New report warns of millions of jobs at risk if the crisis continues
The ongoing Middle East crisis is threatening to eliminate the equivalent of tens of millions of jobs worldwide and suppress wages by trillions of dollars, the International Labour Organization (ILO) has warned, as the conflict's economic shockwaves ripple far beyond the region.
In a new report, the ILO projected that if oil prices climb roughly 50% above their early 2026 average, global working hours would fall by 0.5% this year and 1.1% in 2027.
In human terms, that translates to the loss of 14 million full-time equivalent jobs in 2026 and 38 million in 2027.
Global unemployment, meanwhile, is expected to rise by 0.1 percentage points this year and 0.5 percentage points in 2027.
This is "equivalent to an additional five million unemployed people in 2026 and 20 million in 2027."
"Hence, if the crisis is not resolved and the shock proves as durable as historical experience of other oil shocks suggests, the resilience of the global labour market would be severely tested," the report read.
For real labour incomes, they are projected to decline by 1.1%, approximately US$1.1 trillion, in 2026, deepening to a three three per cent drop, or roughly US$3 trillion, the following year.
The report, Employment and Social Trends May 2026 Update: Growing Labour Market Risks of the Middle East Crisis, was released last week by ILO Chief Economist Sangheon Lee.
"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 in a statement.
"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," he added.
Arab States, APAC most at risk
The ILO identified the Arab States and Asia-Pacific as the regions most at risk, citing their deep integration with Gulf energy flows, trade routes, supply chains, and labour migration networks.
In the Arab States, the ILO projected that total working hours could fall by 1.3% under a scenario of rapid de-escalation.
But this can rise to 3.7% under a prolonged crisis and as high as 10.2% under severe escalation, a decline the agency said would be more than double what the region experienced during the COVID-19 pandemic in 2020.
Around 40% of employment in the Arab States is concentrated in high-exposure sectors, including construction, manufacturing, transport, trade, and hospitality.
In APAC, working hours are projected to decline by 0.7% in 2026 and 1.5% in 2027, while real labour income could fall by 1.5% and 4.3%, respectively.
Roughly 22% of workers in the region are employed in high-exposure sectors.
Employment-centred response needed
The ILO described existing policy responses as "uneven, fragmented and often constrained by limited fiscal space," with most governments focused on short-term stabilisation measures such as energy subsidies and cash transfers.
According to the ILO, the crisis needs an employment-centred response, with a sharper focus on jobs and incomes needed in order to prevent longer-lasting setbacks for decent work.
"This includes ensuring that policy measures reach the most affected workers and enterprises, particularly informal workers, migrant workers, refugees and small businesses, while balancing macroeconomic stability with employment protection," it said.
