Iran’s economy was in a dire state before the war. Now millions face job losses and poverty

By Tim Lister, Aida Karimi, CNN

(CNN) — Asal, a freelance designer in her 30s living in Tehran, used to get projects from abroad all the time.

But after nearly two months without the internet, she told CNN by phone, “no new projects, no replies. It’s like everything just stopped overnight.”

On the verge of tears, she said her income doesn’t even cover her basic expenses anymore. She and others who spoke with CNN for this story asked only to use their first name for privacy reasons.

Asal is one of several million Iranians for whom Iran’s conflict with the United States and Israel is deeply personal. They have lost their work and are being pushed into poverty.

Few sectors have been spared. Among the legions of newly unemployed are refinery and textile workers, truck drivers, flight attendants and journalists.

Iran’s economy was in a dire state before the conflict. National income per person had fallen from about $8,000 in 2012 to $5,000 in 2024, ravaged by inflation, corruption and sanctions.

The outlook is even worse. Up to 4.1 million more people could fall into poverty due to the conflict, according to the United Nations Development Programme (UNDP).

The physical damage caused by thousands of airstrikes has caused widespread displacement, according to the UNDP. More than 23,000 factories and firms have been hit, media outlet EcoIran has reported.

That’s cost one million jobs directly, says Iran’s Deputy Work and Social Security Minister, Gholamhossein Mohammadi. And the spillover has pushed another million people out of work, the Iranian publication Etemad Online has estimated.

Disruption to shipping, and therefore imports, has also disrupted Iran’s already fragile economy, “placing 50% of Iranian jobs at risk and pushing an additional 5% of the population into poverty,” according to Hadi Kahalzadeh at the Quincy Institute, a foreign policy think tank.

“Many firms have suspended operations under the combined pressure of war, inflation, recession, and collapsing demand,” writes Kahalzadeh.

The annual inflation rate in March reached 72%, but was much higher for essentials, according to official data.

Israeli airstrikes last month on huge petro-chemical complexes have left thousands of workers on unpaid leave. Iran’s largest steelworks were also struck, but two of them – Mobarakeh Steel and Khuzestan Steel – deny they have laid off any employees.

Still, the massive damage to heavy industry is rippling through the economy. Trailer-maker Maral Sanat, headquartered near the border with Azerbaijan, laid off 1,500 workers for lack of steel. One of Iran’s biggest textile firms – Borujerd – laid off 700 workers.

Many dairy plants have suspended operations because of shortages of essential packaging materials, says Kahalzadeh at the Quincy Institute.

Soheila, a senior flight attendant, told independent news site Fararu that on February 28, “I was about to leave for a flight when my colleague called and said everything had been canceled. Our contracts ended in March, so until flights resume, we won’t get paid.”

The pattern is repeated across the country and across industries. Official data show a sudden jump in the numbers applying for unemployment insurance – with 147,000 applicants in the past two months, about three times higher than last year.

“The burden falls most heavily on informal workers and on low- and middle-skilled workers in the formal sector, who have the least protection and the least political influence,” according to Kahalzadeh.

Iranian media have reported that the country’s largest e-commerce firm – Digikala – has begun a wave of layoffs across several departments. Businesses and workers reliant on the internet which “could have become a strategic support to control the post-war unemployment crisis are themselves severely weak,” state news agency ILNA reported.

Jafar, a data analyst, told Fararu his company had shut down entirely, leaving more than 50 employees jobless. “Now I’m thinking about working in ride-hailing just to survive. I have rent and debts to pay, and no idea what comes next,” he is quoted as saying.

The lack of access to the internet is especially problematic for women working from home.

Somayeh, in her 50s from Isfahan, has been teaching German online for years. Her classes used to be full, but without internet access, she has had to switch to domestic apps, which aren’t very reliable.

“Nothing works properly anymore,” she told CNN by phone. “Students can’t all get online at the same time, platforms keep crashing.”

Women have made a third of all unemployment insurance claims since the war started.

The jobless numbers have put further pressure on an already strained social security system, at a time when state revenues are depleted.

But without swift government support – tax and insurance deferrals, low-interest loans, and special aid for small firms – a much larger wave of unemployment is likely, according to Etemad.

The economic crisis has fueled criticism of the government’s economic policy.

“The government orders a 60% salary increase for its employees while allowing many of them to work remotely with full pay. Meanwhile, economic enterprises, unable to afford wages, are laying off their workers,” said to Saeed Tajik, a member of the Tehran Chamber of Commerce, in an interview with Fararu.

The Chamber of Commerce has said that preserving jobs must be the country’s top economic priority, urging companies to stand with workers “with compassion and sacrifice” during this crisis.

The government says the hardship is the consequence of an unjust war inflicted on Iranians by the US and Israel. It is reported to be planning an expansion of monthly vouchers that help the poorest with basic items.

Inflation, unemployment and shortages have created “a dire and complicated situation,” wrote the conservative Ettelaat newspaper Monday. “These issues cannot be brushed aside with polite words or general statements. The government may soon need special programs for a wartime economy.”

Even before the war began, hardship and inflation provoked nationwide protests that were brutally repressed.

In almost every walk of life, across Iran, the outlook is dire as the war enters an unresolved limbo.

In Isfahan, language teacher Somayeh told CNN: “The drop in income is bad, but what’s worse is this constant uncertainty. You never know what’s going to happen next.”

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