The ongoing conflict involving the US, Israel, and Iran is expected to weigh heavily on the Middle East and North Africa (MENA) job market in 2026. According to the latest World Economic Forum (WEF) Chief Economists’ Outlook, companies across the region are delaying recruitment plans amid growing uncertainty.
As a result, employment growth could weaken significantly over the next 12 months. The slowdown may also reduce remittance flows from Gulf countries, affecting millions of families that depend on overseas income.
Firms Delay Recruitment as Economic Uncertainty Grows
The WEF survey found that 74% of chief economists expect weak or very weak employment growth during the coming year. Businesses are becoming more cautious as geopolitical tensions disrupt trade, investment, and tourism across the region.
The report noted that the conflict has altered economic expectations dramatically. Earlier this year, economists remained cautiously optimistic about regional growth. However, the escalation of tensions has forced many firms to reassess expansion and hiring plans.
“The conflict in the Middle East changed that, and the economic scarring from the situation thus far is already expected to last into the months ahead,” said Saadia Zahidi, Managing Director at the World Economic Forum.
Remittance Flows Face Fresh Pressure
The employment slowdown could have consequences beyond the Gulf economies. The WEF warned that weaker labor markets may reduce remittance flows from GCC countries, which remain a critical source of income for many developing nations.
Expatriate workers form the backbone of the Gulf’s private sector. Estimates show that foreign workers account for between 76% and 95% of private-sector employment across GCC countries.
Consequently, any reduction in hiring or job losses could directly affect remittance volumes. Recipient countries may face additional economic pressure as overseas earnings decline.
ILO Warns of Risks to Millions of Jobs
The International Labour Organization (ILO) has also raised concerns about the broader employment outlook. According to the agency, prolonged instability threatens millions of jobs, particularly in conflict-affected economies.
Disrupted supply chains, falling foreign investment, and damaged infrastructure are already limiting employment opportunities in several markets. Furthermore, businesses remain hesitant to commit capital until regional tensions ease.
The World Bank has echoed these concerns. It noted that the current crisis is intensifying existing challenges, including weak productivity growth and limited private-sector activity.
Gulf Economies Continue to Show Resilience
Despite the regional uncertainty, major GCC economies continue to demonstrate resilience.
Saudi Arabia remains a significant source of new employment opportunities. Demand for talent is growing across infrastructure, tourism, construction, and energy projects driven by the Kingdom’s Vision 2030 strategy.
Similarly, the UAE continues to attract professionals in artificial intelligence, cybersecurity, financial services, and data analytics. Strong investment activity and economic diversification are supporting hiring demand in several high-growth sectors.
Nevertheless, economists caution that Gulf economies are not completely insulated from regional shocks. Changes in capital flows, tourism activity, and expatriate remittances could still influence labor market conditions.
Regional Growth Outlook Deteriorates Sharply
The WEF report highlights a dramatic shift in economic sentiment across the MENA region. Nearly 88% of surveyed chief economists now expect weak or very weak economic growth over the next year.
This represents a sharp reversal from January, when economists viewed the region as one of the brighter areas in the global economy.
According to the report, oil-exporting nations may have greater capacity to absorb economic shocks. In contrast, oil-importing countries and conflict-affected economies are likely to face more severe adjustments.
Inflation Risks Remain Elevated
Inflation is emerging as another major concern. The survey found that 55% of chief economists expect high or very high inflation across the region.
Moreover, a prolonged disruption around the Strait of Hormuz could significantly increase prices. Any interruption to shipping routes would affect the supply of imported goods and raise transportation costs.
As a result, consumers and businesses may face higher expenses at a time when economic growth is already slowing.
Outlook Remains Uncertain
While GCC economies continue to benefit from strong government spending and diversification efforts, the broader regional outlook has weakened considerably. Economists believe hiring decisions will largely depend on how quickly geopolitical tensions ease.
For now, businesses remain cautious. Consequently, employment growth, expatriate hiring, and remittance flows are likely to face increasing pressure throughout 2026.
