Iran’s economy is entering one of its deepest employment crises in decades as companies across the country’s technology, manufacturing and industrial sectors cut jobs amid the escalating fallout of the US-Israel-Iran conflict.
Businesses already weakened by years of sanctions, inflation and currency instability are now grappling with wartime disruption, a government-imposed internet shutdown and severe supply chain bottlenecks that have paralysed operations across key sectors.
Economists, labour representatives and industry executives are warning that the scale of the contraction could leave millions of workers facing reduced hours, unpaid leave or outright unemployment.
According to Iranian government official Gholamhossein Mohammadi, the conflict has already caused the loss of one million jobs and led to the “direct and indirect unemployment of two million people”.
The pressure is increasingly visible in labour market data. Iranian news outlet Asr Iran reported that a leading employment platform recorded 318,000 resume submissions in a single day on April 25, nearly 50 per cent higher than the previous record.
Internet shutdown cripples Iran’s digital businesses
Few industries have been hit harder than Iran’s once fast-growing digital economy.
The government’s internet shutdown, imposed after the outbreak of the US-Iran conflict, has disrupted the operations of businesses dependent on online payments, logistics, cloud systems and customer communication.
The New York Times reported that the head of an Iranian technology industry lobbying group estimated the shutdown is causing direct and indirect economic losses of as much as USD 80 million a day.
The disruption has forced several companies to scale back operations or shut down entirely.
Digikala, Iran’s largest e-commerce platform, has cut around 200 jobs, representing roughly three per cent of its workforce. Chief executive Masoud Tabatabaei cited recent instability as a factor behind the layoffs.
Kamva, an Iranian e-commerce company founded by entrepreneur Hadi Farnoud, has ceased operations altogether.
“After two wars and months of internet shutdown, we could no longer bypass the crisis,” Farnoud said in a public statement.
“This time, it was impossible to continue.”
Industry executives say the digital shutdown has compounded a broader collapse in business confidence, particularly among startups and privately funded technology firms already operating under financial stress.
Industrial supply chains under severe strain
Iran’s industrial sector is facing simultaneous pressure from physical disruption and import restrictions.
US and Israeli strikes on petrochemical and steel facilities have disrupted supply chains feeding downstream industries, while the US blockade on Iranian ports has restricted access to imported raw materials and industrial inputs.
Factories across several provinces have reduced operations or announced layoffs as production slows.
According to the Iranian Labour News Agency:
• A textile factory in western Iran laid off 700 of its 800 workers
• Another manufacturing facility in northern Iran cut 500 jobs
• Several industrial units are operating only intermittently to avoid complete closure
• Manufacturers are facing shortages of imported materials and components
Bahram Zonoubi Tabar, head of a labour council in Iran’s Fars province, told The New York Times that many factories are functioning only at a symbolic level.
“In practice, some of these units do not have real production and only work semi-actively or intermittently to maintain their existence,” he said.
Mehdi Bostanchi, head of the Coordination Council of Industries, warned that as many as 3.5 million workers could eventually be affected by the industrial downturn.
“In this situation, unlike classic periods of recession, the decline in employment is less visible in official statistics and instead manifests through nonrenewal of contracts, reduced working hours, and forced leave,” Bostanchi said.
Inflation and wage pressures deepen the crisis
The worsening labour situation has unfolded alongside runaway inflation and rising business costs.
In March, Iranian authorities announced a 60 per cent increase in the national minimum wage to protect workers from surging living costs.
However, some business leaders argue the move intensified financial strain on employers already struggling with collapsing demand and operational disruption.
Nima Namdari, chief executive of online car sales company Karnameh, told The New York Times that the wage revision “created a shock to the economy”.
“As a result, the wave of layoffs intensified,” he said.
Businesses are also confronting higher financing costs, currency depreciation and shrinking consumer purchasing power, all of which have weakened domestic demand.
Structural weaknesses magnify wartime shock
Analysts say the current crisis has exposed long-standing weaknesses within Iran’s economy.
Years of international sanctions, fiscal pressures, corruption allegations and chronic currency instability had already eroded business confidence before the conflict escalated.
Nationwide protests erupted last year after the Iranian rial sharply depreciated, highlighting widespread frustration over inflation and economic deterioration.
The government’s current budget, prepared before the war intensified, already relied heavily on increased tax revenues and reduced public spending in real terms. Economists now question whether those assumptions remain realistic as private sector output weakens further.
The political leadership has publicly acknowledged the scale of the pressure.
In a recent statement marking a national day dedicated to workers and teachers, Supreme Leader Ayatollah Mojtaba Khamenei urged companies to avoid layoffs “to the extent possible”.
The appeal came even as business groups blamed government decisions, including the internet shutdown, for worsening the commercial environment.
Meanwhile, US President Donald Trump has openly framed Iran’s economic distress as part of Washington’s pressure strategy against Tehran.
“I hope it fails,” Trump said of Iran’s economy earlier this month.
“You know why? Because I want to win.”
Businesses brace for prolonged instability
Corporate executives and labour representatives increasingly fear that the economic fallout may deepen if the conflict drags on and internet restrictions remain in place.
Many companies are now relying on reduced working hours, temporary suspensions and unpaid leave instead of formal redundancies in an effort to survive the downturn.
But with industrial production weakening, trade routes disrupted and private sector confidence collapsing, economists warn that Iran could face a far broader employment crisis in the months ahead.
For many businesses, the immediate challenge is no longer expansion or profitability, but basic survival.