Iran’s economy, already weakened by decades of sanctions and mismanagement, is hemorrhaging jobs at an accelerating rate as companies across the country’s industrial and technology sectors lay off workers in the wake of the US-Israeli-Iran war and a prolonged government-ordered internet shutdown.
Iran is losing jobs as war disrupts industry and the digital economy
Iran is experiencing the steepest wave of mass unemployment in recent memory, with economists, executives and business executives warning of a contraction that could displace millions of workers in manufacturing, technology and services. The convergence of war destruction, port blockades and widespread internet shutdowns have brought companies that have survived years of international sanctions to the brink of collapse.
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Iranian government official Gholamhossein Mohammadi estimated that the war had caused the loss of one million jobs and “direct and indirect unemployment of two million people”. On April 25, Iran’s leading job search platform recorded 318,000 resumes in a single day, a figure 50 percent higher than the previous record, according to the Asr Iran news website.
Iran’s tech sector devastated by government internet shutdown
Few industries have felt the pressure more acutely than Iran’s digital industry, once seen as a symbol of Iran’s economic potential. A government-mandated internet shutdown enacted at the start of the US-Iran war has severed the operational lifeline of companies that depend on connectivity.
The head of Iran’s technology industry lobby group estimated that the shutdown is costing the country up to $80 million a day in direct and indirect losses, as cited by The New York Times.
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Digikala, Iran’s dominant e-commerce platform, has laid off 200 employees, around three percent of its workforce, with CEO Masoud Tabatabaei citing recent instability as a contributing factor. Last month, Hadi Farnoud, the founder of e-commerce company Kamva, announced that the company would completely cease operations.
“After two wars and months of internet downtime, we could no longer avoid the crisis,” Farnoud said in a public statement. “It was impossible to continue this time.
The manufacturing sector is facing a shortage of raw materials following industrial strikes
The industrial heart of Iran received a parallel blow. US and Israeli strikes on major petrochemical and steel plants have disrupted supply chains that feed downstream producers, while a US-imposed blockade of Iranian ports has further choked imports of essential goods.
A textile factory in western Iran has laid off 700 of its 800 workers, Iran’s labor agency said. Another factory in the north of the country lost 500 jobs. Even firms that have not announced formal layoffs are operating at minimum capacity, according to executives.
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“In practice, some of these units have no real production and work only semi-actively or intermittently to maintain their existence,” the NYT quoted Bahram Zonoubi Tabar, head of a local labor council in Iran’s Fars province, as saying.
Mehdi Bostanchi, head of the Industrial Coordinating Council, stated the scale of the crisis in stark terms, warning that the industrial contraction would affect up to 3.5 million workers.
“In this situation, unlike classic periods of recession, the decline in employment is less visible in official statistics and instead manifests itself in non-renewal of contracts, reduced working hours and forced vacations,” said Bostanchi.
A rise in the minimum wage adds to trade tensions amid galloping inflation
Efforts by the Iranian government to cushion workers from the effects of runaway inflation have in some cases increased pressure on businesses. In March, authorities announced a 60 percent increase in the national minimum wage in an effort to keep pace with rising prices.
The measure was intended as a lifeline for Iranian workers, but its immediate effect was felt differently by employers.
The wage increase “created a shock to the economy,” The New York Times quoted Nimu Namdari, CEO of Karnameh, an online car sales company, as saying. “As a result, the wave of layoffs intensified.”
Iran’s economy was already under great pressure before the outbreak of the conflict
The disruption of war added to the structural weaknesses that preceded the conflict. Iran’s economy has languished for years under the weight of international sanctions, currency devaluation, corruption and fiscal mismanagement.
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Nationwide protests erupted in December when the rial collapsed and were met with a deadly crackdown that killed thousands. The underlying economic grievances that drove these demonstrations have not been addressed.
The Iranian government’s proposed budget for the current year, drawn up before hostilities began, already took into account sharp cuts in public spending in real terms and relied more on tax revenue than in previous years. As the private sector is hemorrhaging jobs and output, these income projections are largely unreliable.
Iran’s Supreme Leader Calls on Firms to Avoid Layoffs
Supreme Leader Ayatollah Mojtaba Khamenei called on companies to avoid layoffs “to the greatest extent possible” in a statement to mark National Workers’ and Teachers’ Day. The call came even though the economic conditions that led to the layoffs were themselves the result of political decisions made by his government, including shutting down the Internet and waging war.
For its part, the Trump administration has called Iran’s economic distress a deliberate lever of pressure. “I hope it fails,” President Trump said of Iran’s economy earlier this month. “You know why? Because I want to win.”
Key things
- Mass layoffs in Iran are escalating due to the convergence of war, internet shutdowns and long-term economic problems.
- The technology sector has been particularly hard hit, with companies losing significant revenue and going out of business.
- The government’s economic measures, such as raising the minimum wage, are inadvertently deepening the crisis.
