Iran’s labor market is on the brink of collapse following sustained military actions by the U.S. and Israel, with an estimated 10 to 12 million jobs at risk—nearly half of the nation’s workforce. The strikes have targeted critical sectors including steel, construction, petrochemicals, and pharmaceuticals, disrupting supply chains and forcing widespread operational shutdowns.

Economic Impact Widens

Hadi Kahalzadeh, a former economist at Iran’s Social Security Organization, noted in a Substack post that the conflict’s ‘hidden target’ appears to be Iran’s labor market rather than its military capabilities. Residential and industrial infrastructure has borne the brunt of the damage, with over 125,000 buildings and 20,000 industrial units destroyed, totaling an estimated $300 billion in civilian infrastructure losses.

‘If this war had a hidden target, it was not Iran’s military power projection; it was the labor market that sustains the livelihoods of ordinary citizens,’ Kahalzadeh wrote.

The ripple effects of the damage are far-reaching. Steel production, a cornerstone of Iran’s economy, has been severely impacted, cascading into manufacturing, transportation, and construction sectors. Inflation has surged to 72%, compounded by weak demand, falling incomes, and deep economic uncertainty.

Precarious Future for Iranian Workers

Kahalzadeh warns that even if only 30% of the at-risk jobs are lost, the result would still equate to 3 to 4 million job losses—a 15% contraction in the labor market, the largest in Iran’s modern history. This would strain the already fragile social safety net, requiring at least 20% of Iran’s budget to address unemployment, further exacerbating the nation’s deficit.

The U.S. naval blockade on Iranian ports adds to the economic turmoil, threatening to trigger hyperinflation and a currency devaluation spiral. Despite President Trump’s claims that Iran has agreed to fully open the Strait of Hormuz, the Pentagon has expanded the blockade to include ‘shadow fleet’ tankers transporting sanctioned oil.

‘Even if the ceasefire holds, Iran’s most vulnerable people will suffer the long-term consequences of this 40-day conflict,’ Kahalzadeh concluded.