The Middle East crisis could wipe out the equivalent of 38 million full-time jobs globally by 2027 if oil prices continue to surge, according to a stark warning from the International Labour Organization (ILO).
In its latest report, the ILO said the economic fallout from the conflict is spreading rapidly through global labour markets. Rising oil prices, weaker trade flows, and disrupted supply chains are already increasing pressure on businesses and workers worldwide.
The report, titled Employment and Social Trends May 2026 Update: Growing Labour Market Risks of the Middle East Crisis, highlights how prolonged geopolitical instability could create one of the largest labour market shocks since the pandemic.
Millions of jobs at risk as oil prices surge
According to the ILO, oil prices rising nearly 50% above their early-2026 average could sharply reduce global working hours over the next two years.
The agency estimates global working hours may decline by 0.5% in 2026 and 1.1% in 2027. As a result, the world could lose around 14 million full-time equivalent jobs this year alone. Furthermore, job losses may climb to 38 million by 2027 if the crisis continues.
At the same time, global unemployment is expected to rise steadily. The ILO forecasts an additional five million unemployed people in 2026 and nearly 20 million more in 2027.
The report warned that the resilience of the global labour market could face severe pressure if the crisis persists and oil price shocks remain prolonged.
Real wages could fall by nearly US$3 trillion
The ILO also projected a sharp decline in real labour incomes worldwide.
Workers could collectively lose around US$1.1 trillion in real income during 2026. Moreover, the losses may deepen to nearly US$3 trillion in 2027 as inflation and energy costs continue to rise.
Higher transportation costs, weaker consumer demand, and slowing investments are likely to worsen wage pressures across several sectors.
ILO Chief Economist Sangheon Lee said the crisis is evolving into a long-term economic disruption rather than a temporary shock.
“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,” Lee said.
He added that global shocks often reach workers through declining job security, weaker protections, and worsening business conditions.
Arab States and Asia-Pacific face the highest exposure
The ILO identified the Arab States and the Asia-Pacific region as the most vulnerable areas due to their close links with Gulf energy flows, migration networks, and international trade routes.
In the Arab States, working hours could decline by 1.3% even under a rapid de-escalation scenario. However, the fall may deepen to 3.7% during a prolonged crisis. Under severe escalation, the region could witness a massive 10.2% decline in working hours.
The ILO noted that such a drop would exceed the labour market damage experienced during the COVID-19 crisis in 2020.
Nearly 40% of jobs across the Arab States remain concentrated in highly exposed sectors such as construction, manufacturing, hospitality, transport, and trade.
Meanwhile, the Asia-Pacific region could see working hours fall by 0.7% in 2026 and 1.5% in 2027. Real labour incomes in the region may also decline by 1.5% this year and 4.3% next year.
Around 22% of workers in Asia-Pacific are employed in sectors considered highly vulnerable to external shocks.
ILO urges governments to prioritise employment protection
The ILO criticised existing policy responses as fragmented and uneven. Many governments have focused mainly on short-term measures such as fuel subsidies and cash transfers.
However, the agency stressed that policymakers now need employment-focused strategies to protect workers and businesses from deeper long-term damage.
The organisation called for stronger support for informal workers, migrant labourers, refugees, and small businesses. It also urged governments to balance macroeconomic stability with employment protection measures.
According to the ILO, protecting decent work and stable incomes will remain critical as the global economy navigates growing geopolitical uncertainty.
