Iran faces mass layoffs as war, internet shutdown and US blockade cripple economy

Iran's economy, already weakened by decades of sanctions and mismanagement, is haemorrhaging jobs at an accelerating pace as companies across the country's industrial and technology sectors shed workers in the wake of the US-Israel-Iran war and a prolonged government-imposed internet shutdown.

Iran Job Losses Mount as War Disrupts Industry and Digital Economy

Iran is experiencing its sharpest wave of mass unemployment in recent memory, with economists, labour leaders and business executives warning of a contraction that could displace millions of workers across manufacturing, technology and services. The convergence of wartime destruction, a port blockade and a sweeping internet shutdown has pushed companies that survived years of international sanctions to the brink of collapse.

An Iranian government official, Gholamhossein Mohammadi, estimated that the war has caused the loss of one million jobs, "and the direct and indirect unemployment of two million people." On 25 April, a leading Iranian job search platform recorded 318,000 resume submissions in a single day, a figure 50 per cent higher than the previous record, according to the news site Asr Iran.

Iran's Tech Sector Devastated by Government Internet Shutdown

Few sectors have felt the pressure more acutely than Iran's digital industry, once regarded as a symbol of Iran's economic potential. A government-imposed internet shutdown, enacted at the outset of the US-Iran war, has severed the operational lifeline of companies that depend on connectivity.

The head of an Iranian tech industry lobbying group estimated the shutdown is costing the country up to 80 million US dollars a day in direct and indirect losses, as quoted by The New York Times.

Digikala, Iran's dominant e-commerce platform, has cut 200 employees, approximately three per cent of its workforce, with the company's chief executive, Masoud Tabatabaei, citing recent instability as a contributing factor. Last month, Hadi Farnoud, founder of the e-commerce firm Kamva, announced the company would cease operations entirely.

"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."

Manufacturing Sector Faces Raw Material Shortages After Industrial Strikes

Iran's industrial heartland has been dealt a parallel blow. US and Israeli strikes on major petrochemical and steel plants have severed the supply chains that feed downstream manufacturers, while the US-imposed blockade on Iranian ports has further choked imports of essential goods.

A textile factory in western Iran laid off 700 of its 800 workers, according to the Iranian Labour News Agency. Another factory in the country's north shed 500 positions. Even firms that have not announced formal redundancies are operating at minimal capacity, according to labour leaders.

"In practice, some of these units do not have real production and only work semi-actively or intermittently to maintain their existence," NYT quoted Bahram Zonoubi Tabar, head of a local labour council in Iran's Fars province.

Mehdi Bostanchi, head of the Coordination Council of Industries, placed the scale of the crisis in stark terms, warning that the industrial contraction would affect as many as 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 through nonrenewal of contracts, reduced working hours, and forced leave," Bostanchi said.

Minimum Wage Rise Adds to Business Strain Amid Galloping Inflation

Iran government's efforts to cushion workers from the effects of runaway inflation have, in some instances, compounded the pressure on businesses. In March, authorities announced a 60 per cent increase to the national minimum wage in an attempt to keep pace with price rises.

The measure was intended as a lifeline for Iranian workers, but its immediate effect was felt differently on the employer side.

The wage increase "created a shock to the economy," The New York Times quoted Nima Namdari, chief executive of Karnameh, an online car sales company. "As a result, the wave of layoffs intensified."

Iran Economy Was Already Under Severe Strain Before Conflict Began

The wartime disruptions have arrived on top of structural weaknesses that predate the conflict. Iran's economy had been deteriorating for years under the weight of international sanctions, currency depreciation, corruption and fiscal mismanagement.

Nationwide protests erupted in December as the rial collapsed, and were met with a deadly crackdown that killed thousands. The underlying economic grievances that drove those demonstrations have not been resolved.

The Iran government's proposed budget for the current year, drawn up before hostilities began, already factored in a sharp reduction in public spending in real terms and leaned more heavily on tax revenues than in previous years. With the private sector haemorrhaging jobs and output, those revenue projections have been rendered largely unreliable.

Iran Supreme Leader Urges Firms to Avoid Layoffs

In a statement marking a national day honouring workers and teachers, Supreme Leader Ayatollah Mojtaba Khamenei urged companies to avoid layoffs "to the extent possible." The appeal came even as the economic conditions driving those redundancies were themselves a product of policy decisions made by his government, including the internet shutdown and the conduct of the war.

For its part, the Trump administration has framed Iran's economic distress as 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.”