With the ongoing crisis in the Middle East, a Chief Economist at the International Labour Organisation (ILO), Sangheon Lee, has cautioned against emerging risks in the world of work.

He explained that early action is critical to protect labour markets, especially for vulnerable workers, small businesses, and low-income households.

He said beyond its human toll, the Middle East crisis was hitting jobs, incomes, and working conditions worldwide.

Noting that the suffering caused by the current war in the Middle East was immense, he said that for many families, the loss of a job or income would turn the crisis into something even harsher: a struggle to afford food, rent, and the basics of daily life.

In the directly affected countries, he said, business operations, jobs, and incomes are coming under immediate strain, with spillover effects already emerging through soaring energy prices, rising transport and production costs, and broader inflationary pressure.

Since late February, he said, oil and gas prices have surged, at their recent peak more than 50 per cent above their pre-crisis level, along with sharp increases in fertilisers and other petroleum by-products, underlining how quickly the shock was spreading through fuel and supply chains.

While the effects on labour markets may prove less dramatic at first than in some previous crises, he said, if higher prices and wider economic disruption persist, the impact would most likely be more uneven and potentially longer lasting.

Noting that the ILO was currently assessing the potential impacts on the world of work, he warned that the signs are already clear.

In the countries most directly affected, Lee said, workplaces are damaged or destroyed, businesses are closing or operating only partially, wages are interrupted, and workers are losing both jobs and income.

The economist said small enterprises are particularly vulnerable, as they often have fewer reserves to absorb sudden disruption, with fragile labour markets becoming even more fragile.

“This is why the crisis raises concerns not only about job losses, but also about job quality. As pressures mount, there is a real risk of rising informality, worsening working conditions, stronger downward pressure on wages, rising working poverty, and increases in child labour, forced labour and other harmful coping strategies. What begins as an external shock can leave deeper scars by weakening the conditions that make work decent,
secure and protected,” he said.

At the country level, he said many governments are entering the crisis with heavy debt and very limited fiscal space, making it harder for governments to provide the social protection and economic support that households need, and raising the risk that the crisis would trigger wider and more lasting damage.

Lee maintained that policy responses would therefore matter greatly.

According to him, governments may try to cushion higher fuel costs through temporary fiscal measures, while central banks may come under pressure to raise interest rates.

“This is bound to further exacerbate already very high public debt levels, while excessive monetary tightening could turn a crisis that begins with price and supply shocks into a recession, with lasting damage to jobs and livelihoods.

While policy space is limited in many countries, the ILO chief highlighted some measures that could help reduce the pressure on workers and enterprises, such as temporary income support for affected households, wage and employment support where feasible, protection of core social protection delivery systems, and practical assistance to small enterprises facing sudden disruption.

According to him, early attention to the risks matters, “because once jobs, incomes and business capacity are lost, recovery becomes harder and more uneven”.