GCC Focus: Addressing Iran's real issue

Last week, I made my second visit to Iran following the presidential elections in June.

The visit was mainly to deliver a speech on socioeconomic issues in the region including the effects of rising oil prices. Still, the visit provided me the opportunity to look into issues encountering the Iranian economy.

Among others, it is probably fair to suggest that Iran's economy suffers from the case of underemployment but not necessarily exceptionally high jobless rate.

By one account, the jobless rate stands at around 12 per cent. Unemployment is said to be exceptionally high among those in the 15-20 age group. It is believed that people belonging to this bracket played key roles in the post-election protests.

Real challenge

However, the real unemployment challenge emerges when looking into the phenomenon of underemployment. This is the case of individuals working below their capacities in terms of skills, experience, compensation and hours.

A good number of Iranians with college degrees work in the field of transporting passengers between different points, reflecting lack of better opportunities. Undoubtedly, the real jobless rate tends to be higher when considering underemployment.

Also, some Iranians assume more than a single job in order to cope with living expenses.

This very practice allows for some activities not recorded properly in economic statistics. The practice of not reporting is partly meant to evade paying extra taxes.

Yet, this very practice suggests that the size of the Iranian economy is ostensibly higher than published figures suggest.

The value of Iran's gross domestic product (GDP) amounts to $345 billion (Dh16 trillion). Still, the value of Iran's GDP increases to $842 billion on purchasing power parity basis.

Inflation is an everyday issue in Iran, standing at 25 per cent in 2008.

However, like other Gulf Cooperation Council (GCC) states, inflationary pressures are less problematic in Iran nowadays compared to 2007.

Back then, the economies of GCC plus Iran suffered from the case of imported inflation caused by exporting countries raising prices to compensate for relatively high oil prices.

However, numerous positive matters should help Iran cope with the economic challenges.

Among others, the population growth rate is less than one per cent, a far cry from the early days of the revolution when the authorities called for increasing the country's population.

By latest accounts, Iran's population is about 67 million with people below the age of 15 years making up 22 per cent.

By comparison, some 38 per cent of the Saudi population is reportedly below 15 years. Clearly, entry of individuals into the job market seeking employment opportunities is more of a serious matter in Saudi Arabia than Iran.

Iran amasses exceptional hydrocarbon resources, in turn allowing for providing the means to address challenges. In fact, Iran is one of the world's leading oil exporters.

According to BP Statistical Review of World Energy, Iran controls nearly 11 per cent of oil reserves or the second highest in the world after Saudi Arabia. Saudi Arabia controls some 21 per cent of proven oil reserves worldwide.

Other exceptional strengths of Iran's economy relates to the role played by the country's private sector. These people include merchants who specialise in exporting Iranian carpets.

Yet, others focus on arranging imports into the country. In many respects, these merchants can be relied on to arrange for imports in the country regardless of economic sanctions imposed on the country due to its controversial nuclear programme.

In short, the economy has the means to address challenges. The real issue relates to managing the resources properly.

The writer is a Member of Parliament in Bahrain