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Building Back Better: UN Iran Socio-Economic Recovery Programme Against the Impact of COVID-19

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Executive Summary

The impact of the COVID-19 pandemic on the global economy and social fabric is unprecedented. Current UN DESA estimates indicate a possible loss of up to $8 Trillion in global GDP1 , affecting over 60% of jobs worldwide: a crisis that will wipe out much previous development gains. Iran has also been severely impacted, compounding existing adverse unilateral sanctions: altogether, possibly leading to a fall of 15% of GDP, affecting 50% of Iran’s workforce, particularly impacting the bottom 40% income-deciles of the population and deepening inequality – and raising additional unemployment possibly by 2 million. Social services and public health systems are taking a toll and at risk given tighter financial situation of the Government; circa 11.5 million households below or just above the multi-dimensional poverty line are significantly impacted by the crisis; service sector businesses and employees, and unskilled, low-skilled, and semi-skilled workers, will suffer most – especially those not covered by social security. Currently, some 1 million Afghan refugees live in Iran along with an estimated 1.5-2 million undocumented Afghan nationals and some 450,000 Afghans with passports and Iranian visas. The overwhelming majority of refugees (97%) live with their host communities, while (3%) most vulnerable refugees reside in 20 settlements. They are also severely impacted.

The Government of Islamic Republic of Iran responded in March 2020 to mitigate negative impact on households and businesses, through expenditures on social security, social assistance, health services and business support – with a response, relief and early recovery package of circa 1,000 Trillion Rials (or about 5% of Iran’s nominal GDP).

The COVID-19 pandemic is eroding safe jobs and disposable income for large segments of the Iranian population, and concomitantly adding pressure on existing social services (including public health and social protection services) along with additional complications caused in-between the health, economy and human security nexus that will sustain: exacerbating household vulnerabilities in multiple dimensions. Also, given current fiscal stress and the Government considerations of changes in subsidies approaches and structures, the further impact on the economy (including basic needs items prices) will have further significant implications for the vulnerable groups that the UN is targeting.

These challenges require, therefore, urgent and improved programme measures for combined social protection and employment generation to pave the way for longer-term sustainable recovery; immediate measures adopting integrated, multi-sectoral approaches to programming, leveraging the diverse range of comparative advantages and solutions in a complementary manner.
Encompassing criteria of innovative building back better, not doing business as usual, going for scale through smarter targeting, being gender sensitive and adopting digital age technologies.

The scale and complexity of the problem also requires a need for engaging a multiplicity of actors – international, national and sub-national, public and private. In response to the Government request in March 2020, the United Nations in Iran has been actively supporting national health, humanitarian and socio-economic response to the COVID-19 outbreak in Iran. The UN agencies are engaged in supporting recovery through focused activities of the UNDAF, some repurposed to align with recovery, and including through the Technical Assistance Package (TAP) initiative and South-South and Triangular Cooperation approaches. So far over $15 million of the UN agencies’ core funds have been repurposed or are aligned towards COVID-19 related needs of Iran.

Given its comparative advantages, the UN System in Iran is actively supporting the Government with tailored solutions and best practices in development efforts, and is launching a COVID-19 SocioEconomic Recovery Programme offer focused on three particular areas of intervention: combined employment generation and social protection, including health system strengthening. This offer builds on the global UN Framework for the Immediate Socio-Economic Response to COVID-19, and the TAP of UN Iran endorsed by the Government in early 2020, and will be implemented by UN Country Team (UNCT) Iran in an integrated manner jointly with national partners.

The programme offer intends to support 92,000 vulnerable households through social protection initiatives and employment generation support – in four provinces. A Conditional Cash Transfer (CCT) model targeting 42,000 vulnerable households, with expanded access to basic social services, that can be potentially considered for nation-wide scale up through a more shock responsive social protection system – and in parallel establishing 50,000 new micro and small enterprise/employment possibilities for them through low overhead cost approaches of $1,000 per support and the establishing of relevant activities, that are also composite social protection and micro-enterprise development approaches utilizing proven methods promoted by the UN agencies in Iran. The UN programme funding would require between $20 million to $50 million. The combined UN programme offer is complementary to the Government’s current needs and own up-scaling efforts; especially its approach towards area-based and rural employment generation and stated intentions to link up to some form of minimum floor social support for lower income groups. The UN supported practices are already being used and up-scaled nationally; further seed capital would support positive economic and social multiplier effects in target communities and will contribute to ‘bottom up’ socio-economic approaches and impact at scale; and towards a more resilient economy and society.