Middle East Crisis Sends Shockwaves Through Global Jobs Market
A new report by the International Labour Organization (ILO) reveals that the escalating crisis in the Middle East is now significantly impacting global labour markets. This critical situation threatens jobs, incomes, and working conditions far beyond the immediate conflict zone.
The ILO report highlights several factors contributing to this global economic shock: rising energy prices, disruptions to vital trade routes, a downturn in tourism, persistent supply chain bottlenecks, and increasing pressures related to migration. These combined elements are creating a gradual yet potent economic disturbance with the potential to inflict long-term damage on workers and businesses globally.
Even as the full ramifications continue to emerge, the ILO notes that the crisis is already permeating global labour markets. This comes at a particularly vulnerable time, as many economies worldwide are still grappling with subdued growth and precarious employment conditions.
Job Loss Risks
One scenario presented in the report projects a significant surge in oil prices, potentially rising by nearly 50% above their early 2026 average. Should this occur, global working hours are anticipated to decrease by 0.5% in 2026 and a further 1.1% in 2027.
Such a decline would equate to the loss of approximately 14 million full-time jobs in 2026, escalating to 38 million in 2027.
Real labour incomes are also forecast to suffer considerably, with projected falls of 1.1% in 2026 and 3% in 2027. This reduction could eliminate an estimated $1.1 trillion and $3 trillion from global labour income in those respective years.
Concurrently, global unemployment is expected to experience a gradual increase throughout this two-year period.
Sangheon Lee, Chief Economist at the ILO and the report’s author, emphasized the profound connection between global events and human well-being: “The world of work is one of the main channels through which global shocks become human shocks. What begins as an external shock eventually reaches workers and enterprises and can leave deeper scars by weakening the conditions that make work decent, secure and protected.”
Uneven Impact Across Regions
The report underscores that the crisis’s effects will manifest unevenly across different regions of the world.
The Arab States and Asia-Pacific economies are anticipated to experience the most significant pressure, largely due to their intricate connections with Gulf energy supplies, extensive trade networks, and established labour migration systems.
Lee further elaborated, “Beyond its human toll, the Middle East crisis is not a short-lived disruption. It is a slow-moving and potentially long-lasting shock that will gradually reshape labour markets.”
Arab States Face Significant Exposure
The Arab States are identified as the most exposed region, grappling with direct disruptions stemming from the conflict, economic damage, pressures from displacement, and severe shocks to both trade and energy markets.
Estimates suggest that working hours in the Arab States could decrease by 1.3% even if tensions were to ease rapidly. In a scenario of prolonged crisis, this decline could deepen to 3.7%, and a severe escalation could lead to losses as high as 10.2%.
The ILO points out that a fall of this magnitude would more than double the impact on working hours observed during the COVID-19 crisis in 2020.
Sectors including construction, manufacturing, transport, hospitality, and trade are projected to be especially vulnerable, notably because they collectively represent approximately 40% of the region’s total employment.
Migrant workers are also anticipated to shoulder a disproportionately heavy burden of the labour market disruption.
Asia-Pacific Region Under Strain
Across Asia and the Pacific, the reliance on imported energy and the significant ties to Gulf-linked migration are already generating ripple effects throughout numerous economies.
For the broader Asia-Pacific region, working hours are forecast to decrease by 0.7% in 2026 and 1.5% in 2027. Labour incomes in this period could see drops of 1.5% and 4.3% respectively.
Sectors such as agriculture, construction, transport, and manufacturing are identified as facing the highest risks, while economies heavily dependent on tourism are also experiencing growing pressure.
Migrant Workers and Remittances Under Pressure
The report further cautions that migrant workers and economies reliant on remittances may encounter escalating uncertainty.
Since the onset of the crisis, several labour-sending nations have reported sharp declines in labour deployments to Gulf Cooperation Council (GCC) countries, concurrently with an increase in repatriations.
Factors contributing to this slowdown include flight disruptions, heightened security concerns, and diminished demand in key sectors like construction, hospitality, and transport.
Remittance flows, which serve as a crucial financial lifeline for millions of households across South and Southeast Asia, are also showing signs of weakening.
The report warns, “If the crisis disrupts both deployments and remittance flows, the effects could spread to consumption, poverty and local employment in countries of origin.”
Policy Challenges and Recommendations
While governments have implemented various measures, such as energy subsidies, cash transfers, and business support programs, the ILO notes that responses remain inconsistent and constrained in many nations due to fiscal limitations.
The organization emphasized the critical need for more robust, employment-focused policies to prevent the current energy shock from evolving into a more profound labour market crisis.
Additionally, the ILO called for enhanced protection for informal workers, migrants, refugees, and small businesses. This should be coupled with policies designed to safeguard jobs and incomes while simultaneously ensuring economic stability.
The ILO affirmed its commitment to continuously monitor the labour market fallout as the crisis develops and new economic data becomes available.
#MiddleEastCrisis #GlobalJobsMarket #ILOReport #EconomicShock #LabourMarket #JobLosses #Remittances #EnergyPrices #TradeDisruption #MigrantWorkers
