Purpose: Minimum wage determination is one of the most important policy instruments for protecting labor and reducing poverty. However, significant differences in living costs, inflation rates, production structures, and labor market conditions across regions challenge the effectiveness of a uniform national minimum wage system. The main objective of this study is to assess the feasibility of regionalized and enterprise-scale-based minimum wage determination and to develop alternative scenarios for setting minimum wages in accordance with regional and sectoral economic conditions.
Method: The study adopts a descriptive-analytical approach and utilizes household expenditure data, regional accounts, inflation rates, poverty-line estimates, and labor market information over the past decade.
Findings: The findings indicate that the minimum wage determined under Article 41 of the Iranian Labor Law has not been sufficient to cover the absolute poverty line in any province. In 2019, the minimum earnings of workers covered only about 67 percent of the average poverty line. The results further reveal substantial interprovincial disparities in living costs, household expenditure patterns, inflation rates, and the share of labor compensation in production costs. Consequently, a uniform minimum wage cannot equitably achieve the intended welfare objectives across all regions. The study also shows that relying solely on inflation and subsistence basket indicators is inadequate for minimum wage determination. Instead, the use of the absolute poverty line and the application of differentiated weights to the relevant indicators can provide a more appropriate basis for wage-setting policies.
Conclusion: Accordingly, while remaining within the framework of Article 41 of the Labor Law, the study proposes alternative scenarios for determining minimum wages that take regional and sectoral differences into account. Such an approach can contribute to greater wage equity, poverty reduction, and improved efficiency in the minimum wage determination system.