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

International Affairs: Vivek Ojha

Released in Geneva recently (May 18, 2026), the International Labour Organization 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.

Impact on Unemployment :

ILO latest report says that 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.

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.

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.