Iran’s labor market cracking under layoffs and inflation

Indian Prime Minister Narendra Modi said attacks that injured three Indian nationals were unacceptable, adding that targeting civilians and infrastructure must stop.

“India stands in firm solidarity with the UAE and reiterates its support for the peaceful resolution of all issues through dialogue and diplomacy,” he wrote on X.

Prime Minister Shehbaz Sharif also strongly condemned the attacks and expressed full solidarity with UAE President Mohammed bin Zayed in a post on X.

“Pakistan stands firmly with our Emirati brothers and sisters as well as with the Government of the United Arab Emirates at this difficult time,” he wrote.

He said it was essential that the ceasefire be upheld to allow space for diplomacy and called for dialogue to achieve lasting peace and stability in the region.

The United Arab Emirates came under attacks from Iran’s drones and missiles on Monday, causing a fire at the Fujairah Oil Industry Zone.

Abu Dhabi “condemned in the strongest terms the renewed terrorist, unprovoked Iranian attacks targeting civilian sites and facilities.”

As a fragile ceasefire holds despite exchanges of fire near the Strait of Hormuz, concern has grown about the risk of unrest driven by soaring prices.

The pharmaceutical sector has been among the hardest hit, with some medicine prices reportedly rising nearly six-fold.

“We have a choice between no medicine or making it available at a high price,” Mahmoud Jamalian of parliament’s Health Committee said, according to Asr Iran.

Warnings have also begun to surface about how the state may respond.

Hardline analyst Mostafa Khoshcheshm said on state television that protests over rising prices could be treated as collaboration with foreign powers seeking to destabilize Iran—an indication of how quickly economic grievances could be securitized.

Moderate daily Sharq wrote that after damaging infrastructure, the war is now eroding economic relations and household livelihoods, adding that uncertainty surrounding the conflict is further weakening the economy.

Beyond prices, the disruption has spread across key sectors. Damage to infrastructure and prolonged internet restrictions have slowed or halted parts of the digital economy, while supply chains have come under strain, compounding pressure on businesses and households.

Economist Hossein Raghfar said the government’s handling of the crisis raises serious concerns, warning that continuing current policies will fuel public dissatisfaction.

He argued that frustration over economic conditions—visible during the January unrest—and the state’s inability to address it had weakened the country internally.

Raghfar criticized the use of scarce foreign currency on car imports and said authorities acted too late to halt exports of eggs, rice and meat to stabilize domestic prices.

“Unfortunately, the government is nowhere to be seen these days,” he said, contrasting the current response with the eight-year war with Iraq.

Asked about solutions, Raghfar said Iran still has the capacity to withstand sanctions but lacks the political will to use it. He called for investment in domestic production and urged reallocating funds to revive key sectors.

Another moderate daily, Etemad, reported that workers are emerging as the primary victims of the war and economic strain, with layoffs, unpaid wages and rising poverty becoming widespread.

In Fars Province, between 20 and 100 workers have reportedly been dismissed per workplace; in Rasht, at least 2,000 have lost their jobs in two months.

The Labor Ministry estimates the conflict has cost more than one million jobs, affecting up to two million people directly or indirectly.

Economist Vahid Shaghaghi-Shahri said chronic inflation, temporary contracts and a large informal labor market had already left workers highly vulnerable.

With war, recession and sanctions converging, he urged the government to prioritize “protecting livelihoods and preventing mass unemployment” as an urgent national priority.

The assessment suggests that while earlier strikes on key facilities set back Iran’s program by several months, more recent operations have not significantly extended that delay.

Officials said the program’s overall trajectory—measured in the time needed to accumulate sufficient material for a nuclear device—remains broadly intact.

The findings follow a series of strikes in June that President Donald Trump said had “obliterated” key elements of Iran’s nuclear infrastructure. US officials now say the impact, while real, appears to have been more limited than such claims suggested.

A key constraint, officials said, is Iran’s remaining stockpile of highly enriched uranium, much of it believed to be stored in hardened or undisclosed locations beyond the reach of conventional strikes. That material, combined with surviving technical capacity, has limited the overall effect of recent attacks.

The International Atomic Energy Agency has previously assessed that Iran retains enough enriched material for multiple nuclear devices, though access for inspectors has been restricted in recent months.

Iran has long maintained that its nuclear program is peaceful and that it has never sought to develop weapons, though some voices inside the country have suggested since the June war that Tehran should reconsider its stance.

The latest intelligence underscores a gap between the scale of military activity and its effect on Iran’s core nuclear capabilities, even as tensions between Washington and Tehran continue to escalate.

Trump has continued to frame the war’s central objective as preventing Iran from acquiring a nuclear weapon, saying in recent days that Tehran “cannot have” one.

He has also repeatedly argued that Iran must agree to a new deal, saying any agreement he secures would be stronger than the 2015 accord reached under President Barack Obama.

Talks and exchanges of proposals in Islamabad have failed to bridge the gap between US demands and Tehran’s insistence on its right to uranium enrichment.

Officials cautioned that the situation remains fluid and that further military action, sabotage or covert operations could still affect the program’s trajectory. But for now, they said, the most recent strikes appear to have had only a limited additional impact.

According to sources familiar with Tehran’s deliberations, Pezeshkian has expressed strong anger at actions by the Islamic Revolutionary Guard Corps, led by Ahmad Vahidi, describing missile and drone strikes on the UAE as “completely irresponsible” and carried out without the government’s knowledge or coordination.

Pezeshkian is said to have described the IRGC’s approach to escalating tensions with regional countries as “madness,” warning of potentially irreversible consequences.

Amid a worsening situation and the risk of the country sliding back into war, Pezeshkian has requested an urgent meeting with Mojtaba Khamenei to press for an immediate halt to IRGC attacks on Gulf states and to prevent further escalation.

He is expected to argue that a narrow window remains to salvage the ceasefire through urgent diplomatic action, and that he should be allowed to signal to international mediators Tehran’s readiness to return to negotiations.

The tensions come as diplomatic efforts to preserve the ceasefire continue, but with a widening gap between military and political approaches inside Iran’s leadership.

At sea, accounts of recent developments remain sharply contested. US officials say commercial ships are continuing to transit and that Iranian threats have been contained.

The IRGC, however, has denied that any passage is taking place and warned that “violating vessels” would be stopped, while Iranian media reported that ships were forced to turn back.

President Donald Trump has stopped short of declaring the ceasefire breached, saying recent exchanges were “not heavy firing” and that “ships are moving.”

In Iran’s power structure, major security and military decisions are ultimately taken at the highest levels of the system and in coordination with key state bodies, underscoring the significance of the president’s request.

Sources close to the presidency, who shared the information with Iran International, say Pezeshkian is deeply concerned about potential international reactions and believes the country cannot withstand a new full-scale war.

He has warned that continued unilateral attacks could trigger heavy US retaliation against critical energy and economic infrastructure—an outcome he reportedly said could lead to widespread destruction and an irreversible collapse in livelihoods.

The political deadlock comes as some observers warn that divided command on the battlefield risks pushing the Islamic Republic toward what they describe as “military self-destruction.”

Missile and drone activity reported around the Strait and in the United Arab Emirates on Monday—alongside disputed encounters at sea—suggest Tehran is beginning to act on warnings it had issued only hours earlier.

But the more revealing shift may be in tone.

Iranian military and affiliated voices have moved quickly to frame the moment not as a clash, but as enforcement.

“The Strait of Hormuz is entirely under Iranian control,” a senior Iranian source said, according to Hezbollah-affiliated Al-Mayadeen. “The message to the American aggressors is: Advance, and you will be targeted.”

‘Asymmetric operations’

That message builds on earlier warnings from senior commanders that any transit not coordinated with Iranian forces could be treated as a threat.

Ali-Akbar Ahmadian, a member of Iran’s Defense Council, pushed the line further, warning that any US action targeting shipping or energy infrastructure would be met with the Islamic Republic’s “asymmetric operations.”

The statements point to a posture that is no longer simply declaratory, but increasingly operational, especially against the backdrop of state-linked rhetoric in the hours before the incidents..

One day before the reported attacks in the UAE, Iranian state television accused Abu Dhabi of involvement in strikes on Iran’s Siri and Lavan islands during the US-led war, claiming Emirati Mirage jets, Wing Loong drones and unmarked F-16s had taken part.

The claims—unverified but widely circulated in Iranian media—help set the stage for a narrative in which regional actors are treated not as bystanders but as participants, and therefore legitimate targets.

That framing was reinforced after the incidents. Regional authorities reported missile and drone launches toward the UAE, while Iranian media attributed damage at energy facilities in Fujairah to what it described as US “military adventurism,” denying any pre-planned Iranian attack.

‘Ships are moving’

At sea, accounts have diverged sharply but point to the same underlying reality: rising friction around attempts to move vessels through the Strait.

US officials said commercial ships had transited and that Iranian threats had been contained. Iran’s Revolutionary Guards, however, denied that any passage had taken place and warned that “violating vessels” would be stopped.

Iranian media reported that ships attempting to cross were forced to turn back, while Washington rejected claims that its naval forces had been pushed out of the area.

US President Donald Trump, for his part, stopped short of declaring the ceasefire violated.

“(It was) not heavy firing,” he said in a phone interview, adding that “ships are moving” and that reports of recent exchanges were still being assessed.

The combination of rhetoric, incidents and competing claims suggests Tehran is seeking to impose a new reality in the Strait—one in which access is conditional and enforced.

Political figures have echoed that direction, pointing to efforts to formalize new rules governing transit and warning that any US role in shaping maritime access would be treated as a violation of ceasefire terms.

For now, the message from Tehran appears consistent: movement through the Strait will not be uncontested, and any attempt to bypass Iranian control risks drawing a response.