Iran’s war with the United States and Israel has erased two million jobs, shuttered factories, devastated the digital economy, and pushed the country’s official inflation rate above 50%, according to senior government officials and economic data emerging from Tehran.
Deputy Work and Social Security Minister Gholamhossein Mohammadi confirmed the scale of the employment catastrophe, attributing the losses to both the direct destruction wrought by the conflict and its cascading indirect effects on commerce and industry. Iranian employers and officials have taken to describing the mass redundancies with the bureaucratic euphemism ‘balancing the workforce’ — a phrase that obscures the human toll spreading across factories, manufacturers, retailers, import-export businesses, and the digital sector.
The physical damage to Iran’s industrial base has been severe. In late March and early April, American and Israeli strikes destroyed two of the country’s largest petrochemical plants, located in Asaluyeh and Mahshahr. The same offensive targeted Mobarakeh Steel and Khuzestan Steel, two of Iran’s most significant steel producers. The car manufacturing sector, which directly or indirectly sustains roughly one million jobs, faces acute disruption. Interference in the Strait of Hormuz has severed supply chains, forcing some factories to halt production entirely and dismiss their workforces.
The consequences are visible at the individual company level. One textile manufacturer dismissed 600 of its 650 employees after losing the ability to import raw materials from Australia. The Iran Labour News Agency (Ilna) made all of its journalists redundant, then invited them to return as freelancers — a model increasingly common across struggling Iranian enterprises. Other companies are compelling staff to take unpaid leave, with vague promises of rehiring once conditions stabilise.
The government’s response has been a loan scheme offering small businesses 440 million rials — less than $300 — per worker, repayable within six months at interest rates ranging from 18% to 35%. With Iran’s official inflation rate having passed 50% in March 2026, the real value of such support is negligible for most recipients.
Compounding the employment crisis is an internet blackout imposed by Iranian authorities at the outbreak of the war. Officials cited security imperatives — preventing surveillance, espionage, and cyber-attacks — as justification for the shutdown. The economic cost has been staggering. Information and Communication Technology Minister Sattar Hashemi stated in January that each day without internet connectivity cost the economy at least 50 trillion rials, equivalent to $35 million. Across 52 days of blackout, that cumulative damage exceeds $1.8 billion.
The shutdown has fallen with particular force on Iranian women, who were already marginalised in the labour market before the war. Official data showed that only one in nine working-age women held formal employment. Hundreds of thousands had built informal livelihoods through platforms such as Instagram, connecting directly with customers to sell goods and services. The internet blackout severed those connections overnight, eliminating income streams for some of the economy’s most vulnerable participants.
The broader consumer economy is contracting sharply. Spending has fallen across tourism, restaurants, and retail sectors beyond basic groceries. Social media users inside Iran have documented the visible signs of economic retreat — unusually empty carriages on Tehran’s metro system and an abundance of parking near office buildings that once buzzed with daily commuters.
The disruption to the Strait of Hormuz, through which a significant share of Iran’s trade flows, has amplified the damage from the direct military strikes. Supply chain fractures have left manufacturers unable to source inputs, even when their facilities remain physically intact. The combination of destroyed infrastructure, blocked trade routes, a collapsed digital economy, and hyperinflationary pressure is producing an economic contraction with few modern precedents in the country’s history.
Iran’s car manufacturing sector — one of the largest in the Middle East and a cornerstone of industrial employment — faces an uncertain future as parts shortages, reduced domestic demand, and damaged supplier networks converge. The sector’s one million-strong workforce represents a significant share of the country’s industrial labour force, and any prolonged disruption there would deepen an already severe unemployment crisis.
For ordinary Iranians, the arithmetic of survival is becoming increasingly difficult. Government loan schemes offer insufficient relief against inflation running above 50%. Companies offering unpaid leave provide no income at all. And for the hundreds of thousands of women who built businesses through now-blocked digital platforms, the path back to economic participation remains entirely unclear as long as the internet blackout continues.
