On November 4, 2012, there were two snapshots of a deeply unequal struggle between labor and capital in Iran—a struggle that had begun two years earlier with a strike of temporary workers at the Mahshahr Petrochemical Complex. In Mahshahr, at the head of the Persian Gulf, Faraveresh, one of the five public-sector companies at the Complex, reached an agreement with the strikers, committing to remove the private middleman who had hired the workers and to sign direct contracts with them as soon as possible. In Tehran, however, Parliament voted for the activity of the third-party contractors to be continued, arousing the chairman of the board of a major private employers’ association to offer other firms his sincere congratulations: “We can achieve still more if we stand together, shoulder to shoulder.” [1]

The main object of the struggle was “the triangular employment relationship”—whereby an employee works under the direction of a public-sector employer but is actually employed by a private third party called a human resources contract firm. The public-sector employer sets the working conditions but the workers receive their remuneration from the third party. The portion of the public-sector budget intended for salaries and wages is delivered to the private contractor, which divides up the amount among the workers. If employees want to bring legal action against the public employer for whatever reason, they have to do so through the private firm. The triangular employment relationship spread gradually in Iran from the early 1990s onward, and the temporary workers of the Mahshahr Petrochemical Complex were the pioneers of struggle against it.

The Mahshahr Strikes at a Glance

The Mahshahr Petrochemical Complex with its five subsidiary companies—Besparan, Ab-e Nirou, Kharazmi, Kimia and Faravaresh—is located on a plot of land of almost 270 hectares in the southwestern province of Khuzestan. The first strikes there began in early 2010, when workers at an affiliated contract company, Iranframeco, demanded six months of unpaid wages. This work stoppage ended in the removal of the managing director of the company. [2] The next wave started in April, extending to almost all of the petrochemical companies in the region. The main demand of the strikers was the removal of the private human resources contract firms so that workers might sign direct contracts with the public-sector employers instead. This strike lasted almost two weeks before the workers gave the public-sector managers three months to meet the strikers’ main demand. [3] When the grace period was over, another wave of strikes started at Kharazmi Company in June, coming to an end after 11 days without spreading much further. The temporary workers of the Bandar Imam Petrochemical Company set off the next round on September 25, 2011, holding out until October 8, and making the same demand that had been raised in the previous strike. [4]

On January 21, 2012, the administration of President Mahmoud Ahmadinejad ordered the entire public sector, including the subsidiary companies of the Oil Ministry, to abrogate the contracts between private human resources firms and workers within 15 days. But Parliament held up the measure. On June 20, Ali Larijani, the speaker of Parliament, sent a formal letter to the president telling him he had one week to address the objections made by parliamentary commissions. Otherwise, the directive would be annulled.

The disagreement between Parliament and the administration was sharp. But Parliament was not alone in paralyzing the attempt to remove the private contract firms. The Oil Ministry and the managers of the Mahshahr Petrochemical Complex also put a spoke in the administration’s wheel. It was as if many of the politicians of the Islamic Republic, big business and public-sector employers had entered into a holy alliance to exorcise the demon of the Mahshahr petrochemical workers.

Who were the main combatants in this battle?

Temporary Labor vs. Private Contractors

There are several estimates of the numbers employed at the Mahshahr Petrochemical Complex during the labor unrest. According to the official website of the Complex, the number of employees was about 3,385. It seems an imprecise estimate, as the text immediately adds that “a part of activities, including repairs, technical services of packing and administering, is undertaken by subcontracting.” A better estimate comes from the Coordinating Committee to Help Form Workers’ Organization: In 2011 there were 6,500 workers employed in the Complex, of whom 4,300 were temporarily employed by contract firms. [5] Thus, it could have been that 66 percent of the total labor force would demand the removal of these firms.

The workers were nevertheless split between those temporarily employed by the contract firms and those permanently employed by different subsidiaries at the Complex. The former were unable to persuade the latter to join its strikes. On the other hand, the split was not deep enough to arouse the permanent workers to break the strikes.

But the temporary laborers themselves were not so united, either. In the two-week strike in the fall of 2011, according to the Coordinating Committee, only 300 to 400 of the 4,300 temporary workers, that is, 8 percent of the total, participated. Each day some of the temporary workers gathered around the main building of the Complex, marching and shouting slogans, while others went to work as usual. The strikers were all men; none of the 300 women employed in the Complex joined them.

On the other side were the highly organized and well-connected contract firms. The contract firms like those at Mahshahr were born in the first half of the 1990s, achieving mushroom-like growth throughout the reform era of 1997-2005. Selling themselves as experts in collective bargaining, they function as mediators between workers and employers, public, semi-public or private. Many of the owners have close ties with the top echelons of the Ministries of Labor and Oil, as well as with other power centers within the establishment. But the contractors seldom have face-to-face interactions with the workers they hire, except when the workers try to bring legal action against the employers. The contract firms band together in business associations, for instance the Center of the Guild Societies of Employers of Service, Backing, Technical and Engineering Firms, a nationwide apparatus. The Center also has strong ties with the authorities. According to the chair of the board of directors, “The Center enjoys a high position. Those organs of the state that work with us, such as the Social Security Organization, the Ministry of Labor, its provincial offices, the Ministry of Economic Affairs and Finance, the National Tax Administration, the Expediency Discernment Council of the System and the Social Commission of the Parliament, have good relations with us…. Our provincial branches can easily contact and negotiate with all these organs.” [6]

Ahmadinejad vs. Parliament

The lobbying capacity of the private contract firms, however formidable, had little impact on the orientation of the Ahmadinejad administration. The January 2012 decree forbade any further contracting to such firms and ordained that the Vice Presidency of Human Resources should henceforth authorize all recruitment of workers in the public sector.

According to the administration, workers were suffering heavy losses by signing contracts with the private firms and having no direct legal relation to their public-sector employers. According to the juridical deputy of the Vice Presidency of Human Resources, “Having studied the temporary workers recruited by the private contract firm, we realized that the expenses of the public sector had increased rather than decreased, on the one hand, and that payments received by temporary workers had decreased, on the other. For example, if workers in a public department had each been allocated a certain amount per month in the state budget, each would receive 50 to 60 percent of the allotted amount. The rest of the money would be channeled into the pockets of private contract firms…. The business of these firms was to just provide a list of workers every month, receiving the allocated funds from the related public department, paying a part of that to the workers, and securing the rest of the funds for themselves…. Today these firms, which are making huge profits, resist the order of the administration, but the administration is trying to redress this injustice to the temporary work force recruited by the firms.”

The administration’s overall track record with labor was hardly in harmony with its defense of the temporary workers at the Mahshahr Petrochemical Complex. It eliminated state subsidies on gasoline and gave Iranian families cash handouts instead, but the payments did not keep pace with inflation. The administration prohibited an increase in the minimum wage. In 2006, it proposed amendments of the 1990 labor law that would give carte blanche to employers seeking to get rid of employees and amendments to the Social Security Law that would raise the retirement age and workers’ contribution to insurance programs. Its Master-Apprentice Act aimed to make youth labor much cheaper. How, then, can one explain the administration’s attempt to eliminate the private contract firms?

Two hypotheses may shed some light. First, most owners of the private contract firms were members of the reformist camp or the military. Ahmadinejad’s hardline administration was hostile to the former, constantly trying to weaken its economic power. Power struggles within the regime also gradually turned Ahmadinejad against the military and the Leader, Ayatollah Ali Khamenei, beginning in early 2011. By removing the private contract firms, the administration could kill two birds with one stone. Second, the removal of go-betweens like the private contract firms would allow the administration to insert its own loyalists at different levels of the public sector, including the Mahshahr Petrochemical Complex.

It was not just squabbling among conservative factions that led to Parliament’s stubborn opposition to the January 2012 order removing the private contract firms. Parliament had the complete support of Iranian business interests, public and private.

After Larijani’s letter in June rejecting the order, the pro-Ahmadinejad forces in Parliament sprang into action. On September 24, the Social Commission of the Parliament introduced a draft bill, inspired by the administration, reorganizing the activity of the private contract firms rather than removing them entirely. The Vice Presidency of Human Resources, the bill said, should authorize any future contracts with the private human resources firms in the public sector.

But another parliamentary body, the Planning and Budgeting Commission, fought against the draft bill, sending the speaker a report to the effect that “the draft is inconsistent with the Fifth Five-Year Plan approved by the administration, as well as with Article 75 of the Constitution ordaining that all bills and proposals that entail the reduction of public income or the increase of public expenditure may be introduced in the Assembly only if means for compensating for the decrease in income or for meeting the new expenditure are also specified.”

The Islamic Parliament Research Center, while approving the Social Commission’s stands in principle, opposed the draft bill as well, declaring that its implementation would lead to a decrease in productivity as well as to an unintentional increase in the size of the public sector. The various objections made by this Center, the Planning and Budgeting Commission and the speaker himself were consistent with the strongly advice of the owners of the firms themselves: “Lay aside this issue from the agenda of Parliament.” [7] By rejecting the Social Commission’s draft bill and voting for the contract firms’ mandate to be renewed on November 4, 2012, the overwhelming majority of Parliament could win over these influential businessmen.

The Managers

In the struggle between the temporary workers and the private contract firms and the parallel disagreement between the administration and Parliament, the managers of the Mahshahr Petrochemical Complex were not neutral at all. In the former, they supported the private firms, and in the latter, albeit implicitly, Parliament.

The managers were subordinate to the administration on the organizational chart of the Islamic Republic, but in practice they were not submissive. Differences of interest had appeared from the beginning of the Ahmadinejad presidency. In his 2005 electoral campaign, Ahmadinejad said, “I want to bring Iran’s oil lucre to the dining-room tables of the people” and “I will overthrow the mafia embedded in the Oil Ministry.” “From these statements,” one observer wrote, “it follows that Ahmadinejad had little confidence in the structure of the Oil Ministry…. He had so little confidence that many observers were contemplating a wave of replacements at all levels of the Oil Ministry’s management.” [8]

Ahmadinejad’s first nominee for oil minister in 2005, Ali Saeedlou, was not confirmed by Parliament. The second candidate, Sadeq Mahsouli, was forced to withdraw his nomination. The third, Mohsen Tasalloti, was also not confirmed. All of these nominees came from outside the Oil Ministry’s ranks, and were rejected through the machinations of oil industry managers, who finally imposed Kazem Vaziri Hamaneh, a top manager coming from the Ministry, upon Ahmadinejad. Hamaneh’s tenure lasted until August 2007 when Ahmadinejad removed him. The managers were again successful in forcing another replacement candidate from the Ministry, Gholam-Hossein Nozari, upon the president. Up to the end of Nozari’s tenure in 2009, Ahmadinejad was unable to exert control over the oil sector. It was only afterward that he could. But this period witnessed the president’s sharp split with the Leader, who could dominate the new minister, a man from the Revolutionary Guards. Ahmadinejad again lost his sway over the Oil Ministry. The managers did their best to obstruct his wishes.

Their opposition is easily understood apart from resentment of Ahmadinejad’s populist campaign rhetoric. First, they were very friendly with the private contract firms. Second, they could shrink their responsibility toward the workers by putting the private contractors in the position of go-between. As the Free Trade Union of Iranian Workers put it, “The managers of the Mahshahr Petrochemical Complex and the mafia of the private contract firms are trying to retard the implementation of the administration’s decree…. They think that if the implementation is slow, the administration’s tenure will expire, and everything will return to normal.” [9]

Economists and the Media

Two major components of the economic agenda proposed by neoliberal economists after the Iran-Iraq war were government downsizing and preparation for capital accumulation with the private sector as pioneer. The spread of the triangular employment relationship was a step toward the labor market flexibility that would hasten progress toward these goals.

Nevertheless, the report of the Islamic Parliament Research Center showed that the triangular employment relationship did not help to achieve these goals and also created more problems. First, the size of public-sector work force increased, because no one was supervising the recruiting of the private contract firms. Second, corruption in the public sector burgeoned, because of the relationship between the public-sector employers and the private contract firms. Third, the discrimination between the temporary workers employed by the private firms and permanent employees gave rise to mounting discontent among the former. Fourth, disparities in pay for the same work led to still more grievances. And fifth, there was a sharp decline of job security among the temporary workers employed by the private firms.

What about the Green Movement, the most visible opposition to the Iranian status quo at the time of the Mahshahr strikes? Where did its media outlets stand? Green Movement media occasionally displayed a disposition toward a coalition of the middle and working classes against the establishment. But they were not homogenous in attitudes toward the working class—with right-wing and liberal left tendencies being the two most prominent.

The website Neday-e Sabz-e Azadi (Green Voice of Freedom) was an example of the right-wing current. Its approach is clear in one of its mere three news items about the strikes: “The protests of the Mahshahr petrochemical workers have their origins in both mismanagement of the private contract firms and the shortage of liquidity and prosperity in the industry, leading to unemployment and unpaid wages.” [10] All of the right-wing currents, including those embedded in the Green Movement, traced the workers’ complaints back to poor governance and the insufficient rate of economic growth. Hence their solution was to pave the way for market-oriented policies. Ahmadinejad’s administration was the only party to blame.

Kalameh (Word), the official website of Mir-Hossein Mousavi, who was shouldered aside by Ahmadinejad in the 2009 election, was the most important example of the liberal left current in the Green Movement, with substantial coverage of labor and the Mahshahr strikers in particular. According to an important editorial, “The middle class has paid little attention to economic injustices done to labor, though doing its best to struggle against political tyranny. Its inattention to economic injustices is one of the causes preventing the working class from forming a coalition with the middle class in struggling against lawlessness.” [11]

Nevertheless, though the liberal media of the Green Movement approved of cross-class coalitions, its language was deeply colored by the right wing of the movement. The workers’ problems had their roots in the Ahmadinejad era, and not before. It was only the poor governance of Ahmadinejad, rather than structural conditions created in the reform era, that was the culprit. The solution to workers’ problems is to be found in political struggle over the mode of governance rather than economic, social and political structures.

Against this backdrop, the Green Movement media’s discourse on the Mahshahr strikes had four major elements: sympathy for the strikers; antipathy for Parliament and the petrochemical managers who were open allies of the private contract firms; apparent hostility toward the administration, which was the most influential opponent of the private contractors; and absolute silence on the private contract firms themselves, the main subject of the dispute.

Whither Mahshahr Labor?

In their struggle against the private contract firms, the Mahshahr petrochemical workers tried to exploit two high-level political fissures as means of pressure. One occurred within the ruling elite with the rise of the Green Movement in 2009; the other, between Ahmadinejad and the Leader, reached its climax in April 2011 when the president engaged in an 11-day walkout from cabinet meetings and all other official functions.

Neither attempt was effective. The Green Movement was too loyal to business to change its mental calculus in favor of labor. The administration was too weak within the establishment to further the workers’ interests even for its own factional purposes.

With the 2013 election of President Hassan Rouhani, both splits were papered over. If the Green Movement had channeled popular energies into the streets for a while, the 2013 presidential election redirected them toward the ballot box, again posing a constitutionally mandated act as the main form of political participation. But Rouhani is very much part of the Islamic Republic establishment. Now, the Green Movement is regarded not so much as a split within the ruling political class as a threat to the whole political regime. Also, as far as the impact of economic policy upon the popular classes is concerned, there is no basic disagreement between Rouhani’s administration and its hardline opponents, with market-oriented strategy as the main agenda, notwithstanding the growing gap with regard to both foreign and domestic policy.

Meanwhile, there was another structural change. The Mahshahr Petrochemical Complex was transferred to the private sector in three stages. Forty percent of its shares were allocated to provincial investment companies according to the cabinet authorization dated July 2009. In the first stage, 5 percent of its shares were transferred to the Tehran Stock Exchange in January 2013 for price discovery. In the second stage, 17 percent of its shares were transferred by auction to the National Iranian Oil Company’s (NIOC) Pension, Savings and Welfare Fund in May 2013. At that point, Persian Gulf Petrochemical Industries (the new name of the Complex) was separated from the public sector as the country’s largest petrochemical holding entered the private sector. In the third stage, another 17 percent block of the company’s shares was released in March 2014. The block was jointly purchased by Tapico and NIOC’s pension fund in a 50-50 partnership. At present, according to the Complex website, the shareholders are as follows: 40 percent “justice shares”; 5 percent general public (through the Tehran Stock Exchange); 25.5 percent NIOC Pension, Savings and Welfare Fund; 8.5 percent Tamin Petroleum and Petrochemical Investment Company; and 21 percent National Petroleum Company. Over half of these shares are under private-sector management.

Now, with no political split over market-oriented policies, as well as the presence of a coherent private petrochemical industry, the Mahshahr workers have set out to renew their struggle. But, this time, not most of, but all of the other combatants in the battle have entered a holy alliance against them. Between Rouhani’s pro-bourgeois administration, on the one hand, and hardliners headed by the Leader, on the other, the Mahshahr petrochemical workers as part of an unmade working class must steer their own course.


[1] Kanon, November 4, 2012. [Persian] [2] Coordinating Committee to Help Form Workers’ Organization, “A Report on Bandar Imam Petrochemical Workers’ Strikes at Mahshahr,” October 10, 2011. [Persian] [3] “A Review of Spontaneous Strike of the Mahshahr Petrochemical Workers,” August 19, 2011. [Persian] [4] Coordinating Committee to Help Form Workers’ Organization, op. cit.
[5] Ibid.
[6] Payam-e Karafarinan 32 (October-November 2010), p. 32. [Persian] [7] Mehr News Agency, October 24, 2012. [Persian] [8] Bijan Khajehpour, “The Ministry of Petroleum in the Ninth Government: Clarifying the Struggle,” Goft-e Gu 49 (August 2007), p. 62. [Persian] [9] Free Trade Union of Iranian Workers, “Sabotage to Change the Contracts of the Mahshahr Petrochemical Temporary Workers and Revenge Upon the Workers by the Mafia of the Private Contract Firms,” October 15, 2012. [Persian] [10] Neday-e Sabz-e Azadi, “A Reflex of the Strikes in the Mahshahr Petrochemical Complex in the Financial Times,” October 10, 2011. [Persian] [11] Kalameh Karegari, “Neither Seclusion nor Improper Coalition,” December 4, 2012. [Persian]

How to cite this article:

Mohammad Maljoo "Whither Iranian Petrochemical Labor?," Middle East Report 277 (Winter 2015).

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