Iran’s industrial sector is facing a deepening labor shortage that is no longer cyclical but structural, reflecting economic strain, shifting worker preferences and a growing mismatch between industrial workplaces and the expectations of younger generations.
Data from the Purchasing Managers’ Index (PMI) for industry underline the scale of the problem: the employment sub-index has remained below the neutral 50 mark for 14 consecutive months, signaling sustained contraction in industrial hiring.
Producers across manufacturing, mining and heavy industry report growing difficulty in recruiting even unskilled workers—a stark reversal from past decades when factories attracted long queues of job seekers.
Inflation and the erosion of real wages are at the core of this shift. As living costs rise faster than salaries, fixed-income jobs in industry have lost appeal, while short-term, cash-generating activities in services—particularly app-based transportation—have become more attractive.
In the textile industry, the problem has become acute. Amin Moghaddam, a textile sector activist, says the broader economic environment has reshaped employment choices.
Macro Trend
“A macro trend has emerged in Iran toward quick-yield income,” he explains. “With a mobile phone and a car, people can earn between 10 million and 20 million rials ($7-15) a day. Despite vehicle depreciation and physical pressure, this daily liquidity is more attractive than factory wages that are often paid late.”
According to Moghaddam, even industries offering social security, supplementary insurance and welfare benefits struggle to compete for unmarried workers. “These advantages matter to married workers, but they are far less relevant for singles,” he notes.
Labor shortages, he adds, directly affect output and costs, as many factory operations still depend on manual labor. “When unskilled workers are missing, production falls and unit costs rise.”
Mining faces an even harsher reality. Labor shortages have forced some mines—especially coal mines—to halt extraction altogether. Saeid Samadi, a mining sector expert, attributes this to the collapse of purchasing power.
“Even a 20% annual wage increase does not match real inflation,” he says. “As a result, the real value of wages declines, and people avoid wage-based jobs, particularly in physically demanding environments like mines.”
Samadi notes that in some cases, monthly wages of 300–400 million rials ($230-300) still fail to attract workers. “Those who accept such jobs often do so under economic pressure, which lowers productivity,” he says. Rising wages are also constrained by high production costs, including mining equipment priced at two to three times global levels. “Without reducing employers’ costs, higher wages are simply unsustainable.”
Generational Change
In steelmaking, the challenge is less about wages alone and more about generational change. Aziz Ghanavati, a steel industry analyst, points to a widening cultural and technological gap.
“The new workforce has different expectations, weaker practical skills and limited tolerance for shift-based, intensive industrial work,” he says.
Outdated technologies—many dating back decades—further dampen motivation. “Young workers compare domestic plants with modern global facilities and feel disconnected.”
Ghanavati argues that limited career mobility and high energy constraints compound the problem. “When wages lag inflation and production costs rise due to high interest rates and energy shortages, competition for labor intensifies across industries,” he warns.
Iran’s labor exodus from industry reflects the convergence of economic hardship, the pull of quick-return services and a structural disconnect between industrial environments and modern workforce expectations. Without technology upgrades, wage policy reform and targeted incentives that workers can tangibly feel, labor shortages will continue to erode production capacity, raise costs and weaken the competitiveness of Iran’s industrial base.
