Iran created only 700,000 new jobs in the 12 months to March 19, falling short of its 800,000 target, President Mohammad Khatami was quoted as saying on Saturday.
Iran, with some 70 percent of its population under the age of 30, says it needs to create around 800,000 new jobs each year to keep unemployment static at an official 16 percent.
"For the first time in Iran's history, we created 700,000 jobs in the last (Iranian) year," the official IRNA news agency quoted Khatami as saying.
Economic analysts say Iran needs to create about one million new jobs per year to keep unemployment steady.
After virtually suppressing foreign investment after the 1979 Islamic revolution, officials are now promoting foreign investment in a bid to combat unemployment in the country of 66 million.
Iran's economy grew 7.4 percent in the year to March 2003 and is expected to have expanded at a similar rate in the following 12 months.