ILO: West Asia crisis threatens RM13.2t income losses, jobs in Asia-Pacific

 

Real labour incomes could plummet by RM13.2 trillion (US$3 trillion) by 2027, further straining an already struggling global economy, warned the International Labour Organization (ILO).

ILO chief economist Sangheon Lee, author of the “Employment and Social Trends May 2026 Update” report, said this projection stems from the widening fallout of the West Asia crisis, which has evolved from a regional conflict into a “slow-moving shock” affecting Asia and the Pacific.

“What begins as an external shock eventually reaches workers and enterprises and can leave deeper scars,” Lee said in ILO News, which published the report yesterday.

The report identifies Asia and the Pacific as one of the most vulnerable regions, warning that the crisis could choke labour markets, squeeze household incomes, and disrupt migrant worker remittances.

In a scenario where oil prices surge 50 percent above early 2026 averages, the ILO projects that the equivalent of 14 million full-time jobs could be lost this year.

By 2027, job losses could triple to 38 million full-time equivalent positions.

International Labour Organization

Lifeline under pressure

The report notes that Arab states and Asia-Pacific are the most exposed regions due to their integration with Gulf energy flows, trade routes, and labour migration networks.

The report projected that in Asia-Pacific, where many economies depend on imported energy and tourism, working hours could fall by 1.5 percent and real incomes by up to 4.3 percent by 2027.

The Arab states face a more dire outlook, with working hours projected to fall by 10.2 percent in a severe escalation scenario - more than twice the disruption seen during the Covid-19 pandemic in 2020.

For many countries in South and Southeast Asia, the impact is being felt through disrupted labour migration.

The report notes labour deployments to Gulf Cooperation Council (GCC) countries have fallen sharply, while flight disruptions, security fears, and weaker labour demand in sectors like construction, hospitality, and transport have driven rising repatriations.

This has weakened remittance flows, which serve as a vital financial lifeline for millions of households in labour-sending countries.

“If the crisis disrupts both deployments and remittance flows, the effects could spread to consumption, poverty, and local employment in countries of origin,” the ILO warned.

Call for urgent action

While some governments have rolled out energy subsidies, business support, and cash transfers, the ILO criticised the global response as “uneven, fragmented” and constrained by limited fiscal space.

To prevent a temporary energy shock from becoming a permanent setback for global labour rights, the organisation called for urgent, “employment-centred” responses grounded in social dialogue.

The ILO urged world leaders to prioritise vulnerable groups, including informal workers, migrant workers, refugees, and small businesses, while balancing macroeconomic stability with employment protection. - Mkini