Since 2006, Iran’s demographic age composition has been marked by a phenomenon known as the “demographic dividend” or “window of opportunity” by demographers and economists. Can startups unleash the potential of this golden opportunity? [1]

The working age population of Iran is 44.1% of the total population represented by 71.3% men and 17.3% women. The demographic transition to this demographic dividend (or population bonus) is shown in the chart below.

 

Source: “Demographic Transition, Window of Opportunity, and Population Bonus: Toward a New Population Policy in Iran” Dr. Hatam Hosseini, Bu-Ali Sina
Source: “Demographic Transition, Window of Opportunity, and Population Bonus: Toward a New Population Policy in Iran” Dr. Hatam Hosseini, Bu-Ali Sina

 

However, there is a time limit to this window of opportunity. Based on intermediate scenario population projections by the UNDP (2009), the length of Iran’s window of opportunity is expected to remain for four decades until 2045 to 2050.  Subsequently, based on current trends, Iran is expected to experience a demographic transition towards an aging population, similar to many advanced European economies.

This advantageous condition in the population age composition does not automatically convert to a demographic dividend nor into economic growth. It requires policies, investments and initiatives to harness their potential.

Iran has an unprecedented demographic “window of opportunity”.

According to experts, demographic dividends can be realized in multiple ways, which includes (1) strategic investments into developing competitive talent, (2) productive employment of existing labor force, and (3) crowdsourcing wealth and savings towards productive investments. (Navaneetham and Dharmalingam, 2009)

 

How has Iran capitalized on its demographic advantage so far? 

To a large extent Iran has attempted to capitalize on its demographic advantage by investing in primary and tertiary education. The TechRasa three series edition has highlighted the positive impact of government focus and investments in primary and tertiary education. The result is a pool of educated workforce that serves as a strong foundation for transitioning from a factor-driven to an innovation-driven economy.

However, there remains rooms for progress in terms of productive employment and allocation of labor force.

One of the major challenges is absorbing the educated talent into the economy. At present, the official unemployment rate of Iran is 12.7%. The highest rate of unemployment is among people between age group 15 to 24 years at 30.2% followed by age group 25 to 30 years at 23.9%. Women within these age brackets have the highest unemployment rate at 47.3% and 41.9% respectively. The Minister of Labor and Social Affairs, Dr. Ali Rabeei, has said that “if the country doesn’t do something effective in creating jobs, we will face a tsunami of 5.6 million educated jobless.”

There are also a few geographic disparities. Some provinces experience significantly higher unemployment compared to the national average – Kermanshah 20.6%, Chaharmahal and Bakhtiari 19.8%, Isfahan 17.4% and Alborz 15.4%.

At the same time, the data also indicate compelling and positive trends. The 2016 statistics from Management and Planning Organization indicates that majority of youth are employed in the private sector with age group 15 to 24 years at 90.6% and 25 to 29 years at 88.5%. Women within the 24 to 25 years age group have the highest representation in the services sector at 61.4%. These data points indicate to a tremendous opportunity for public private partnerships (PPPs) that link Iran’s national competitiveness strategy to corporate talent strategies for combined investments in regional development and job creation. Furthermore, it shows the impact that the private sector can have in capitalizing on Iran’s demographic dividend.

Aside from long-term PPPs, there are many immediate gaps in the labor market efficiency that can be capitalized. For example, internships and volunteering are still not a fundamental part of student experience in Iran. While students have access to tertiary education, many tend to graduate with limited or no professional experience. This impacts their employability and competitiveness. Universities also do not have the dedicated resources, such as institutional career centers, to guide students, give access to alumni mentors and to create direct linkages with prospective employers. Albeit, Sharif University of Technology recently started the Sharif Career School, which can serve as a potential model for other Iranian universities.

Some private companies such as FANAP, Rahnema Group (Rahnema College) and Sarava (Sarava Academy) have launched their own customized internship programs. Companies have room to undertake a more proactive role, both as part of their talent strategy and CSR programs, to capitalize on the demographic dividend for their growth, while helping the youth realize their full potential. Supplementary pilot activities are also underway such as Karamaan, a non-profit initiative to support students to gain valuable experiential training as interns, apprentices and volunteers through a meritocratic and equitable process. Yet all of these are in a nascent stage.

 

What is the role of technology and startups?

Perhaps the most promising addition is that the startup ecosystem in Iran has taken notice of this golden opportunity in Iran’s demographic bonus.

Five years ago, IranTalent, an English recruitment platform, was the only noticeable online player focused on the Iranian market. Now there is a growing number of startups addressing the key drivers of human development from e-learning (e.g. Faranesh, CafeTadris, Iran Web Learn,  Yad Academy and etc.), recruitment (Karyab24, Jobinja, Kar118, Karbin, Karan, Job Vision, and etc), career tools (Atbox.io) to more comprehensive platforms such as TalentYab. The Ministry of Cooperatives, Labour, and Social Welfare has also deployed an online solution for facilitating apprenticeships through Karvarzi Platform.

These digital platforms and HR tech solutions can also help enhance labor market efficiency. A smart platform can effectively match the right talent with right companies and vacancies. They can facilitate transparency in the wage market and meritocracy in the recruitment process. The e-learning solutions can help graduates and mid-careers adapt rapidly to their changing environment with online courses and programs.

These are positive trends undertaken by different players in the ecosystem towards human resource management and harnessing what remains of Iran’s “window of opportunity”.

 

Concluding Remarks

The WEF Competitiveness Report has categorized Iran’s stage of economic development as a transition stage from a factor-driven to efficiency-driven alongside fifteen other countries. What are the drivers to complete this transition? How can it accelerate this transition? Can Iran leap-frog from an efficiency-driven to innovation-driven stage? The demographic dividend, a temporary window of opportunity, can be a part of the solution and with the help of technology, its impact can be accelerated.  It is both an opportunity and challenge to Iran’s core competitiveness.


[1] United Nations Population Division defines the “window of opportunity” as a period in which the ratio of under 15 population reaches to less than 30% of the total population and the ratio of 65 years and older population is still less than 15% (UN 2004). Under these conditions, the ratio of working age population (15-64 years) increases and the total age dependency ratio reaches to less than 0.5. This is a demographic condition that can be favorable for economic development, if managed efficiently.

References

  • United Nations
  • World Economic Forum
  • Statistical Division, Management and Planning Organization of Iran (MPO)
  • “Demographic Transition, Window of Opportunity, and Population Bonus: Toward a New Population Policy in Iran” Dr. Hatam Hosseini, Bu-Ali Sina University

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