The ongoing crisis in the Middle East is beginning to exert significant pressure on jobs, incomes, and working conditions globally, with early signs pointing to potentially long-lasting impacts on labour markets, according to a recent analysis by the International Labour Organization (ILO).
While the immediate human toll remains the most urgent concern, the economic consequences are rapidly unfolding. “For many families, the loss of a job or income quickly turns crisis into something even harsher,” said Sangheon Lee, Chief Economist at the ILO, noting that the effects extend far beyond conflict zones.
In countries directly affected by the conflict, businesses are shutting down or operating at reduced capacity, wages are being disrupted, and workers are losing livelihoods. Small enterprises, in particular, are under strain due to limited financial buffers, while public services are facing mounting pressure.However, the impact is not confined to the region. Rising energy prices, supply chain disruptions, and inflationary pressures are already being felt globally, particularly in Asian economies. Oil and gas prices have surged sharply since late February, at one point exceeding pre-crisis levels by more than 50%, triggering broader increases in transport and production costs.
The ripple effects could extend to global trade and employment. Estimates suggest that merchandise trade growth in 2026 could slow significantly, with knock-on effects on hiring, investment, and income levels.Labour market risks are also evolving in less visible but equally concerning ways. Beyond job losses, the crisis could lead to deteriorating job quality, including rising informality, wage pressures, and increased working poverty. Vulnerable groups—including informal workers, migrants, and low-income households—are expected to bear the brunt of these shifts.
“The warning signs are already clear,” Lee said, adding that the crisis could leave deeper structural scars by weakening the foundations of decent work.
Sectors such as travel and tourism are among the first to be affected, as insecurity and rising costs reduce mobility and demand. At the same time, disruptions to migration flows and remittances could further strain household incomes in developing economies.The current situation, experts note, differs from previous crises in its potential to unfold gradually but persistently. Unlike the sharp but temporary shocks seen during the pandemic, the impact of this crisis may be prolonged, driven by repeated price increases, uncertainty, and weakened investment.
Policy responses will be critical, but many governments face limited fiscal space due to high debt levels and broader economic constraints. While measures such as income support, wage subsidies, and assistance for small businesses could help mitigate the impact, the scope for intervention remains constrained.
The ILO has cautioned against a wait-and-see approach, warning that delayed action could allow temporary disruptions to become entrenched. “Once jobs, incomes and business capacity are lost, recovery becomes harder and more uneven,” Lee said.
As the crisis continues to evolve, its most lasting effects may not be limited to immediate economic losses, but could reshape labour markets in ways that make them more unequal, insecure, and fragile long after the conflict subsides.