Iran’s 7% unemployment rate masks deeper jobs crisis, experts say

From a strictly economic perspective, former US Treasury official and sanctions strategist Miad Maleki says the greater danger to the regime may emerge once the fighting stops and it must govern a country burdened by soaring inflation, reconstruction costs and years of economic decline.

"If the conflict ends today, then you're going to see the economic effect of the war doing its work," Maleki told Eye for Iran.

"That would be very scary if I was an Iranian regime official, having to face the reality of a post-war economy."

Maleki argues Iran is already inside what he describes as a "tipping zone," where years of inflation, currency depreciation and economic mismanagement have steadily eroded purchasing power.

The question, he says, is no longer simply whether the government can continue paying salaries, but whether those salaries still buy enough to sustain loyalty.

"The salary might keep coming," he said. "You just won't be able to afford very basic needs."

The scale of that pressure is reflected in official consumer-price data.

In June, food and non-alcoholic beverage prices were nearly 134% higher than a year earlier, while prices for oils and fats rose about 278% and meat about 172%, according to data from the Statistical Center of Iran.

Those increases squeeze not only ordinary households, counterterrorism and security specialist Roger Macmillan argues, but also lower-ranking members of the Basij, IRGC conscripts and their families—people drawn from the same society on which the state relies to maintain internal security and suppress dissent.

"The real question isn't how much damage a bomb can do," he said. "It's what happens when the money stops moving."

Iran's financial center of gravity

Military pressure has dominated discussion of Iran for months, with much of the debate centered on missile stockpiles, drone production and how long it might take Tehran to rebuild its military capabilities.

Macmillan argues that focus overlooks something more fundamental.

"They are built to absorb military pressure," he said. "But are they able to absorb payroll pressure?"

His argument is not that economic pressure alone will weaken the regime. Rather, he says policymakers should focus on disrupting the broader financial ecosystem that allows the Islamic Republic to function, from government payrolls to military-linked economic networks.

"We need to be looking at the financial center of gravity, which is not just the payroll but also the military bonyads," he said.

Bonyads are powerful quasi-official foundations that expanded after the 1979 Islamic Revolution, with some of the largest developing extensive holdings in sectors including banking, construction, manufacturing, agriculture and energy.

Major foundations enjoy significant economic privileges and limited public oversight, and several are overseen by or closely connected to institutions under the Supreme Leader.

Some have also served as important patronage networks and maintained extensive economic links with Iran's political and security establishment.

For Macmillan, the question is not simply how much revenue those networks generate. It is whether they can continue supporting rank-and-file security forces if inflation keeps eroding wages while the government takes on the additional burden of rebuilding a post-war economy.

"What we need to look at is how we can remove the will, shatter the cohesion and the will of the foot soldiers from the Basij and from the IRGC, and separate them from the state," he said.

The argument represents a different way of thinking about pressure on Iran.

Rather than asking only how much military capability can be destroyed, Macmillan and Maleki argue policymakers should also consider how much financial strain the Islamic Republic can absorb before maintaining the institutions that enforce its rule becomes increasingly difficult.

Peace itself could reduce some war-related economic pressures, particularly if it improves trade conditions or is accompanied by sanctions relief. But Maleki argues it would also force Tehran to confront accumulated economic problems while meeting the costs of reconstruction.

For him, that may be precisely where the regime is most vulnerable.

"The most punishing thing they can do to this regime is send it back to govern Iran in a state of peace and face the reality they had to kill their way out of," Maleki said.

Last week, hardline lawmaker Mohammad Naghd-Ali told parliament that another member had told him he cries after every parliamentary session because of the current state of women's dress.

Naghd-Ali fiercely criticized President Masoud Pezeshkian's administration for refusing to implement the controversial hijab law approved in 2024, saying the government was allowing what he described as "nudity” and “immorality" to spread.

Although the new legislation was finalized in 2024, its implementation has been suspended following a decision by the Supreme National Security Council, reportedly out of concern that enforcing it could trigger unrest similar to the nationwide protests that erupted after Mahsa Amini's death in 2022.

Existing compulsory-hijab rules, however, remain legally in force.

Hardline activists have likewise blamed Pezeshkian for what they portray as the country's cultural decline.

"If Pezeshkian's incompetent and secular government continues for another two years, even today's level of dress will become something people long for," conservative commentator Hassan Abbasi wrote on social media. "Pezeshkian is standing against God's command on hijab and wants to return Iran's cultural climate to the Pahlavi era."

Social media campaign seeks broader crackdown

Hardline activists have also intensified an online campaign demanding tougher enforcement.

In recent days they have circulated videos showing unveiled women in tight-fitting sleeveless tops serving customers at a well-known restaurant in Tehran—scenes that would have been almost unimaginable in the capital and other cities until only a few years ago. Such activists frequently describe these styles as "nudity" or "body display."

One hardline X user, allegedly tied to a state institution, wrote: "The first step in confronting unveiled women is confronting cafes and establishments that violate social norms." According to the post, enforcement is currently focused mainly outside Tehran but will gradually expand across the capital.

Hardline journalist Fereshteh Sadeghi similarly shared a photograph of an unveiled woman shopping outside Tehran and criticized those arguing that hijab should not be discussed while the country faces broader security challenges.

"They tell us not to talk about hijab in the middle of a war and not even to take pictures. Then when are we allowed to speak?" she wrote.

Yet Sadeghi also acknowledged the state's failure to restore widespread headscarf compliance.

"The battle to force the hijab back onto women is over; you can't force the hijab on their heads," she wrote in another post, while arguing that authorities should at least establish dress regulations to prevent what she called "body display."

Hijab as a political symbol

For many hardliners, compulsory hijab is not only a religious obligation but also a defining political symbol of the Islamic Republic.

"Hijab is the flag of Islam. Muslim society is recognized through hijab," conservative social media activist Alireza Akbari wrote.

Supporters of compulsory veiling frequently cite a ruling by Supreme Leader Ali Khamenei, who described unveiling as forbidden both religiously and politically.

Journalist Mehrdad Khadir argued in an article published by Asr-e Iran that women's dress is no longer among the public's primary concerns.

"The way women and girls dress is not a concern for the majority of people," he wrote. "The face of the city has changed, and it will not return to what it once was."

According to Khadir, the country's real concerns are the threat of war and the collapse in living standards.

"In the current circumstances," he wrote, "it is unlikely—indeed impossible—that the authorities would surrender their judgment to those tears and turn an issue that has effectively been settled back into a national crisis. If there is anything worth crying over, it is the collapse of people's purchasing power."

Resistance through everyday life

Although enforcement has eased in many areas over recent years, critics argue that this should not be mistaken for legal liberalization because compulsory hijab laws remain fully in force even if they are not consistently applied.

The social landscape has nevertheless changed dramatically. Many women who continue to wear the hijab have also moved away from the traditional all-black chador and highly conservative appearance. Styles often described online as “hijab style” combine headscarves with colorful clothing, modern designs and fashion accessories.

Hardliners reject these styles as well, arguing that they contradict hijab's original purpose of discouraging attention and preserving modesty.

Opponents of compulsory veiling, meanwhile, say the increasingly visible presence of unveiled women reflects persistence rather than freedom.

"The type of clothing women wear in public still depends on the neighborhood, how they travel, even the day and time," one X user wrote. "The fact that we now see bolder styles is the result of the relentless struggle of brave women who accept the risks of dressing that way. Nothing has actually been liberated."

Unlike the corruption scandals that have long dominated headlines in Iran, the report by Jahan-e Sanat focuses on thefts measured not in billions of rials but in loaves of bread, packages of cheese and cuts of meat.

It argues that cases involving everyday groceries are increasingly reflecting economic distress rather than simple criminality.

"There are no billions of tomans, no gold, no luxury villas," the newspaper wrote. "Sometimes it is only a can of cheese, a loaf of bread or a few simple food items."

• 

  Iran managing the inflation statistic, not the inflation

Days before Jahan-e Sanat published its report, CCTV footage from outside a minimarket at night in the northern city of Babolsar spread widely across Persian-language social media.

The footage appears to show a woman wearing a black chador approaching a display of boxed goods outside the shop. After pausing beside the display and glancing around, she appears to pick up one of the boxes before walking away.

Exactly what prompted the woman's actions remains unknown. But for many Iranians, the clip became less about one apparent shoplifting than about the growing struggle to afford everyday necessities.

"May God never let anyone feel ashamed in front of their family," one user wrote.

"This is what happens when prices keep rising. We live in a country rich in oil and gold, yet the government cannot provide for 87 million people," another commented.

"People simply cannot afford to buy things anymore because prices have become so expensive," another wrote.

• 

  Economic crisis drives Iranians to sell hair, rent laptops

Others pleaded with whoever shared the footage not to expose the woman's identity.

"Who would steal a few groceries unless driven by poverty and hunger? God help them," one commenter wrote.

100%

"Maybe she had no money to buy food for her children. The shopkeeper should have protected her dignity instead of exposing her," another said.

Some comments contrasted the apparent theft with what they described as large-scale corruption, arguing authorities should focus on powerful figures accused of enriching themselves rather than people taking everyday necessities.

The sympathy expressed online echoed account gathered by Jahan-e Sanat from a supermarket employee who described an apparent increase in customers taking inexpensive food items.

Behind the supermarket shelves

Amirhossein, an employee at a large supermarket chain, told the newspaper he had witnessed several such incidents during the past 10 months.

He recalled seeing a woman place two tubs of cheese into her handbag during a busy period before leaving without paying. In another case, he said, security camera footage later showed a man leaving with butter, cakes and pastries concealed beneath his coat.

Staff also stopped a customer who had eaten packaged cakes inside the store and hidden the empty wrappers before trying to leave, according to the employee.

• 

  Iran faces region’s harshest mix of wartime contraction and inflation

Perhaps most surprising, Amirhossein said, was a regular customer who was caught taking a package of meat.

"I think poverty is the main reason," he told Jahan-e Sanat. "You cannot judge everyone the same way, but when someone steals a simple item, they are probably under enormous pressure. Sometimes, if what was taken has little financial value, we don't pursue it because we think the person's circumstances may have brought them to this point."

'A crisis of livelihoods'

Sociologist Mostafa Abroshan said reports of thefts involving bread, dairy products and other essentials should be viewed in the context of Iran's prolonged economic difficulties.

"Thefts of basic goods, especially food and other necessities, reflect disruptions in economic structures and the declining ability of households to meet their basic needs," he told the newspaper.

"This does not justify theft, but it shows that people's behavior must be understood within its social context."

Abroshan said inflation, declining purchasing power and job insecurity had left many households struggling to afford essential goods.

"A society in which stealing bread, milk or rice becomes more common is facing a crisis of livelihoods and social justice more than a security crisis," he said.

100%

Prolonged economic hardship, he warned, could also erode social trust, leaving retailers more suspicious of customers, increasing security costs and weakening confidence in public institutions.

While enforcing the law remains necessary, Abroshan said that reducing poverty, controlling inflation, creating jobs and strengthening social support would do more to curb petty theft than harsher punishment alone.

Without addressing the economic pressures facing low-income households, he said, the theft of everyday groceries risks becoming an increasingly visible measure of Iran's widening cost-of-living crisis.

A baby does not stop needing clean water because the pumps have shut down. A patient cannot postpone the use of refrigerated medicine or medical equipment. An elderly person living on the 14th floor cannot simply take the stairs when the elevator stops working. Parents cannot suspend cooking, washing or caring for their children until the state restores the water.

During the brutal Iranian summer, when temperatures in parts of the country exceed 40 degrees Celsius and climb above 50 in the south, air conditioning is not merely a comfort. For children, older people and those with medical conditions, it can become a matter of survival.

The authorities can announce a two-hour power cut. A child's fever, a patient's oxygen machine and a family's need for clean water do not follow that schedule.

Iran's water and electricity emergencies are not separate crises. Water distribution depends on electricity to operate pumping stations and move water through municipal networks, especially into apartment buildings and elevated neighbourhoods. When electricity fails, pumps stop working and water pressure falls. One failing system pulls another down with it.

‘No one to turn to’

Reports from across Iran describe daily electricity cuts lasting for hours alongside recurring water shortages. In Boumehen, east of Tehran, residents reportedly received running water on only two days during one week, and even then for only a few hours.

"We have a sick person at home. We no longer know who to turn to," one resident said.

In Pardis, another city east of Tehran, a resident of a 14-storey building said a four-hour power cut left the elevators out of service. "How are we supposed to climb all these stairs?" he asked.

In Ilam, power cuts reportedly lasted as long as four hours while temperatures reached around 46 degrees Celsius. In Khuzestan, one of Iran's principal oil- and electricity-producing provinces, residents complained that outages had resumed as temperatures crossed 50 degrees.

This is one of modern Iran's deepest contradictions. A country with some of the world's largest oil and natural gas reserves cannot guarantee electricity to its own population. Provinces that generate much of Iran's energy cannot rely on power in their own homes.

Factories lose production hours, small businesses lose income, food and medicine spoil, and families organise their days around outage schedules that are not always accurate.

During the summer they lose electricity; during the winter they face gas shortages. The crisis changes with the season, but it never disappears.

‘Energy imbalance’

Officials describe this as an "energy imbalance," a phrase that makes the problem sound technical rather than political. But Iran's energy crisis was not created overnight.

For years, electricity generation failed to keep pace with demand. Transmission networks deteriorated, renewable energy remained marginal and water systems continued to lose enormous quantities through leakage and decay.

In June 2026, Iran's Parliamentary Research Center reportedly projected a peak summer electricity deficit of roughly 13,600 megawatts.

The government's answer was to ask every Iranian to reduce electricity consumption by ten percent. Once again, citizens were instructed to compensate for failures they did not create.

A family can switch off a lamp. It cannot modernize a power station. A parent can shorten a child's shower. She cannot repair a leaking municipal water network. A shopkeeper can turn off an air conditioner, but he cannot recover decades of lost investment or build the electricity capacity the country requires.

Iran does face genuine environmental pressures. Drought, extreme heat and irregular rainfall have reduced water availability across the country. Climate change is making an already dry region hotter and more vulnerable.

But climate alone cannot explain why so much available water is wasted, why groundwater has been extracted beyond natural recovery or why inefficient agricultural practices remained dominant for decades.

Low efficiency

Even experts quoted by Iran's official news agency acknowledge as much.

Hashem Oraee, head of the Iran Energy Associations Union, estimated that nearly 90 percent of Iran's annual water consumption goes to agriculture, where efficiency remains extremely low.

He also said roughly one-third of the water entering urban distribution networks is lost before reaching consumers.

Iran is not simply running out of water. It is losing the water it still has. The current war did not create this crisis. It struck a system that was already fragile, underfunded and unable to meet national demand.

Iranian electricity officials have said more than 2,000 points across the national grid were damaged during the conflict, reducing available generating capacity by around 4,200 megawatts.

Those figures have not been independently verified, but they indicate the scale of the damage the authorities themselves claim to be facing.

Extended hours

In Bandar Abbas, residents described explosions followed by prolonged electricity cuts. One woman who depends on the internet for her income said she had already been struggling with government-imposed internet shutdowns before longer power cuts placed her work at further risk.

"We always had power cuts, but the hours have now extended," she said.

That distinction matters. The war made the outages longer and more dangerous, but it did not introduce Iranians to blackouts. Years of neglect had already done that.

Inside the home, the consequences are immediate. Refrigerators stop cooling food and medicine. Medical devices fail unless families can afford backup power. Elevators become unusable. Water no longer reaches upper floors when electric pumps stop working. Parents struggle to prepare food, wash clothes, sterilize baby bottles or care for elderly relatives and young children.

The word "outage" suggests a temporary interruption after which normal life resumes. But when electricity disappears every day, when water and power fail together, and when no one knows whether the published schedule can be trusted, the interruption becomes normal life.

Water and electricity are not luxuries. They are the foundations on which healthcare, sanitation, education, industry and family life depend.

Iran did not run out of intelligence, resources or human ability. Its people were deprived of functioning systems because those in power failed to build and maintain them.

Now the lights are going out, the taps are running dry, and ordinary Iranians are once again being asked to bear the cost.

The use of nas has become increasingly common among students, particularly in middle school, said Mostafa Mohammadpour, head of the state Welfare Organization office in the northeastern city of Kashmar. In some cases, he added, children in the upper years of primary school have begun using it.

"What has now become common among students and paves the way for drug dependence starts with the use of nas," Mohammadpour said. "Unfortunately, children have very easy access to it because selling it is not considered a crime and it is not recognized as a narcotic."

Nas, known across the region as naswar, is a moist green tobacco mixture held under the lip or tongue. It is a centuries-old habit in eastern Iran, Afghanistan and Central Asia, and because it produces no smoke, a child can use it in a classroom without anyone noticing.

'Why don't they stop it?'

The warning drew a wave of responses from users reacting to Iran International's coverage, many asking why the product remains on open sale despite years of warnings about its risks.

"Why don't they stop it from being distributed?" one commenter asked.

100%

Another argued the answer lies in giving children somewhere else to go. "Municipalities should build at least three sports complexes for students in every district and make them free. School facilities should also be improved so students stay occupied and don't turn to it," the commenter wrote.

Others aimed their frustration at official indifference. "Do they even care what happens to young people?" one wrote.

Some tied the issue to wider political grievances. One X user alleged that the authorities allow addiction to spread among the young to blunt political activism, and wrote that nas "causes addiction quickly," "causes cancer in the mouth" and "damages teeth," adding a claim, which could not be independently verified, that products sold in Iran contain arsenic.

• 

  Counterfeit drugs kill 7,000 people annually in Iran

Within every child's reach

Because nas is not classified as an illegal narcotic, it sits on the shelves of small shops, and students obtain it with little difficulty, according to Mohammadpour.

The habit is most entrenched in the northeastern province of Razavi Khorasan, he said, but is no longer confined to one region, with nas now readily available across much of the country.

Tehran is no exception. Iranian media have reported vendors openly selling nas in and around the capital's Molavi market, the green tobacco displayed in packages large and small under a variety of brands.

The market draws buyers with lower prices and a wider selection, though the product is also sold through herbal shops across the city.

For children, the attraction is obvious: it is cheap, easy to hide and everywhere.

100%

More than a tobacco habit

Doctors warn the risks run well beyond nicotine.

Research has linked nas to cancers of the mouth, esophagus and pancreas, as well as cardiovascular disease. Health experts also reject the belief that smokeless tobacco is a safe alternative to cigarettes, warning that no tobacco product is without risk.

The spread among students carries a further danger: early exposure to nicotine can leave children more vulnerable to addiction of every kind later in life, the concern at the heart of Mohammadpour's "gateway" warning.

100%

A country's changing addictions

The warning lands against a wider shift in substance use in Iran.

More than 4.4 million people in Iran use narcotics regularly or occasionally, according to a report last year in the daily Shargh, which estimated that, counting their families, some 15 million people live with the consequences of drug use.

• 

  Cannabis emerges as leading drug among Iranian women

Officials and health experts have also pointed to rising use of synthetic drugs, a falling age of first use, and growing numbers of women and young people among users, signs that addiction in Iran is getting younger.

The children with green packs in their pockets, on this reading, are not an anomaly but the leading edge.