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Farhang-e Touse'e [Culture of Development]; (Monthly)
Cultural, Social, Political & Economic
Jun. - July 1998, No.s 34 & 35
By: Maryam Mohseni
Summary: The economic adjustment plan, which was implemented following the termination of the Iran-Iraq war in 1989, led to the implementation of privatization plan, which was approved by the Council of Ministers on April 25, 1991.
In the course of time, implementation of the plan has had consequence for the manpower community and for factories including privatization plan and other productive national sectors covered by the plan. As the privatization leads to reduction or cessation of government's support for many production sectors, so the responsible officials, in order to be able to compete with active production sectors with imported goods, have taken action to adjust and modify the labor
force, and in the course of time, omit the fringe benefits and their commitments vis-a vis workers, reduce the safety costs of workers, decrease holidays and eliminate the formal labor force under various titles.
Text: The economic adjustment plan has been put into effect since 1989 after the termination of the war. Although some changes have been made therein since 1994 and modified to a certain extent, what has been pursued since 1989, has been the "adjustment policy". Privatization was another part of policies which have been put into effect after the economic adjustment plan. In a session held on April 24, 1991, the privatization policy, on the basis of interpretation of Articles 134
and 138 of the Constitution, was approved by the Council of Ministers.
Following the implementation of this plan, the government adopted the policy of transfer of big productive units to the entrepreneurs of the private sector, or restoring the confiscated companies to their original owners, in order to initiate momentum and keep the economic wheels of the country turning. In practice, however, the privatization plan did not proceed as expected, and in those fields in which it has taken place, it has not achieved much success. (1)
Many of the owners of privatized factories, instead of making efforts to raise the quality of goods, joined the queues of importers of similar goods, resulting in some parts of production units and large scale unemployment. In some factories where production was initiated, the factory owners, in order to enable the produced goods to compete with similar foreign products and to earn higher profits, adopted the policy of reducing the costs, which so far has resulted in
dismissal of the so-called "redundant" forces, enhanced severity, enforcement of more strict disciplinary regulations, hiring of contract workers instead of permanent ones, reduction of fringe benefits, etc.
On the other hand, changes of internal regulations of factories and enforcement of new regulations that exert more pressure on workers, have led to the intensification of exploitation. The economic adjustment plan has, so far, had no effect for workers except unemployment, intensification of exploitation, and extension of poverty, and has worsened the living situation of workers. This point is confirmed by statistics. For example "consumption of bread in the basket of family expenses has gone up and the amount of consumed protein has come down. The shortage of calorie resulting from insufficient consumption of meat and other protein materials, is compensated by consumption of large amounts of bread." (2)
From the very beginning some economic experts declared their opposition to privatization, invoked some problems such as increased unemployment, increase of class gaps and inequality, extension of poverty etc., and expressed the view that privatization would have unpleasant social consequences. That was why they opposed the project. They considered that the starting point would be a correct analysis of the economic situation of the country, then adoption of a style to suit the situation, rather than taking international situation into account or submitting to, and implementing the decisions of, some institutions such as international monetary fund and the World Bank.
In spite of the consequences of privatization, its advocates consider that its negative effects such as extension of unemployment, concentration of wealth and income to be quite natural. They regard it to be binding. Some defenders of privatization go so far as not to regard even the small increment of workers' wages which is quite out of proportion with the rate of inflation, as an incentive for an employer to invest. They talk as though extension of unemployment and poverty
were insignificant subjects, little realizing that one is talking about the living and subsistence rights of thousands of workers who have fallen in the state of destitute during the past few years following implementation of adjustment policy.
The rise in unemployment and poverty levels, which is confirmed by statistics following the adjustment policy, particularly its enforcement, indicates only some figures and numbers regardless of its real significance. When these figures take up life in the working environment, we shall realize that we are facing a dreadful situation. The living style of workers today denotes severe decline of their living standard.
The quality of food of working families has come down severely, as is proved by abundant pieces of evidence. For example it is enough to have a look at workers' districts and ask the local butcher how many people have referred to him, to buy say between 100 and 150 toomans worth of meat, which would be about 100 grams at the currant price. This piece of meat is certainly not for beefsteak or steak, but for "Abgoosht" (soup) to feed a family of not fewer than five. It constitutes two meals for them. Here, the dry and spiritless figures come to life and get frightful. One should not play with figures as the destiny of thousands of workers are at stake; they have become poverty stricken as a result of the adjustment policy.
Poverty and destitution are not conducive to creativeness. Hunger, destitution and unemployment are curses. In a society where social security is only a facade, can one defend unemployment, and manpower adjustment as a means of investment by entrepreneurs? The worker who leaves a factory falls into abyss and becomes homeless. Many workers, imagining that they will be able to buy a car to carry passengers or a shop with their severance pay, leave the factory but before
receiving any money, which usually takes a few months, realize that they cannot buy even an old Paykan (national car), as the purchasing power of their payment is reduced very much, so they will end as a hawker etc.
In our society some people have got so rich that they do not know how to spend their money, and their main preoccupation is to find out the ways and means of spending their money. But others, who are in the majority, should do several jobs to earn a living, perspire from morning to night and even then they cannot make their ends meet.
Do those who consider this project to be binding ponder on its consequences? Have they visited the work place for once to see the workers' life style? It is often said that the economic adjustment policy is like a painful surgery which is accompanied by bleeding. It should be said that the workers' life is passed the stage of hemorrhage and pain. Those who draw up a similarity between the adjustment plan and surgery should be asked what should be done if the patient
dies during the operation? Can we enforce the experiments of other countries where the conditions and situations are different from those of Iran?
The effects of the economic adjustment policy on the workers' situation are briefly described from three points of view, namely manpower adjustment, intensification of exploitation and the reduction of wages and fringe benefits.
(A) - THE PROJECT OF MANPOWER ADJUSTMENT
Following privatization, the project of manpower adjustment has been put into effect in many factories. The aim of the plan was to reduce the personnel and dismiss the so-called redundant workers in order to decrease the expenses of production units. As a result of this policy many workers employed in economic units joined the ranks of idle and unemployed people, thus raising the rate of unemployment in our country. Different methods have been used by employers to advance the manpower adjustment plan: they include severance pay, direct dismissal, refusal to renew the contract of contract workers, suggesting to sell the factory products in lieu of severance pay, and early retirement.
The bitter experiences of layoffs of workers during 1996-1997, led workers to take up a pessimistic view about manpower adjustment and to resist any offer of severance pay. These workers had seen the fate of many of their unemployed colleagues who had been laid off during previous years and whose living conditions had got worse and worse every day. But some factories such as car manufacturing units, raised the severance pay in order to reduce the personnel, substitute contract workers for the permanent ones and thereby to decrease
expenditures. For example the sum offered was from 1.5 to 2 million toomans and more, depending on the service record and specialization.
Many workers who had not seen so much money in one go, regarded the situation to be favorable and agreed to receive severance pay, little realizing that as a result of increasing inflation rate, the purchasing power of their money would be decreased soon. Directors of many other factories, resorted to harsh behavior and to drawing up of self-made laws and regulations which would render working conditions more difficult. Sometimes they put forward irrelevant excuses claiming that the workers have ignored regulations. Through the increase of punishment, reduction of welfare benefits etc., they paved the way for dismissal of workers. The excuses employers resorted to included: workers' delay in reporting for duty, one day; failure of production to reach the desired level on the other day; workers' departure from the factory during the working hours etc. On the other hand acts of privatization and the method of transfer to the public sector cast shadow on the future operations of the factories. Many employers deliberately put up even a darker forecast, creating an impression in the workers' mind to avail themselves of this opportunity and get a severance pay now, otherwise the factories may close down soon and the conditions would get more unfavorable.
One of the methods employers adopt in order to cause despair in workers about their future is to say that the factory is not profitable, that the products are not sold out, and that the productivity is low and it may be closed down soon. Some directors try to create artificial conditions about the loss sustained by the factory, the lack of raw materials, the products being left unsold, low price of products in the market, the low quality of products and their inability to compete with similar goods, and by so doing impress on the workers' minds that the factory is on the point of bankruptcy and closure, that the workers may be laid off soon, in which case the factory would not be able to pay its debts. In this way they more of less force workers to agree to a severance pay.
There are some factories where the rumor of closure has been rampant for several years, but the factory is still working. But as a result of these rumors, which were repeated for several times, the workers agreed to severance pay or went on an early retirement. As a result of the wave of unemployment due to the adjustment policy, which reached its climax in 1992 and 1993, many workers lost their jobs and their living conditions were aggravated. The lack of a social security system places the life of an unemployed worker, who has no financial support, in a highly
unfavorable situation. Most unemployed workers lose hope of finding a steady job so they take up any job they can get hold of in order to earn a living, ranging from a temporary or contract job to hawking, etc.
It is often seen that a worker employed in a production unit on a formal basis, when he loses his job he would refer to the same unit repeatedly in search of work, and those who return, will find themselves in an unfavorable situation. That is because, firstly they will be employed on a contract and temporary basis, secondly, they carry out the worst and the most menial pieces of work that others are not prepared to do; thirdly, they lose their dignity and are looked upon as
defeated persons, and so are put under mental pressure.
That is why many unemployed workers prefer to get jobs in sites other than their previous units, even though it is at a lower level from the point of view of wages. The situation of unemployed women workers who are family heads is even worse. It is possible for men to do hawking, but women are deprived of it, and on the whole, recruitment of women is not so possible. The older they get the less likely it will be for them to find a job, and they will be forced to get to work again under very unfavorable conditions. Some women workers who had lost their jobs, were
obliged to start working again in a production workshop for 8 to 12 hours a day with half of their previous wage.
(B) - INTENSIFICATION OF EXPLOITATION
Following the implementation of the economic adjustment policy, one of the levers used by employers to earn a higher income has been to exert pressure on workers. Earning a higher income and raising production by putting pressure on workers results in more intensive exploitation. During the past few years, directors have tried to raise production and put pressure on workers by various means. The more important ways of doing this are as follows:
1 - RAISING THE SPEED OF EQUIPMENT
One of the methods used by directors to raise productivity is to raise the speed of equipment. What has so far defined higher production in the unit of time has not been the use of modern machinery and rejecting the old and obsolete machinery, or using the correct management and human methods, or the provision of desirable working conditions, but it was to exert more pressure on workers. Some employers and directors manipulate and tamper with machinery to raise their speed, even at the expense of safety regulations and endangering workers' lives. In
order to speed up the machinery and equipment, some directors have removed the protective shields, and they should not care if the workers' lives are jeopardized!
According to a report in Kar-o Kargar newspaper, 3000 fingers were cut off within a space of 4 months, and according to a report of Social Security Organization 2900 accidents happened in the work place in one year. Among other cases of overlooking safety regulations done by employers one can mention the failure to use safety caps and helmets and shoes and masks, which are resorted to by directors to lower costs.
2 - CONTRACT LABOR
Another method used by directors to raise production is to take advantage of contract labor. Following the implementation of economic adjustment project, employers, firstly, force workers to raise production to a definite level; secondly, they make payment of reward and part of workers' wage dependent on the production level. In many cases they give work on contract basis, and use piece work rather than the daily wage. Following the implementation of the economic adjustment policy work is done by women at home on a contract basis at a large
scale. In order to avoid payment of legal wages as are enjoyed by workers in factories, many employers give work to laborers on contract basis and out of the factory.
This method has the following consequences: firstly, whenever they do not need workers they do not entrust any work to them, so they do not face difficulties regarding workers' dismissal, such as severance pay; secondly, they deprive workers of many fringe benefits paid to the factory labor force; thirdly they turn the worker's home into a work place, so they are not obliged to allocate a special space for it. In this way they take advantage of a mobile force and use it without any limitation of space and time.
Thus, it can be said that only a small number of workers who are engaged in big enterprises are covered by the labor law, and that the majority of workers are not covered by the law. Many entrepreneurs prefer to set up small workshops on the margins of towns and in remote areas, to hire workers and take advantage of fruits of their labor, without being obliged to observe the labor law. It should be mentioned in this regard that arrangements should be made so that more and more workers are covered by the labor code, and that this law should stretch its protective umbrella on increasing the number of workers.
3 - HIRING CONTRACT LABOR AND ELIMINATION OF FIXED AND OFFICIAL LABOR
The contract labor is now used at a large scale in factories. Instead of employing official and permanent labor, directors mostly resort to hiring the contract labor. There are some workers with ten years service record but employers refuse to put them on an official basis, and keep on signing 89-day contracts with them. Hiring contract labor has the following consequences: firstly, it gives a free hand to employers who will not be obliged to pay any damages for workers dismissal; secondly, the employers can refrain from paying many legal benefits that are paid
to official workers; thirdly, the contract worker is always regarded as a rival of the permanent worker, and the employer by hiring the contract worker instead of the permanent one, can make use of a mobile labor force, without being obliged to observe legal provisions, thus paving the way for dispensing with regularly employed workers. That is why Notes (1) and (2) of Article 7 of the Labor Code should be amended in such a way to block the conclusion of 89-day contract and the absence of workers' employment security which has been intensified in the last few years.
4 - INCREASE OF WORKING HOURS
After implementation of the adjustment plan, many employers have, in one way, or other, increased the working hours in factories. This has been done by formally increasing the workings hours, reducing the rest and lunch period, establishing forced overtime, etc. Some factories whose working hours was less than 44 hours per week during the first post-revolution years and who had retained this practice being pressed by the management, raised their working hours to 44 as of the year 1990. Some directors do not even regard the 44 hours per week to fill up the
prescribed hour, so they have insisted on omission of Thursdays. They have forced the workers to report for duty every Thursday or every other Thursday, so the two-day weekend has been decreased to one day. On the other hand, some employers, by omitting all or a part of annual leave, have forced the workers to work on holidays. Moreover, in some factories, such as car factories, the workers are obliged to stay and work for a few hours after the termination of regular hours, or report for duty on holidays and get engaged in forced overtime.
5 - ENACTMENT OF SELF-MADE DISCIPLINARY LAWS AND REGULATIONS
Following the implementation of the adjustment policy, many internal regulations have been changed to make them more severe for workers and impose a harsher discipline on them. They include increase of fines for workers' delay and their absence from working environment, so that higher production can be achieved through more severe disciplines. This paves the ground for more extensive dismissal of workers. Many cases have been seen in which the directors or manager of a part of a factory has said to a worker that if he did not like him, he could easily dismiss him, citing Article 27 of the Labor Code in support of his argument.
In this connection it should be stressed that, firstly, the Labor Code should be changed in such a way to stop the worker's arbitrary and unjustified dismissal by the employer; secondly the social security system should include all fields, and the present system of social insurance should be changed so that (1) to cover a higher percentage of workers (2) to cover a worker as long as he has not been able to find a job, (3) its amount should be increased in such a way to take care of the worker's expenses, to a certain extent, during the period of unemployment. The present system of employment benefit is such that it is applicable to maximum three years, depending on the worker's record, and a worker with less than 10 years service record, will not be able to receive the benefit for two years. Moreover its amount is too small, and, considering the present inflation, it does not cover the worker's living expenses, and it is also applicable to a small part of workers.
(C) - REDUCTION OF REAL WAGE
The payment system of workers' wages in our country is such that the workers do not receive all their wage at one time. A part of their wages is paid in cash under the headings of productivity, percentage, annual profit, and the other part is paid in kind. Moreover, workers receive some amounts as housing allowance, food allowance, family allowance, etc. The negative aspect of this wage payment system is that with the slightest change of circumstances, for example the rise or fall of goods produced and the level of the profit of the factory, it would be possible for the employer to easily interfere in that part of the worker's wage, that is paid under the title of fringe benefits, and to omit all or a part of it.
After the implementation of the economic adjustment plan, many of the workers' fringe benefits were tampered with by employers under various pretexts, including as the factory does not sell enough so the annual profit would not be applicable, or as the workers were unable to raise production to a definite level so productivity would not be paid. They have gone so far as to omit warm lunch and nurseries in some production units, and instead a small amount is paid every
month to workers which, considering the inflation, is against the interests of the workers.
In spite of the rise of nominal wage, due to the rising inflation, workers' real wage is decreased, which is borne out by figures. In an interview with IRNA, Mohsen Khaje Nouri, the Assistant Director of Labor Relations at the Ministry of Labor and Social Affairs, declared that in spite of the fact that the minimum daily wage of workers has gone up eleven times in 1996 compared with that of 1979, yet considering the growth of price index of goods and services, the real wage of workers has gone down by 58% (Salaam Newspaper, July 4th 1997). Workers' insufficient wage to run their own, and their families' affairs have caused many workers to turn to second and third jobs or to welcome overtime in factories.
Workers' protests during the last few months against the method of job classification, the situation of wages and salaries, etc., are indicative of workers' dissatisfaction with the implementation of the adjustment plan. The news published in the press, such as Kar-o Kargar daily show the degree of discontentment reigning over factories. Its causes are poverty and increasing exploitation on the one hand and aggravation of class inequality on the other hand.
Whenever problems related to workers' life are discussed, workers are not present in decision making processes. As far as workers or their representatives are concerned, they should participate in decisions taken about their lives. The working community should bring their problems and difficulties to the attention of responsible officials and other members of the society. The participation of workers' representatives in these discussions and their more tangible presence in the press can help with the solution of workers' problems.
FOOTNOTES
1. For example, see the article concerning the effect of privatization on social
security and stability of Iran, by Dr. Ebrahim Razzaghi, Political and Economic Ettela'at,
PPs 115-118, P2, paragraph 2. The situation presented by the industries transferred to the
private sector mainly indicates failure of this policy.
2. Ali Dini (Torkamani), Political and Economic Ettela'at PPs 113-114, "The share of
bread in food expenses of households has increased in 1994 compared with 1980". In
other words, in urban societies bread has taken the place of other food materials, and
nutrition has become more unsuitable as compared with 1989.