On the eve of May Day, workers engaged in ongoing construction works at the Polavaram irrigation project.
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The crisis in West Asia is increasingly affecting jobs, working conditions and incomes far beyond the region, as higher energy costs, disrupted transport routes, supply chain pressure, weaker tourism and migration constraints weigh on economies and labour markets, according to a new International Labour Organization (ILO) report.
Released in Geneva on Monday (May 18, 2026), the report titled ‘Employment and Social Trends: May 2026 Update’ 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.
The report, though, pointed out that the impact of the crisis on global labour market will take time to materialise, but the risks are already significant if oil prices remain high. If the oil prices climb by about 50% above their January-February 2026 average, the ILO report estimates that the 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 labour income could decline by 1.1% and 3%, equivalent to losses of around US$1.1 trillion and US$3 trillion,” the report said.
The unemployment rate could rise by 0.1% in 2026 and by 0.5% in 2027, equivalent to an additional five million unemployed people in 2026 and 20 million in 2027. “The shock is uneven. Exposure is highest where economies, sectors and workers are most closely linked to Gulf energy flows and energy-intensive supply chains. The Arab States and Asia and the Pacific stand out as the most exposed regions,” the report added maintaining that the policy responses to the situation have begun but remain uneven and constrained by limited fiscal space.
“A stronger focus on jobs, incomes and business resilience is needed to prevent a temporary energy shock from becoming a longer-lasting setback for decent work,” the report suggested.
Reshaping labour markets
“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,” said Sangheon Lee, chief economist at the ILO and author of the report.
In Asia and the Pacific, the report said reliance on imported energy and Gulf-linked labour 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% in 2026 and 1.5% in 2027, while real labour income could fall by 1.5% and 4.3%, respectively. Around 22% of workers in the region are in high-exposure sectors, including agriculture, transport, manufacturing and construction, while tourism-dependent economies are under increasing strain,” the ILO said.
Migrant workers are likely to absorb a disproportionate share of the adjustment, the report found. In Gulf countries, the report noted that for every 1% decline in employment among nationals in times of crisis, employment among non-nationals falls by 4%.
Published – May 18, 2026 10:33 pm IST
