Furor Over Banker Pay Reaches Iran at Critical Time for Rouhaniby
Entire managerial board of wealth fund resigns over payslips
Economic affairs ministry caps monthly salaries at $6,250
Popular uproar over the high salaries paid to banking executives and other top corporate officials has reached Iran, putting President Hassan Rouhani on the defensive as he prepares to stand for re-election next year.
The size of bankers’ paychecks, a political issue that intensified in the U.S. and other developed economies after the global financial crisis, has come under scrutiny in Iran since payslips of executives at the state insurance regulator and lenders including state-run Bank Refah were leaked in May.
On Saturday -- the same day Supreme Leader Ayatollah Ali Khamenei demanded ‘firm” action against “astronomical salaries” -- the minister for economic affairs announced a monthly salary cap of $6,250. At a meeting attended by Rouhani, the management of Iran’s $80 billion sovereign wealth fund resigned en masse after some of their payslips were leaked.
Fund head Safdar Hosseini , a labor minister under the former reformist president Mohammad Khatami, earned more than $220,000 in the 12 months to February, according to a document published by Tasnim News, a semi-offcial, pro-hardline news agency.
While modest by Western standards, where salary packages can reach tens of millions of dollars, the executive salaries have created a public furor as Iran struggles to recover from years of international sanctions over its nuclear program, eased in January under an accord with world powers. Supporters of Rouhani see the payslip debate as part of a campaign by hardline opponents to upset his re-election chances.
“It’s a serious challenge right now, not just for Rouhani but for the whole system,” said Saeed Laylaz, an Iranian economist who was an adviser to Khatami. Rouhani’s opponents are seeking to find a “new political crisis every day in order to drag him down and crush his chances,” Laylaz added.
Statistics aren’t available for average public- and private sector salaries, a spokeswoman for the National Statistics Center of Iran said. Adjusted for exchange rate, Iran’s gross domestic product per capita was a little more than $17,000 in 2015, according to an International Monetary Fund estimate.