Tamnoush, an Iranian company that makes fizzy drinks, has shut down its production line after 16 years and laid off dozens of workers. It was facing massive losses as US sanctions pushed up the price of imported raw materials.
“All our 45 workers are jobless now. The men are driving taxis and women are back to being housewives,” said CEO Farzad Rashidi.
Iranian business owners say hundreds of companies have suspended production and thousands of workers are being laid off because of a hostile business climate mainly caused by new US sanctions, according to Reuters.
The Iranian rial has fallen to record lows and economic activity has slowed dramatically since US President Donald Trump withdrew from the big powers’ nuclear deal with Tehran in May.
He imposed sanctions directed at purchases of US dollars, gold trading, and the automotive industry in August. Iran’s vital oil and banking sectors were hit in November.
“We have lost around five billion rials ($120,000 at the official rate) in the last few months, so the board decided to suspend all activities for as long as the fluctuations in the currency market continue. It is stupid to keep driving when you see it’s a dead end,” Rashidi said.
The country has already experienced unrest this year, when young protesters angered by unemployment and high prices clashed with security forces. Official projections indicate unrest could flare up again as sanctions make the economic crisis worse.
Four days before parliament fired him August for failing to do enough to protect the jobs market from sanctions, labour minister Ali Rabiei said Iran would lose a million jobs by the end of year as a direct result of the US measures.
Unemployment is already running at 12.1 per cent, with three million Iranians unable to find jobs.
A parliamentary report in September warned that rising unemployment could threaten the stability of the Islamic Republic.
“If we believe that the country’s economic situation was the main driver for the recent protests, and that an inflation rate of 10 per cent and an unemployment rate of 12 per cent caused the protests, we cannot imagine the intensity of reactions caused by the sharp rise of inflation rate and unemployment.”
The report said if Iran’s economic growth remains below 5.0 per cent in coming years, unemployment could hit 26 per cent.
The International Monetary Fund has forecast that Iran’s economy will contract by 1.5 per cent this year and by 3.6 per cent in 2019 due to dwindling oil revenues.
