The Iranian regime claims in its official reports that the unemployment rate has declined, but the reality of the labor market paints a different picture. Today, the issue is no longer limited to unemployment itself; a phenomenon known as “hidden unemployment” or “labor force withdrawal” has become one of the country’s most serious economic crises. Millions of people, particularly young people and educated women, are no longer even searching for work, making the official unemployment rate appear lower than the actual situation.
According to the definition used by the Statistical Center of Iran, the Iranian regime’s official statistics agency, only individuals who were without a job during the reference week and were actively seeking employment are classified as unemployed. As a result, those who have stopped looking for work because they have lost hope of finding a job are no longer counted as unemployed and are excluded from the economically active population. Therefore, a decline in the official unemployment rate does not necessarily indicate the creation of new jobs and, in many cases, is the result of a declining labor force participation rate.
Iran’s Employment Crisis: The Increase in Unemployment Insurance Registrations
The latest official reports from the Statistical Center of Iran show that the country’s labor force participation rate was about 38% in 2025. In other words, more than 62% of the working-age population was neither employed nor looking for work—a figure considered extremely low compared with many countries in the region and other emerging economies. In many middle-income countries, labor force participation rates range between 55% and 70%.
The severity of this crisis is even greater among women. Women’s labor force participation in Iran is among the lowest in the world and has fluctuated between 13% and 15% in recent years. Many women with university degrees have effectively left the labor market because of limited job opportunities, hiring discrimination, job insecurity, and low wages.
Youth Unemployment and the Alarming Figures
Young people face similar conditions. According to official statistics, the unemployment rate among those aged 15 to 24 remains more than twice the national average and exceeds 20% in some provinces. At the same time, a significant share of university graduates are either forced to work in jobs unrelated to their field of study or abandon their job search altogether because of the lack of suitable opportunities.
The findings of a survey conducted by JobVision, an Iranian employment platform, present a similar picture. According to the report, 66% of job seekers identified the creation of new employment opportunities and economic stability as their top priority, while 74% said they had been forced to reduce their living expenses to cope with economic hardship.
Economists cite multiple reasons for the expansion of this crisis, including declining investment, aging industries, the closure or reduced capacity of manufacturing facilities, the energy crisis and frequent power outages affecting industry, chronic inflation, economic uncertainty, intensified sanctions, and the consequences of war. Together, these factors have reduced demand for labor and pushed the economy’s job-creation capacity to its lowest level in recent years.
However, many experts believe that the root cause of the employment crisis extends beyond economic indicators. Structural corruption, the expansion of monopolistic institutions, extensive intervention by government and military bodies in the economy, the lack of investment security, constantly changing regulations, and weak rule of law have created an uncertain business environment for both domestic and foreign investors, undermining incentives to establish new businesses.
Under these circumstances, the decline in the official unemployment rate is less a sign of an improving labor market than evidence of the growing phenomenon economists describe as “hidden unemployment” and “employment discouragement”—a silent crisis that is removing an increasing share of the country’s workforce from productive economic activity each day and making the outlook for Iran’s labor market even bleaker.
