments in Iran During Four Decades 1956-1996: Trends and Consequences

Political and Economic Ettela'at; Periodical
Aug. & Sept. 1998, Nos 11 & 12
By: Dr. Mohsen Nazari, University Professor

Summary: The present article is the result of research studies conducted in the following fields: the rate of the public activities, the employment ratio, the distribution of the employed population among active population of the country, the shares of the public and private sectors in the employment creation, the low rate of specialized employees, the productivity of employees, the capital for each job, productive elasticity of employment, the employment in rural and urban areas, the distribution of employed and unemployed persons by provinces, the unemployment rate in each province, women's share and the composition of inactive population.

The articles then concludes:

1- The rate of public activity in Iran is very low;
2- The agricultural sector has low capacity for employment creation;
3- The government has had a dominant role in employment creation;
4- The percentage of specialist employees in the total is very low;
5- The capital consumption for each job has reduced during the last ten years;
6- The employment created is mainly in urban areas;
7- Women's share in employment has been very low;
8- The rate of productivity in Iranian economy has been low;
9- Employment will be a major problem for Iran in future.

Text: Manpower has a dual role in economic planning: as a development factor on one hand, as a development objective on the other. The human capital has been the focus of attention in development theories, particularly during the last few decades, and the relative advantage of countries is characterized by the attention paid to human capital.

The problems of manpower and human capital are related to many factors and are very complicated topics. The characteristics of the Third World Countries add to this complexity. On the one hand manpower supplies related to some variables such as the rate of population growth, the age and sex distribution of population, migration, the rate of women's participation, etc., and on the other hand the demand for manpower is also related to such variables as the volume of investment, the distribution of investment, technology and the economic growth.

With due regards to the characteristics of the country it is necessary to pay attention to the manpower and to suitable planning therefore. Since the Third Plan (1963-67), when a separate chapter was, for the first time earmarked for the manpower and employment, serious attention has been paid to this subject.

For the reasons referred to in this report, the question of employment has gained importance in the macroeconomy, and in the economic rehabilitation plan, which has been announced recently, the planners' foremost concern is the question of employment.

In order to understand the developments of the labor market in Iran during the past four decades and the factors affecting them, certain indices will be introduced, and taking the changes of these indices into consideration during the past four decades, light will be thrown on the labor market developments in Iran. There is no doubt, that without recognition of these developments, it is not possible to plan correctly and to understand the development of the trend governing the labor market in Iran.

LOW RATE OF PUBLIC ACTIVITIES

One of the most important features of the labor market in Iran is the low rate of public activities. This index has been calculated in table one for the period 1956 to 1996. The rate of public activities is decreased from 32% in 1956 to 25.9% in 1986 and then has increased to 26.7% in 1996. Nevertheless the rate of public activities in the country for 1996 is still lower than that of 1996, 1966 and 1956.

The high rate of population growth, young population, insignificant participation of women in the labor market etc. are among the reasons for the low index. For example, during the period of 1976 to 1986, while the growth rate of population of persons ten years and younger was 4.5%, the rate of growth of active population was 2.5%; furthermore the rate of women's activity was only 5.4%.

The low rate of the public activity in the country causes the burden of dependency to rise, and the rise of dependency burden will affect the rates of saving, investment and other economic indices. From the point of view of this index, our country is not on a suitable situation, as compared with other countries. In view of the foregoing account, one of the most important long term and macro plans of the country in the manpower dimension is to raise the rate of public activity to a suitable level.

In order to do this, it is necessary to raise employment level, to raise women's participation in the labor market, to reduce and stabilize the rate of population growth, to reform the age pyramid of the population etc. To reform some of these cases is a long term process, and the effect of some on the improvement of the rate of public activity will be felt with some delays. Therefore, we must take action to improve the rate of public activities of the country as quickly and as seriously as possible.

Table (1) - Manpower indices in Iran during 1956-1996 period
 

Source: Statistical aggregate, time series of economic and social statistics up to 1996, public census and statistical year books of 1956, 1966, 1976, 1986, 1991 & 1996, and the writer's computations

LOW EMPLOYMENT RATIO

Another feature of the labor market in Iran is the low employment ratio. The employment ratio is obtained by dividing the employed population by the total population, and is calculated and shown in table one for the Iranian economy for the last four decades. This ratio is decreased from 31.2% in 1956 to 29.3% during the 1986-96 period. In other words, the employment ratio is still lower than those of 1976 and the preceding years, though it has begun to rise again since 1986.

This law ratio has, like the rate of public activities, an adverse effect on the economic indices, like the rate of investment, the burden of dependency, investment, the household wealth, etc., and will lower down the productive capacity of the family and the country. The low ratio shows that one person must provide for the living expenses of a higher number of people. In 1996, each employed person had to provide for the living expenses of 4.2 persons, which would cause the reduction of the level of savings of households hence the national savings.

The low ratio is the result of the low number of employed persons, the population growth, young population, women's low participation in the labor market, low demand for manpower etc. In order to compare the figures of Iran with those in other countries, it is interesting to mention the following:

In 1993, the employment ratio for Egypt was 28.5, Brazil 42, the U.S. 50, Japan 50.5, Denmark 51, France 39.6, West Germany 46 and Turkey 33.5%. It is seen that the employment ratio in our country, as compared with others is very low, which is itself the source of many economic difficulties. The objective of the state macro-economic plan should be to raise this ratio to about 50% in the course of a long 20 year perspective plan.

In order to make the dimensions of the problem more clear, it is necessary to pay attention to the following statistics: If the rate of population growth of the country is taken to be 1.5% during the 1996-2021 period, then the population will reach 87,136,523 in 2021. If the employment ratio is taken to be 30% for the year 2021, then 26140957 persons will be employed in that year, which is 11568957 higher than that of 1996. In other words this number of new jobs must be created or 462,758 jobs per annum. Considering the potential capacity of the Iranian economy, this objective can be attained, of course, on the condition that this potential capacity is actualized.

Taking the performance of the 1976-1986 period into account, it is seen that the Iranian economy has been able to create 220,000 new jobs per year. During the 1986-96 period, 350,000 jobs have been created per year, and its annual rate for the first half of the decade (1986-91) was 418,000 and for the second half (1991-96) was 287000 new jobs. Therefore, by means of transformations in the economic and planning system, we should make it possible to create 400 to 500 thousands new jobs per year. In view of the past trend and the economic system it is unlikely that so many jobs may be created in the Iranian economy, although it is not inconsistent with the economy of Iran.

The more the rate of population growth is diminished and the unemployment is lowered, the more will the employment ratio rise. The improvement of this index is one of the points that should be taken into account by planners in the long term plans of labor market and employment.

DISTRIBUTION OF ACTIVE POPULATION AMONG MAIN SECTORS OF ACTIVITIES

Distribution of workers among the main sectors of activity (agriculture, industry and services) is also among the characteristics of the situation of any labor market. It should be made clear which sectors have a higher demand for manpower. Table No. 2 shows the distribution of the active population of ten years and older in the whole country in terms of the main groups of activities during the 1956-1996 period. A study of this table would reveal interesting points about the demand of manpower in Iran and its developments during the last four decades which may be used as raw materials for macro- and long term plans in order to reform and change this trend.

Table 2 - Distribution of active population of ten years and older in terms of main sectors of activity during the 1956-1996 period (thousands persons)
 

Source: General census of the country, statistical center of Iran, years 1956, 1966, 1976, 1986, 1996 and calculations of the writer

The number of those employed in the agriculture sector has decreased from 56% in 1956 to 23% in 1996. The decrease of share of workers in the agricultural sector in economic development is a natural phenomenon, and is considered to be one of the criteria of development. The downward trend in the workers of the agricultural sector may be regarded as a desirable matter, but it should be mentioned that the share of workers in the agricultural sector in 1996 was still too high.

This share is about 10% in developed countries. It seems that the reduction of the share of agricultural workers should constitute one of the objectives of manpower planning. This objective is consistent with others such as the consolidation of agricultural land, increase of productivity in agricultural sector, high rate of plot of land per farmer, application of technology and new tools in the agricultural sector. It seems that the agriculture sector is faced with surplus workers and that there is a considerable hidden unemployment in this sector. For example, per capita land for each farmer in Iran is about 6 hectares, which is too low and cannot be a basis for modern agriculture to suit all economic sectors. It is noteworthy that the reduction of shares and even the absolute figure of persons employed in the agricultural sector does not mean lack of attention to the agricultural sector or encouraging migration to cities. It is quite the opposite. It means that the surplus workers in the agricultural sector has caused a reduction of productivity and migration to cities. In order to prevent migration some policies would be required which aim at creating employment in non- agricultural sectors in the regions from which migration takes place.

The share of workers of the industrial sector has increased from 20% in 1956 to 34.2% in 1976. This share decreased during 1976-86 decade, then increased from 1986, but has not reached the figure of 1976 yet. In a desirable development process the share of the workers of industrial sector increases at first, and then after going through the initial industrial stages, the share decreases in favor of industrial sector. During 1976-86 decade, of the Iranian economy, this natural trend was disturbed owing to difficulties of the Islamic revolution and the war (1980-88), while this trend was resumed during the years before 1976 and after 1986.

The employment created during the last three decades point to the fact that the service sector has created the highest number of jobs during the 1976-91 period. For example, 2203000 jobs were created during 1976-86 decade. In other words, during those years, the Iranian economy has been able to create 220,000 jobs per annum, 100% of which pertained to the service sector, that is to say 199000 (19000 per year) were in the agricultural sector, in return, 232000 jobs were lost in the industrial sector, and, as a result, the employment created in the service sector amounted to 223,600. For various reasons, this decade was not a balanced period for the Iranian economy. The situation of Iran is such that at this stage of development, the employment in the agricultural sector should have remained at least constant or reduced, and the highest number of employment be created in the industrial sector, or at least the employment creation in the industrial and service sectors be equal to each other.

During 1986-96 decade, altogether 3,529,000 jobs were created per year, out of which 4.5%, 47.9% and 47.6% were in the agricultural, industrial and service sectors respectively, which is a reasonable composition. During that decade the agricultural sector was capable of creating 16,000, the industrial sector 169000 and the service sector 168000 jobs. If the 1986-96 period is divided into two five-year periods i.e. 1986-91 and 1991-96, then the highest number of employment was created during the first half of this decade. In any case, during the last decade the Iranian economy created the highest number of jobs for job seekers and also suppliers of manpower.

According to the available information, during the last 20 years the agriculture sector has created fewer than 20,000 jobs while high attention was paid to the above sector. Hence the ability of agriculture to create jobs is low, and if employment creation and unemployment removal are the objectives of planning then attention should be paid to employment creation of other sectors.

During the last 20 years the highest number of employment has been created in the service sector. During this period 3917 thousand jobs have been created in the service sector. In other words, 196 thousand jobs have been created by this sector per year, while the total employment created during the last two decades was 5732000 jobs, that is 287000 jobs per year. In other words about 70% of the jobs created during the recent years were in the service sector.

During 1976-86 decade, the industrial sector lost 232000 jobs, and 223,6000 jobs were created in the sector. If the service sector is divided into two parts, namely general and social services and other services, it will be seen that 1.5 million jobs were created in general and social services, which reveals the government's dominant role in the matter of employment creation during this decade.

Drawing up a strategy for development of the country would require essential attention to the distribution of persons employed in various groups of activities and the economic sectors of the country. This strategy should be drawn up with due regard to the employment creation capability of the country, productivity of sectors, technological development, etc. The question of income distribution is, to a certain extent, the function of distribution of employees of sectors.

SHARE OF PUBLIC AND PRIVATE SECTORS IN EMPLOYMENT CREATION

Table No. 3 shows the distribution of the active population broken down in the public and private sectors. The table indicates whether the employment created belongs to the private or public sectors.

One of the aspects of making the government smaller and reducing the share of government activities and privatization is the question of employment. Determination of the suitable share of the public and private employment (which should be taken into account in a dynamic manner in a long term plan) is an important aspect of making policies at a macro scale. Optimum distribution of the employees in the public and private sectors has a determining role in the productivity and performance of the economic indices.

During 1966-76 decade, the employment created in the public sector was more than of the private sector. During this decade 1010 thousand and 938 thousand jobs were created by the public and private sectors respectively. This situation was changed radically during 1976-86 decade and has taken up an undesirable form. That is to say out of 2203 thousand jobs created, only 4000 belonged to the private sector. If the undeclared jobs are added then the share of the private sector will get to 20%. But the public sector created 80% of the jobs during the same period. Of course, during this period we were faced with confiscation of private companies and nationalization of some industries in the post Islamic revolution years, which changed the composition of employees severely in favor of the public sector.

Table 3 - Distribution of employment in terms of public and private sectors during the 1966-96 period
 

Source: General population and housing census, statistical center of Iran, years 1966,76,86,91,96 and writer's calculations

During the 1986-96 period, through an increase in the share of the private sector in employment creation, the distribution of employees has improved. The information given in table 3 shows this situation clearly. According to the information contained in table 3 the trend of employment creation of the private sector has improved since 1986. But 30% of employees in 1996 were still in the public sector which is more than that of 1976 and the preceding years. Provision of suitable conditions such as facilitating investment of the private sector, recruit of investment and encouraging the private sector can all be effective in increasing the employment capacity of the private sector.

In view of the fact that the agricultural sector is run mainly by independent personnel of the private sector, so if the employment in non-agricultural sector is taken into account and attention is paid to the shares of the private and public sectors therein, the government's dominant role in employment creation can be understood better. In 1996, the share of the public sector in non-agricultural employment was 37%. This share rose to 43.5% in 1986, while it was 28% in 1976.

The important point is that determination of the optimum share of public and private employment would require determining a suitable status for public and private sectors, for which there has not been consensus of opinion in post revolution years. It seems that more attention has been paid to the private sector in recent years, and it will be so in future. Hence the employees of the private sector are expected to grow at a higher rate as compared with that of the public sector.

LOW SHARE OF SPECIALIZED EMPLOYEES

The specialized manpower in any country is one of its most important human capitals and assets and has an effective role to play in an optimum utilization of the facilities of the country. As reforming the structure of such employees from this point of view is a time consuming process, and as it takes a long time to train specialist employees, so it is necessary to take into account changes of employment of specialized manpower within a macro and long term plan.

Table 4 shows the situation of specialized manpower during the 1966-96 period broken down into the major groups of activities. Although the share of specialized manpower in the total active population has risen from one percent in 1966 to 9.6% in 1966, still specialized manpower constitutes very low percentage of the active population of the country.

There were 739,000 specialized employees in 1991, which increased to 1,403,000 specialists in 1996. The rate of growth of specialized workers during the 1986-96 period was about 11%, while the rate of growth of employees as a whole was 2.8%. Hence although during the five years ending in 1996, the population of specialized employees had doubled and the rate of growth of specialized workers was much more than that of total workers, the share of specialized workers, compared with total workers, is still low.

Table 4 - The situation of main groups of activities in terms of manpower during the 1966-96 period
 

Source: Balance of specialist force, Hassan Taie, Ministry of Culture & Higher Education, 1991, 1994 & the general census of 1996

In 1986, the index of specialist manpower for one million population was 11889 persons which rose to 15767 in 1991, and 23000 in 1996. Considering the Asian average for this index which was 11686 persons in 1985, the situation of our country is suitable, but this ratio is lower than the world level (23442 persons). The highest ratio pertains to North America which was 126,200 persons for every one million population, and the lowest ratio pertains to Africa, i.e. 3451 persons.

In 1996, the highest share of specialist workers pertained to the sector of general, social and personal services and the lowest figure pertained to agriculture, in which only 4.7% of workers were specialists. It would be interesting to compare this figure with the corresponding ratios of other countries. During the above years, this ratio was 40.6% in Canada, 23% in Japan, 20.7% in Finland, 17.4% in West Germany, 16.8% in Denmark, 12.8% in Spain and 12.1% in Australia.

Distribution of employees in main groups of activities shows that the agricultural sector has attracted the lowest number of specialist forces and the general, social and personal services have attracted the highest. For example in 1991, out of 739000 specialist forces, 553 thousand persons were in this sector. Such a situation prevailed in other years too. This point shows that productive and private sectors have not been so successful in attracting specialized forces. There is no doubt that until productive and private sectors are in such conditions as to increase their share of specialized workers, there will be very little chance of effecting renovations in these sectors. That is because it is the specialized manpower that raises the efficiency of physical capital, raises productivity and provides for the welfare of the society.

It is necessary to pay attention to the share of specialized forces, particularly in productive and private sectors, in any planning, which, of course, requires changes being made in the educational system.

PRODUCTIVITY OF EMPLOYEES

As raising productivity would lead to a better and higher use of the limited resources and to a better growth and welfare with consumption of the same sources so it is among the essential variables in any development planning. Any policy making would face numerous difficulties if due attention is not paid to productivity.

In table 5 the productivity of occupations, broken down in economic sectors, is shown for the 1976-1996 period, and their rate of growth for recent years is calculated. The productivity for 1996 was one, which means at the constant price of 1982, every thousand active persons created one billion rials added value. It is interesting to note that the productivity of 1996 was less than that of 1976; of course, the productivity for the whole country without oil is higher than the productivity of 1976.

Table 5 - Productivity of occupations in economic sectors (At constant price of 1982, billion rials, 1000 persons)
 

Statistical year book, general census of various years & writer's calculations

The growth of total productivity during 19976-86 was negative and equal to -3.5 percent. Of course, productivity of the whole country without oil had a rate of growth of 0.4%. The agricultural sector had the highest rate of growth, i.e. 3.8% during the 1976-86 period. In the remaining years too, the rate of growth of agriculture was higher than the rate of growth of general productivity. During the 1986-1991 period, although the general growth of productivity was positive, productivity without oil had a negative growth. The productivity growth during the 1991-1996 period was the highest in the last 20 years. During the 1986-1996 period the growth of productivity was 1.1% and growth without oil was 0.8%. During the 1986-1996 period the agricultural sector had the highest growth, and during the 1991-1996 period, the rate of growth of agriculture & service sector were the highest. During the 1986-1991 period the industries and mines sector had the highest rate of growth of productivity

CAPITAL INVESTMENT OF EVERY OCCUPATION

The amount of money invested for every person employed is a variable which has a determining role in employment. When this index is determined it will be seen how much investment is necessary to create one job in economic sectors. Furthermore one can say that in a labor intensive program, which sectors should be given priority of investment. It is very difficult to calculate the amount of investment for every occupation in terms of sectors. Due to the different methods of calculating the existing capital, different results may be obtained. Estimation of capital investment for every occupation is an independent and interesting topic, which may be determined by various methods.

In order to make the point clear one can calculate the ratio between the increase of investment (capital formation) and increase of employment. This ratio shows how much money has been invested for creation of one job. Of course, this index has its own difficulties, but it may be used as instead of capital investment of every occupation.

In table 6 the ratio between gross fixed capital formation to increase of employment has been calculated for three decades. This ratio was 5.1 for the whole country during the 1986-96 period, which indicates that 5.1 billion rials at constant price of 1982 was spent to create 1000 jobs. This ratio was 9.989 for 1976-1986 and 8.454 for the 1966-1976 periods. During all the periods the highest ratios were for oil and gas, which are, in fact, the most capital intensive sectors. The lowest ratios during the 1966-1976 & 1986-1996 periods pertain to the construction sector. During the 1986-1996 decade, the ratio for industry was lower than of agriculture in the whole country. In other words, according to this index employment creation of each unit of investment was higher in the industrial sector.

Table 6 - Gross fixed capital formation and employment broken down for economic sectors (At constant price of 1982, billion rials-1000 persons)

Statistical aggregate, time-series of economic & social statistics up to 1996

EMPLOYMENT PRODUCTION ELASTICITY

This ratio which is derived from the rate of growth of employment to the rate of growth of production, shows what percentage growth would be obtained against one percentage growth of production. The calculations related to this index for three decades and in term of economic sectors is shown in table 7. This index for all economic sectors was 0.74 for 1986-1996, which shows that for each one percent increase in production, there was 0.74% of employment increase. During this period, this ratio was very high for construction and mines sectors and very low for agricultural sector. Furthermore, this ratio was higher for the 1986-1996 than for the 1966-1976 periods.

Table 7 - The rate of growth of production and employment for economic sectors during the 1966-1991 period
 

Statistical aggregate, time-series economic-social statistics up to 1996

In a labor intensive program, attention should be paid to the growth of those sectors which have high employment production elasticity. According to table 7, compared with other sectors, agriculture has much lower effect on employment. If employment is the primary objective of a program, agriculture would not help this matter, and more attention should be paid to construction, industries and mines sectors. For more accuracy, the information contained in table 7 should be calculated for subsections of industries, agriculture and other activities.

URBAN AND RURAL EMPLOYMENT

Employment and unemployment for urban and rural areas over the last three decades are shown in table 8. The share of persons employed in rural areas during the 1966-1996 period has been decreasing, whereas that for urban areas has been increasing. In other words, most of the employments has been created in cities during the last few years. During the 1986-96 period, for instance, altogether 3,569,000 jobs were created, 2,846,000 of which were in urban areas, that is 80% of jobs were created in towns, although the share of urban population is lower than this figure.

Although most of the jobs were created in urban areas, the share of rural unemployment has been decreasing and share of urban unemployment has been increasing. Rural-urban migration has had a determining role in this matter owing to differences in income and other aspects. In order to regulate rural-urban migration, one should establish an equilibrium between man, activity and space, so that better use is made from the facilities of each region and migration is turned into a constructive rather than destructive phenomenon.

Table 8 - Distribution of employment and unemployment among populations of ten years and older in villages and towns
 

General population and housing census, statistical center of Iran 1966, 76, 86, 91, and 96

PROVINCIAL DISTRIBUTION OF EMPLOYED AND UNEMPLOYED PERSONS AND UNEMPLOYMENT RATE OF EACH PROVINCE

The distribution of employed and unemployed persons of every province can lead to regional disequilibrium, and entail some consequences such as migration, dissatisfaction and instability; Tables 9 and 10 show the provincial distribution of employed and unemployed.

In 1976, the highest unemployment rate was in Gilan province, which constituted about half of the active population of the province (about 25% of the unemployed persons were in this province). The lowest unemployment rate was in Yazd province. In 1976, the unemployment rates of Hormozgan, Mazandaran, Gilan, Kohkiloyeh and Boyerahmad, Kurdistan, Khuzestan and West Azarbaijan were higher than unemployment rate of the whole country.

In 1996, the unemployment rates of Kermanshah, Lorestan and Khuzestan provinces were the highest; and the unemployment rates of Mazandaran, Lorestan, Gilan, Kohkiloyeh and Boyerahmad, Kermanshah, Khuzestan, Ilam and West Azarbaijan were higher than the unemployment rate of the whole country.

Table 10 shows the provincial distribution of employed persons and share of each province of the available employment. For example, Tehran province has had the highest percentage of employment in recent years, and in 1991 and 1996, 20% of the whole employed persons have been in this province, showing that more employment has been created in this province.

Decentralization, regional planning and management have all been mentioned as factors that may remove discrimination and establishment of regional balance among various parts of the country. In any employment planning one should not be content with general indices and should pay attention to provincial indices, because while the general indices of the whole country may improve, their provincial distribution may not improve, and so difficulties may ensure.

During the 1986-1996 period, altogether 3569000 jobs have been created, 24% of which were in Tehran province, but, the population of this province is less than 24% of the population of the whole country. Problems of this nature lead to some phenomena such as migration, which is the origin of other phenomena too.

Lack of regional balance and differences of employment possibilities and other social, cultural and economic factors have caused the figure of migrants to increase to 8,719,000 persons during the 1986-1996 period, whereas this figure was 5,821,000 during the 1976-1986 period. In other words, in 1996, about 15% and in 1986 about 12% of the population of the whole country lived in regions other than their own places of birth. A high percentage of the migrants are persons younger than 20 years of age, who turn to migration in search of better jobs and living facilities.
Table 11 shows the age and sex distribution of migrants for the 1976-96 period.

Table 9 - Provincial distribution of the unemployed and share of each province (1000 persons, %).
 

Source: Statistical Year books, 1976, 1996

Table 10 - Provincial distribution of employed persons and share of each (1000 %)

Statistical yearbooks. When use is to be made of this table, we must take into account the changes made in boundaries of provinces, during various census.

Table 11 - Distribution of migrants in terms of age and sex
 

SHARE OF WOMEN IN EMPLOYMENT

Table 12 shows women's share in employment of the whole country in terms of urban and rural areas for the 1966-96 period. Women's role in employment should be considered from several points of view. Changes in the employed women will lead to changes in women's participation in the economy, family, economic standing of the country, women's independence and to other cases.

An important point is that the growth of employed women will lead to rise in labor supply and if enough job opportunities are not created, it will lead to rise in unemployment. In fact, the women's role is the hidden driving force of labor supply, and if not enough attention is paid to it, economic planning will not be sufficiently accurate.

Table 12 shows that women's share increased during 1966-76, decreased during 1976-86 and increased again since 1986. The number of employed women has risen particularly since 1991. The growth of employed women was 4.8% during 1986-1991, whereas it rose to 7.5% during the 1991-1996 period.

The growth of all employees during those periods was 3.5% and 2.2% respectively. In view of the fact that the share of women students is going up fast, so it seems that the growth of employed women will be higher still. According to information contained in table 12, the growth of the share of rural employed women was higher than that of urban ones.

Therefore there is a hidden driving force in women's labor supply, that, notwithstanding the reduced growth of population, will raise the labor supply, on account of the rise of women's participation. If this hidden driving force is not taken into account, predictions about demand and supply of labor will not be accurate enough.

Table 12 - Women's share in employment
 

Source: General population and housing census statistical center of Iran

COMPOSITION OF INACTIVE POPULATION

In table 13 the share of housewives and students in inactive population has been calculated and its changes during the 1966-1996 period is shown.

The inactive population may be divided into two groups: temporary and permanent inactive population. Temporary inactive persons are potentially active, and will become active after a period. For instance a certain percentage of students are temporary inactive population and will become active when their studying courses are terminated. Housewives are mainly permanently inactive, and only a small number of them will get engaged in economic activities.

It is important to study the composition of housewives and students in the inactive population of the country. According to table 13, the share of students in the inactive population has gone up very much in recent years. For example, in 1996, out of 28821 thousand inactive population, 12633 thousand or 44% wee students many of whom will join labor supply when their academic work ends. This ratio was 33% in 1986. The growth of inactive students during the 1986-1996 period was 93%, while the growth of inactive population of the country was only 43%.

Study of the same index in the inactive women population reveals other aspects. The ratio between women students to the total inactive women population has gone up from 9% to 30% during the 1966-1996 period. Women students have grown by 124% during the 1986-96 period or 8.4% per year.

As against increase of share of students in inactive population, the share of permanently inactive housewives has decreased. The ratio of housewives was 75% in 1986 and 65% in 1996. The share of housewives to the total inactive population has decreased from 56% to 46% during the same period.

Table 13 - Share of students and housewives in inactive population

SOURCE: Statistical aggregate, time-series of economic and social statistics up to 1996
 
Table 14 - Gross and net dependency burden in terms of regions during 1966-96
 

SUMMARY AND CONCLUSION

In order to plan and devise employment policy, its changes must be studied. The nature of labor market has changed during the last three decades.

1- The rate of public activities in Iran is very low. This index has decreased particularly in post-revolution years and has put our economy in an unsuitable situation. This decrease has affected the dependency burden, saving rate, and investment capability. Low employment rate together with low activity ratio (coefficient) is one of important indices that have become worse in post-revolution years compared with pre-revolution years.

2- Agricultural sector has low capacity for employment generation. In spite of the attention paid to this sector during the last two decades, there has been low increase in the number of employees of this sector. It can even be said that agriculture is faced with redundant works. In macro planning, employment generation capacity of industries and services sectors must be increased and the share of agricultural workers be reduced.

3- The government has had a dominant role in employment creation. The share of employment generation of non-governmental sectors must be increased by various measures in future.

4- The ratio of specialized employees to total is low. This ratio has increased in recent years, but the situation should be improved further. Distribution of specialized employees in unsuitable. The share of specialized employees in productive sectors such as industry and agriculture is insignificant. Capacity of productive sectors to