38 million full-time jobs could fall if war in West Asia continues, ILO warns

On the eve of May Day, laborers joined the ongoing construction work at the Polavaram Irrigation Project. | Photo credit: The Hindu

The crisis in West Asia is increasingly affecting jobs, working conditions and incomes far beyond the region’s borders as higher energy costs, disrupted transport routes, supply chain pressures, weaker tourism and migration restrictions impact economies and labor markets, according to a new International Labor Organization (ILO) report.

The report, titled “Employment and social trends: May 2026 update”, issued on Monday (May 18, 2026 in Geneva), warned that if fuel or fertilizer prices rise or shortages persist, the effects could extend beyond farm incomes to food prices, rural livelihoods and food security in countries that depend on imported fertilizers, including India.

However, the report pointed out that the impact of the crisis on the global labor market will take time to play out, but the risks are already significant if oil prices remain high. If oil prices climb about 50% above their January-February 2026 average, the ILO report estimates that hours worked could fall by 0.5% in 2026 and 1.1% in 2027, equivalent to 14 million and 38 million full-time jobs. “Real labor income could fall by 1.1% and 3%, corresponding to losses of around $1.1 trillion and $3 trillion,” the report said.

The unemployment rate could rise by 0.1% in 2026 and 0.5% in 2027, equivalent to an additional five million unemployed in 2026 and 20 million in 2027. “The shock is uneven. Exposure is highest where economies, sectors and workers are most closely connected to Gulf energy flows and the most energy-intensive regions In Asia, the report added that policy responses to the situation have already begun, but remain uneven and constrained by limited fiscal space.

“A greater focus on jobs, incomes and business resilience is needed to ensure that the temporary energy shock does not become a longer-term obstacle to decent work,” the report said.

Reshaping labor markets

“Besides the human toll, the Middle East crisis is not just a short-term disruption. It is a slow-moving and potentially long-lasting shock that will gradually reshape labor markets,” said Sangheon Lee, ILO chief economist and author of the report.

In Asia and the Pacific, the report says that reliance on imported energy and Gulf-related labor migration are creating visible knock-on effects in a number of key economies. “In the region as a whole, working hours are expected to decrease by 0.7% in 2026 and 1.5% in 2027, while real labor income could fall by 1.5% and 4.3%, respectively. Around 22% of workers in the region are in highly exposed sectors, including agriculture, transport, manufacturing and construction, while the economy is dependent on tourism.

Migrant workers are likely to absorb a disproportionate share of the adjustment, the report said. In the Gulf countries, the report states that for every 1% reduction in employment among nationals during the crisis, employment among foreign nationals falls by 4%.

Published – 18 May 2026 22:33 IST