Following the US and Israeli war against Iran’s regime, the impact of the attacks has not been limited to infrastructure damage; the labor market has also entered a period of widespread instability. A wave of layoffs, the shutdown of internet-based businesses, runaway inflation, soaring rents, and a sharp decline in purchasing power are now putting immense pressure on working-class families and large segments of Iranian society.
Iran’s economy, already suffering from structurally high inflation, is now bending further under the crushing pressure of rising prices. Reports indicate that the US dollar exchange rate has surged to an unprecedented 1.9 million rials. At the same time, according to Iran’s regime Central Bank, point-to-point inflation has reached around 70% and living costs have crossed critical thresholds. Official data also show that food inflation has exceeded 60%, rents have once again increased in many cities, and working-class household incomes have fallen to around $200 per month. This is while, under a government decree, the minimum wage for a worker with one child stands at approximately $127, an amount that continues to decline daily due to the rising dollar exchange rate.
How Did Inflation in Iran Become the Most Chronic Structural Crisis?
How the War Destabilized Iran’s Labor Market
Military attacks and disruptions to industrial and communications infrastructure pushed Iran’s already fragile and unstable economy into another phase: production lines halted, supply chains were disrupted, factory capacity declined, internet businesses shut down, and a tsunami of layoffs followed.
The war’s biggest blow to workers, combined with the denial of labor rights, is estimated to have affected up to 2 million people. On one hand, war caused inflation to surge, especially in food, housing rents, and medicine, while on the other hand wages have either been suspended or reduced for many workers. Employees at damaged factories are being sent on forced unpaid leave, benefits such as annual bonuses, housing allowances, and insurance contributions are often not paid, and layoffs have become an everyday phenomenon.
As inflation rises rapidly, people’s purchasing power is sharply declining, while a 50% to 60% increase in construction material prices signals a new wave of housing price surges.
Even before the war, women’s share of employment was no more than around 20%, and conditions are now far worse for them than for men. According to regime officials, only 147,000 people have been deemed eligible for unemployment benefits, of whom only one-third are women. Most of these individuals are also stuck in lengthy queues for processing unemployment claims. Due to the strained conditions of the fund and various restrictions, unemployment payments are often equivalent to only half of previous wages, which is not even enough to cover rent. Half of all workers, whether male or female, work in places not covered by labor law protections.
Internet-Dependent Livelihoods and Network Blackouts
One of the differences between this war and previous crises was the direct blow to the digital economy. Widespread internet shutdowns caused a large portion of online businesses to cease operations. Internet outages in Iran are not merely communication restrictions; for many women and households engaged in home-based and online work, they effectively mean complete exclusion from the labor market.
More than one million large and small internet-based jobs have been severely damaged due to prolonged internet disruptions, along with many home-based businesses, most of which are run by women.
Rents Are Consuming Wages
The state-run Ham-Mihan newspaper reported that many households have been forced to leave the capital due to high living costs, reflecting the structural pressure of the housing market on the urban working class. In the official narrative of Iran’s regime institutions, measures such as food coupons and unemployment insurance are presented as supportive policies, but in an economy where purchasing power has declined by at least 50% in one year, these forms of support play only a minimal role in easing livelihood pressures.
Greater Suppression of Labor Protests in a Wartime Atmosphere
The prevention of union activities, the effective suspension of labor law, and the security atmosphere created by the war have reduced the possibility of addressing the pressures faced by workers, while any form of labor protest is met with repression.
The pressure currently affecting workers’ mental health is not merely the result of war or recent crises, but rather the outcome of years of accumulated economic crises, privatization, the spread of temporary contracts, job insecurity, and declining purchasing power of wages. In recent years, these pressures have intensified due to the war, its economic consequences, and the suppression of social protests, affecting not only workers themselves but also their families.
The consequence of this situation is a severe decline in purchasing power and the relocation of part of the middle class to cheaper urban areas, a trend showing that the shrinking middle class and expansion of lower-income groups have become structural issues in society.
The behavior of the private sector under current conditions cannot be separated from the policies adopted by the government and institutions responsible for labor affairs. In the current structure, the government and the Labor Ministry are effectively more inclined toward protecting the interests of major employers and economic enterprises than defending workers’ rights.
The Outlook for the Working-Class Economy in the Post-War Situation
Under such conditions, one can speak of a kind of outlook of economic and social misery, although historical experience shows that these same pressures can also create the conditions for new forms of solidarity and public uprising.
