The deepening Middle East crisis is now rippling through global labour markets, threatening jobs, wages and working conditions far beyond the conflict zone.
- Energy Shock Could Erase Millions of Jobs
- How Global Shocks Turn Into Human Impact
- Impact Will Be Uneven Across Regions
- Arab States Face Deepest Labour Market Shock
- Asia-Pacific Economies Feel the Pressure
- Migrant Workers and Remittance Economies at Risk
- Policy Response Remains Uneven
- Urgent Need to Protect Jobs and Vulnerable Workers
According to a report by the International Labour Organization (ILO), the crisis is triggering a slow but powerful economic shock. This comes at a time when many economies are already dealing with weak growth and fragile employment.
Energy Shock Could Erase Millions of Jobs
The ILO outlines a severe risk scenario. Oil prices could surge nearly 50% above early 2026 levels. As a result, global working hours may shrink by 0.5% in 2026 and 1.1% in 2027.
This decline translates into massive job losses. Around 14 million full-time jobs could disappear in 2026. The number may jump to 38 million in 2027.
At the same time, real labour incomes are expected to fall sharply. They could drop by 1.1% in 2026 and 3% in 2027. In monetary terms, that means a loss of $1.1 trillion and $3 trillion respectively.
How Global Shocks Turn Into Human Impact
Sangheon Lee, Chief Economist at the ILO, explains the broader impact. Global disruptions often reach workers through the labour market first.
What begins as an external crisis quickly affects businesses and households. Over time, it weakens job security, income stability and workplace protections.
Impact Will Be Uneven Across Regions
However, not all regions will suffer equally. The report highlights that Arab States and Asia-Pacific economies face the greatest risk.
These regions remain closely tied to Gulf energy supplies, trade flows and labour migration networks. Therefore, even indirect disruptions can trigger strong economic effects.
Arab States Face Deepest Labour Market Shock
The Arab region stands at the centre of the crisis. It faces direct conflict spillovers, economic damage and displacement pressures.
Even in a mild scenario, working hours may fall by 1.3%. Under prolonged stress, the drop could reach 3.7%. In a worst-case escalation, losses may surge to 10.2%.
Notably, this would exceed the labour market damage seen during the COVID-19 pandemic.
Key sectors at risk include:
- Construction
- Manufacturing
- Transport
- Hospitality
- Trade
Together, these sectors account for nearly 40% of employment in the region.
Moreover, migrant workers are likely to face the harshest impact. Many work in vulnerable, low-security jobs.
Asia-Pacific Economies Feel the Pressure
Meanwhile, Asia-Pacific economies are already experiencing spillover effects.
The region depends heavily on imported energy and Gulf-linked employment. As a result, working hours may decline by 0.7% in 2026 and 1.5% in 2027.
Labour incomes could also fall sharply. Estimates suggest a drop of 1.5% in 2026 and 4.3% in 2027.
Sectors under pressure include:
- Agriculture
- Construction
- Transport
- Manufacturing
In addition, tourism-dependent economies are seeing rising stress due to falling travel demand.
Migrant Workers and Remittance Economies at Risk
The crisis is also disrupting migration flows. Labour deployments to Gulf countries have slowed in several nations.
At the same time, repatriation is increasing. Flight disruptions, security concerns and weaker hiring demand are driving this trend.
Remittances, a critical income source for millions of families, are also weakening. This creates a ripple effect.
If both migration and remittance flows decline, consumption will fall. Consequently, poverty levels may rise in labour-sending countries.
Policy Response Remains Uneven
Governments have introduced measures such as:
- Energy subsidies
- Cash transfers
- Business support programmes
However, these responses remain uneven. Fiscal constraints limit action in many countries.
The ILO stresses the need for stronger, employment-focused policies. Governments must act quickly to prevent a deeper labour crisis.
Urgent Need to Protect Jobs and Vulnerable Workers
The organisation calls for targeted action. Policymakers must protect:
- Informal workers
- Migrants
- Refugees
- Small businesses
At the same time, they must ensure economic stability.
The crisis is not a short-term disruption. Instead, it is a structural shock that could reshape global labour markets for years.
