The impact of the Middle East war on jobs and the global economy
The International Labour Organization (ILO), a UN agency, has warned of the serious economic repercussions of the Middle East conflict on the global economic landscape. The organization emphasized that these ongoing conflicts are eroding wages and deteriorating working conditions, with their negative impact extending beyond the immediate conflict zones to international labor markets. In a recent report by its chief economist, Sang-Hyun Lee, the ILO predicted that the conflict will lead to the loss of millions of jobs and a significant decline in real wages during 2026 and 2027, with particularly high risks threatening migrant workers who rely on sending vital remittances to their home countries.
The geopolitical context and escalating regional tensions
Historically, the Middle East has been a vital artery of the global economy, containing strategic waterways such as the Suez Canal and the Strait of Hormuz, as well as being a major source of energy supplies. With the recent escalation of conflicts, the impacts are no longer confined to the geographical borders of the conflicting states. Security tensions have led to widespread disruptions in maritime traffic, causing increased transport and insurance costs and placing immense pressure on global supply chains. These factors, combined with the decline in the tourism sector and the shrinking job opportunities for migrant workers, are exerting significant pressure on economies dependent on regional stability.
By the numbers: How does the Middle East war threaten global jobs?
The International Labour Organization (ILO) report states that the Middle East conflict is expected to impact labor markets for an extended period, with the extent and nature of these effects depending on developments on the ground and in the political arena. In a pessimistic scenario, if oil prices rise by approximately 50% above their pre-conflict average, global working hours will decrease by 0.5% in 2026 and by 1.1% in 2027. This decline would equate to the loss of roughly 14 million full-time jobs this year, rising to a staggering 43 million jobs next year. This would be accompanied by a 0.1 percentage point increase in global unemployment rates in 2026 and a 0.5 percentage point increase the following year, with real wages falling by 1.1% this year and 3% in 2027.
Migrant workers and remittances under threat
The organization explained that the Middle East and the Gulf region, along with the Asia-Pacific region, will be the most affected by these repercussions. It indicated that the effects of this crisis could surpass in severity some of the repercussions the world witnessed during the COVID-19 pandemic. Migrant workers in Arab countries will bear the brunt, as approximately 40% of jobs in the region are concentrated in high-risk sectors sensitive to economic fluctuations, such as construction, manufacturing, transportation, trade, and services. The organization warned that any decrease in the Gulf states' reliance on migrant labor from South and Southeast Asia will inevitably lead to a sharp decline in remittances, which represent a lifeline for the economies of many developing countries.
Long-term effects on the structure of the global economy
The strategic significance of this event extends beyond immediate losses to encompass structural changes in the nature of work and employment. In this context, Sanghyun Lee, the report's author, emphasized that, in addition to the heavy human cost, the current crisis is not merely a short-term disruption that can be quickly overcome, but rather a slow-developing shock that could be long-lasting and will gradually reshape labor markets. This warning places a significant responsibility on governments and policymakers to devise flexible economic policies capable of absorbing these shocks and protecting the most vulnerable working groups from geopolitical repercussions that could redraw the map of the global economy for years to come.
