Middle East war could wipe out 43 million jobs globally by 2027, ILO warns

The International Labour Organization (ILO) has warned that the ongoing Middle East conflict could significantly weaken labour markets worldwide, potentially eliminating 43 million jobs globally by 2027 and reducing real wages as energy costs and supply disruptions intensify.

In a new report, the United Nations labour agency said the war was expected to affect economies well beyond the conflict region through higher fuel prices, transport disruptions, weaker tourism activity, supply chain pressures and reduced migrant labour demand.

The ILO said the scale and duration of the labour market impact would depend on how the conflict evolved in the coming months.

According to the report, if oil prices remain around 50% above their pre-conflict average levels recorded before the US-Israeli attacks on Iran began on February 28, 2026, global working hours could decline by 0.5% in 2026 and 1.1% in 2027.

The agency estimated that the reduction would be equivalent to the loss of 14 million full-time jobs in 2026 and 43 million jobs in 2027.

The report also projected an increase in global unemployment, with the unemployment rate expected to rise by 0.1 percentage points this year and by 0.5 percentage points next year.

The ILO further warned that real labour incomes could decline by 1.1% in 2026 and by 3% in 2027 due to inflationary pressures linked to higher energy and transport costs.

According to the agency, economies in the Middle East, Gulf states and the Asia-Pacific region were likely to face the strongest impact from the conflict.

The report said migrant workers in Arab states would be particularly vulnerable, as around 40% of employment in the region is concentrated in sectors highly exposed to economic disruptions, including construction, manufacturing, transport, trade and hospitality.

The ILO also warned that reduced hiring of workers from South and Southeast Asia by Gulf economies could weaken remittance inflows that remain a major source of foreign exchange for many developing countries.

ILO Chief Economist Sangheon Lee, who authored the report, said the crisis represented a prolonged economic shock rather than a temporary disruption.

He said the conflict was likely to gradually reshape labour markets globally beyond its immediate humanitarian and geopolitical consequences.

The report added that the economic fallout from the conflict could potentially exceed labour market disruptions experienced during the Covid-19 pandemic in some regions.