ILO: MidEast crisis response must shield workers, small firms
The International Labour Organization (ILO) is calling for timely, targeted, and employment-centered responses to protect workers, incomes, and small enterprises as the Middle East crisis increasingly threatens labor markets far beyond the region.
In a news release dated May 20, almost three months after the first attack on Iran, the ILO warned that the conflict is no longer only a regional security and humanitarian crisis. It is also becoming a slow-moving global labor shock, transmitted through higher energy costs, disrupted transport routes, supply chain pressures, weaker tourism, and constraints on labor migration.
The ILO said the crisis is expected to affect labor markets for some time, with the scale and duration of its impact depending on how the situation evolves.
While the full consequences will take time to materialize, the organization warned that pressures are already building in a global economy still marked by weak growth and persistent decent work deficits.
Under an illustrative scenario in which oil prices rise by about 50 percent above their early 2026 average, global working hours are projected to fall by 0.5 percent in 2026 and 1.1 percent in 2027. This would be equivalent to 14 million and 38 million full-time jobs, respectively.
Real labor incomes are also expected to decline by 1.1 percent in 2026 and 3 percent in 2027, equivalent to losses of US$1.1 trillion and US$3 trillion, respectively. Global unemployment would rise more gradually, increasing by 0.1 percentage points in 2026 and 0.5 percentage points in 2027.
“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 labor markets,” said Sangheon Lee, Chief Economist at the ILO and author of the report, Employment and Social Trends May 2026 Update: Growing labor market risks of the Middle East crisis.
“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.”
The ILO said the impact will be highly uneven across regions, sectors, and workers, with the Arab States and Asia and the Pacific identified as the most exposed because of their close links to Gulf energy flows, trade routes, supply chains, and labor migration.
The Arab States are the most directly exposed to the crisis through conflict-related disruption, damage to economic activity, displacement, energy and trade shocks, and pressure on migrant workers and refugees.
According to the ILO, total working hours in the region could fall by 1.3 percent under rapid de-escalation. The decline could reach 3.7 percent under a prolonged crisis and 10.2 percent under a severe escalation — more than twice the scale recorded during the COVID-19 pandemic in 2020.
Around 40 percent of employment in the region is concentrated in high-exposure sectors such as construction, manufacturing, transport, trade, and hospitality. Migrant workers are expected to bear a disproportionate share of the labor market adjustment.
In Asia and the Pacific, the ILO said reliance on imported energy and Gulf-linked labor migration is creating visible spillover effects in a number of key economies.
For the region as a whole, working hours are projected to decline by 0.7 percent in 2026 and 1.5 percent in 2027, while real labor income could fall by 1.5 percent and 4.3 percent, respectively.
Around 22 percent of workers in Asia and the Pacific are employed in high-exposure sectors, including agriculture, transport, manufacturing, and construction. Tourism-dependent economies are also coming under increasing strain.
The crisis is also putting pressure on migration and remittances, which remain a lifeline for many families and communities across South and Southeast Asia.
Since the crisis began, labor deployments to Gulf Cooperation Council countries have declined sharply in several labor-sending economies, while repatriations are rising. The ILO said this reflects flight disruptions, security concerns, and weaker labor demand in construction, hospitality, and transport.
Remittance flows are also beginning to weaken, with early signs of contraction in some countries.
“If the crisis disrupts both deployments and remittance flows, the effects could spread to consumption, poverty, and local employment in countries of origin,” the report said.
Against this backdrop, the ILO said governments must ensure that policy responses do not focus only on short-term stabilization, but also directly protect jobs, incomes, and working conditions.
Policy responses have already been rolled out across countries, but the ILO said these remain uneven, fragmented, and often constrained by limited fiscal space. Measures have largely focused on energy subsidies, cash transfers, business support, and administrative steps for migrant workers.
However, the organization warned that policy gaps are most acute in fragile and conflict-affected contexts, where workers and enterprises are already highly vulnerable.
The ILO said a sharper focus on jobs and incomes is needed to prevent a temporary energy shock from turning into a longer-lasting setback for decent work.
It urged governments to ensure that support reaches the most affected workers and enterprises, particularly informal workers, migrant workers, refugees, and small businesses, while balancing macroeconomic stability with employment protection.
The ILO called for employment-centered crisis responses grounded in social dialogue and aligned with international labor standards to protect jobs, incomes, and working conditions as the crisis evolves.
It said it will continue to monitor the labor market effects of the crisis as new data become available and transmission channels continue to develop.
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