Over the past two years, Iran has entered a new phase of social upheaval. The government’s challenges go beyond economic crises or external pressures; declining levels of public trust in institutions, national security, and regional developments, most notably the Twelve-Day War, have intensified structural imbalances throughout the country and economy.
Inflation, declining purchasing power, unemployment, emigration, and diminishing hopes for improved conditions were no longer mere obstacles, but key factors shaping the broader social mood. Protests were also no longer limited to professional or sector-specific demands, but increasingly reflected a widening circle of social discontent and declining confidence in institutions’ ability to address the crises that had accumulated.
While the official narrative attributes the roots of the crisis to sanctions and external pressures, other analyses point to internal factors, such as weak economic management, corruption, and the dominance of a security-based approach to crisis management, which have also contributed to deepening social imbalances.
Declining Livelihood Security
Iran’s economic crisis is no longer merely a matter of macroeconomic imbalances; it has become part of everyday life in major cities, particularly Tehran.
Most economic reports on Iran published in 2025 and 2026, including the Bertelsmann Stiftung’s Transformation Index (BTI) project, concluded that Iran’s economic crisis has become the primary driver of social change in the country. Weak economic growth and ongoing international sanctions have expanded the scope of poverty, directly affecting the livelihood security of Iranian households.
The reports also reveal persistent structural imbalances, most notably weak investment, declining production, high unemployment rates, and continued pressure on public finances. Despite government measures to contain rising prices and stabilize markets, economic indicators point to continued inflationary pressures throughout 2026.
According to data from Iran’s Central Bank, the annual inflation rate rose from 48.3 percent in March 2026 to 57.7 percent in May and June, with similar rates recorded in urban and rural areas.
At the same time, prices of basic goods, services, and rents continued to rise faster than real incomes, while the toman weakened. The dollar’s price on the parallel market rose from around 140,000 tomans in late 2025 to nearly 200,000 tomans in July 2026, contributing to a new wave of price increases and further eroding purchasing power.
Against this backdrop, Hussein Salahvarzi, the former president of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA), believes that the middle class has been the hardest hit over the past decade, which has left a large percentage of employees, professionals, and small business owners unable to save or invest in education, healthcare, and housing.
Salahvarzi has coined the term “lifestyle poverty” as families have been forced to cut spending on culture, entertainment, travel, education, and other components essential to a good quality of life. Vahid Shaghaghi Shahri, an economics professor at Kharazmi University, argues that the middle class does not suddenly fall into poverty, but instead undergoes a gradual erosion of its standards of living. Shahri points out that this class shrank from around 65 to 70 percent of society in the 2010s to about 50 percent in recent years. In his view, this erosion is reflected in declining purchasing power and savings, postponed purchases of homes and cars, delayed marriage and childbearing, and growing reliance on loans or the liquidation and sale of savings to cover basic expenses.
These estimates align with the findings of studies by the Research Center of the Islamic Consultative Assembly (Majlis), which warned of the expansion of poverty across the country.
Javad Hosseini, head of Iran’s State Welfare Organization (SWO), noted that poverty indicators had been trending upward in recent years. He explained that some estimates put the poverty rate at nearly 40 percent by 2024, up from around 20 percent during the previous decade. He also estimated that more than 34 million people were living below the absolute poverty line, compared with around 16 million in previous years, reflecting growing social vulnerability and mounting livelihood pressures on broad segments of Iranian society.
In local markets, the cost of living is evident in consumption patterns. Red meat and poultry, as well as many dairy products and fruits, are no longer affordable for a broad segment of low-income people, and these pressures have also spread to growing parts of the middle class. With each new wave of increased prices, families have been forced to reorder their consumption priorities and gradually give up goods that, until recently, were considered necessities.
Many families have had to move to distant suburbs in search of more affordable housing. Precarious forms of housing, such as working in exchange for shelter or sleeping in cars, have also emerged as indicators of a widening housing gap and low-income groups' declining ability to afford the cost of living.
Brain Drain and Social Upheaval at Home
Iran’s brain drain has become one of the most significant social and developmental challenges the country has faced over the past two years.
Data from the Statistical Center of Iran for the summer of 2025 illustrate the scale of this challenge: the labor force stood at around 26.9 million out of more than 66 million people of working age. The unemployment rate also reached 19 percent among those aged 15 to 24 and 14.4 percent among people aged 18 to 35, with higher rates recorded in border provinces.
The motivations for migration are no longer limited to seeking better educational or economic opportunities; they are also increasingly linked to growing social and psychological pressures, declining confidence in the future, and a sense that opportunities for professional and social advancement within the country have become blocked. Students at the 10 leading study-abroad destinations have exceeded 110,000, while the number of students pursuing their education outside the country has increased by around 80 percent over the past four years.
Masoud Tajrishi, acting president of Sharif University of Technology, warned of the growing emigration of academic talent, noting that 26 of the university’s 460 faculty members had permanently ended their cooperation with the university, alongside growing concerns that several faculty members who had left on research or unpaid leave would not return.
From Economic Grievances to a National Protest Wave
Reports by human rights organizations, international media outlets, and research centers specializing in Iranian affairs show that the protests Iran witnessed in 2025 and 2026 represent an extension of the accumulated wave of social discontent of recent years. One of the most prominent waves of protests began in late 2025, with strikes and shop closures by traders in Tehran’s Grand Bazaar protesting the continued collapse in the value of the rial and the sharp rise in prices. The protests then spread to universities and major cities such as Isfahan, Shiraz, and Mashhad, and later to many Iranian provinces.
The same period also saw a series of protests and strikes by factory workers, teachers, retirees, nurses, truck drivers, and workers in various service and productive sectors, reflecting a broader social base of protesters compared with previous waves.
Social media and digital platforms played a pivotal role in transmitting information across provinces and connecting local protests, giving them a broader national dimension and accelerating the spread of social demands across professional groups and geographic areas.
The military confrontation in the region during the summer of 2026 further intensified these pressures: security spending increased, some economic activities were disrupted, and pressure on public finances grew, without reducing social demands. On the contrary, these developments deepened economic anxiety and heightened public sensitivity to livelihood issues amid continued inflation, declining real incomes, and a widening gap between the cost of living and wage levels.
In light of these developments, protests in Iran no longer represent a temporary response to rising prices or falling wages; instead, they reflect a deeper shift in the relationship between society and official institutions.
Can Iran’s government maintain social legitimacy?
In his study “Iran’s 2025–2026 Uprisings and the Legitimacy Crisis of the Islamic Republic,” Will van Hoff argues that the protests, which began with economic grievances, quickly evolved into a broad social movement involving merchants, students, workers, and segments of the middle class.
Van Hoff notes that the expanding base of participants, together with the shift in slogans from economic grievances to calls for regime change, reflects the deepening legitimacy crisis facing the Islamic Republic. He also explains that the authorities responded to these protests with heightened security measures, including the deployment of Islamic Revolutionary Guard Corps (IRGC) and Basij forces, mass arrests, and restrictions on the internet and communications, as part of efforts to contain the spread of the protests and restrict the circulation of information about them.
In the same context, Amnesty International reported in its May 2026 report that Iranian authorities had intensified their security measures by carrying out widespread arbitrary arrests, alongside a rise in politically motivated executions targeting dissidents and rioters.
In the same context, Amnesty International reported in its May 2026 report that Iranian authorities had intensified their security measures by carrying out widespread arbitrary arrests, alongside a rise in politically motivated executions targeting dissidents and rioters.
Executions carried out in connection with cases linked to the protests also sparked widespread reactions among rights groups and on social media platforms, while the authorities maintained that the sentences had been carried out in accordance with established judicial procedures.
How Costly was the Crackdown?
Ali Alfoneh, a researcher at the Arab Gulf States Institute in Washington, argues that the December 2025 protests represented a turning point in the trajectory of Iranian protests. He notes that these protests were distinguished by their duration, continuing, albeit with varying intensity, until February 2026, unlike previous economically driven protests, which tended to be short-lived. He also describes them as one of the bloodiest waves of protest in the history of the Islamic Republic, noting that the government reported 3,110 deaths, while the Human Rights Activists News Agency (HRANA) estimated the number of victims at no fewer than 6,800, and possibly exceeding 11,000, while adding that it is “presently impossible to independently verify these claims.”
Regardless of the wide discrepancies in estimates of casualty numbers, these indicators reflect the escalating intensity of the confrontation between the state and society and reinforce assessments that the latest protests constituted one of the most serious internal crises the Islamic Republic has faced since its establishment.
Mohammad Al-Zghool, director of the Iranian Studies Unit at the Emirates Policy Center (EPC), argues in his article titled “A Funeral Turns into an Opulent Political Spectacle: Calculations of Necessity and the Repercussions” that the Iranian leadership sought to contain the legitimacy crisis exacerbated by the protests and economic pressures by using the funeral ceremonies for Iran’s Supreme Leader as a mobilizing occasion intended to demonstrate internal cohesion and the regime’s continued popular support through the massive turnout.
Al-Zghool argues that the ceremonies were not limited to their symbolic dimension, but were also used as a tool to reproduce the image of the state and strengthen the cohesion of its institutions. Among the Iranian public, there has been talk that priority should instead have been given to addressing economic pressures and improving living conditions, while government supporters viewed these measures as part of a national duty during an exceptional period.
Is There Stability in the Country’s Future?
Many experts argue that international sanctions have deepened the economic crisis; however, their impact has been compounded by longstanding domestic issues, most notably weak economic governance, fiscal imbalances, and declining productivity, which have limited the economy’s ability to absorb shocks and recover.
Most studies conclude that the future of social stability depends not solely on easing external pressures, but more on the state’s ability to implement economic and administrative reforms that address structural imbalances, curb inflation, improve living standards, and strengthen confidence in public institutions.
In this context, three main scenarios can be outlined:
Continued crisis-management policies, with social pressures remaining at their current levels.
Implementation of gradual reforms that help restore some degree of public trust.
A simultaneous escalation of internal and external pressures, leading to heightened social tensions and increased levels of instability.
Overall, most estimates indicate that social stability in Iran in the coming period will remain contingent on the state’s ability to strike a balance between security requirements, economic reform, and responsiveness to social demands.
Researchers also argue that continued economic hardships and a widening trust gap between society and institutions could lead to the recurrence of protest patterns, accelerate brain drain, and reduce civic engagement, while effective economic and administrative reforms could mitigate these repercussions and strengthen stability.
Iran’s challenges no longer represent separate crises, but rather interconnected components of a structural crisis whose effects have been directly reflected in living standards, public trust, and the relationship between the state and society. The future of social stability in Iran remains contingent on the state’s ability to implement economic and administrative reforms that address structural imbalances, curb inflation, improve living standards, and strengthen confidence in public institutions, while also managing rapidly changing social dynamics more effectively. Relying solely on containing crises through a security-based approach, without addressing their economic and social roots, only perpetuates the factors fueling discontent and increases the likelihood of renewed protests.