The Middle East crisis has quickly evolved into a global shock to the labor market, says the International Labor Organization, stressing the crisis has led to higher energy prices, disruptions to transport routes, supply chains, tourism, investment confidence, migration flows and remittances.
With soaring oil prices, ILO forecasts work hours to fall by 0.5 per cent in 2026 and 1.1 percent in 2027, equivalent to 14 million and 38 million full-time jobs. Labour income is also expected to decline by 1.1 per cent and 3 per cent, equivalent to losses of around $1.1 trillion and US$3 trillion.
According to ILO report, the Middle East crisis affects the unemployment rate expected to rise by 0.1 percentage points in 2026 and by 0.5 points in 2027, equivalent to an additional 5 million unemployed people in 2026 and 20 million in 2027.
However, the shock is uneven. Exposure is highest where economies, sectors and workers are most closely linked to Gulf energy flows and energy-intensive supply chains. The Arab States and Asia and the Pacific stand out as the most exposed regions.
ILO says policy responses have begun but remain uneven and constrained by limited fiscal margin. It calls for a stronger focus on jobs, incomes and business resilience is needed to prevent a temporary energy shock from becoming a longer-lasting setback for decent work.
Based on a model designed to capture the faster and broader impact of war in the region, simulations indicate that work hours could fall by 1.3 per cent under rapid de-escalation, 3.7 per cent under a prolonged crisis and 10.2 per cent under severe escalation.
According to ILO experts, around 40 percent of employment in Arab States is in high exposure sectors. These include trade, construction, manufacturing, agriculture, transport, and accommodation and food services
Spillovers to Asia and the Pacific are already visible and may worsen over time.
