The International Labor Organization (ILO) has warned that if the crisis caused by the ongoing war between the US, Israel and Iran continues for a long time, working hours in the Arab region alone could fall by up to 10.2 percent. This is double the level seen during the 2020 COVID-19 pandemic.

A report released by the ILO on employment and social conditions on May 18 stated that the Arab countries are the most directly affected by the ongoing war. This is also starting to have a major impact on the source countries (Asia) that send workers to the Arab region. Nearly 60 percent of Nepalis who go for foreign employment are in the Arab countries. According to the Ministry of Foreign Affairs, 1.9 million Nepalis were working in the region before the war began.

The report states that the Arab region will be affected by conflict-induced disruptions, damage to economic activity, displacement, energy and trade shocks, and pressure on migrant workers and refugees. ‘If the ongoing tensions subside soon, total working hours could fall by 1.3 percent. If the crisis continues for a long time, this decline could reach 3.7 percent, the report states. If the situation becomes more severe, it is estimated that it could fall to 10.2 percent. Such a decline would be more than double the level seen during the 2020 Covid period.

This will lead to a decrease in the production of employer companies, sectors such as hotels, construction, and transportation slowing down, many workers will have their working days or hours reduced, some will lose their jobs, overtime will be stopped, and new workers will be recruited less. Raju Shrestha, who is working in Kuwait and has been unemployed since the West Asia tensions began, said. “Some of us have been here for three months, some for four months. The company has not paid us work or salaries. The company is asking us to go to Nepal on its own,” he said. “The agents do not listen to us. We are having trouble even eating and drinking.”

The ILO report states that about 40 percent of jobs in the Arab region are in sectors such as construction, manufacturing, transportation, trade, and hospitality. About 22 percent of its workers’ jobs are at risk. The report concludes that migrant workers will bear the brunt of the labor market adjustment.

In the Asia-Pacific region, reliance on imported energy and labor migration linked to the Gulf are already starting to affect many economies. For the entire region, hours worked are expected to fall by 0.7 percent in 2026 and 1.5 percent in 2027. Real labor income is projected to decline by 1.5 and 4.3 percent, respectively.

The West Asian crisis is not just a short-term disruption, but a shock that could have long-term consequences, says Sang-Hon Lee, ILO Chief Economist and author of the report. “Apart from the humanitarian toll, the West Asian crisis is not just a short-term disruption. It is a gradual and long-term shock that will gradually reshape labor markets,” he said. “The world of work is one of the main channels through which a global crisis can transform into a human crisis. The impact that starts with an external shock eventually reaches workers and enterprises. It can leave deep scars, undermining the foundations of decent, safe and secure work.’

Since the crisis began, the rate of sending workers to the Arab Cooperation Council (ACC) countries has fallen sharply in many labor-supplying countries. The number of workers returning home is increasing, the report says. Abdul Mia, a Gorkha who drives a car in the UAE, said his work is irregular. ‘If you take 10 days off, you work 20 days. The company is also cutting salaries,’ he said. ‘Inflation is also rising. So far, our company has been saying that if someone wants to go home, they can call them when the situation normalizes.’

The report shows that the risks to employment, income and working conditions are increasing not only in the Arab region but also globally. The size and duration of the impact will depend on how the situation develops, the report says. Although it will take time to see the full impact, the ILO has already warned that its impact is already spreading through various channels to the global economy.

Based on a scenario where oil prices increase by about 50 percent compared to the initial average in 2026, global working hours are projected to decline by 0.5 percent in 2026 and 1.1 percent in 2027. This is equivalent to 14 million and 38 million full-time jobs, respectively. Similarly, real labor income is projected to decline by 1.1 and 3 percent, which is equivalent to 1.1 trillion US dollars and 3 trillion US dollars, respectively. The global unemployment rate is also expected to increase gradually, increasing by 0.1 percentage point in 2026 and 0.5 percentage point in 2027.

According to the report, the crisis has also put pressure on migration and remittances. “If the crisis disrupts both the process of sending workers and remittances, the impact could spread to consumption, poverty and local employment in labor-supplying countries,” the report said. The Department of Foreign Employment had banned the sending of workers from Nepal to Arab countries for about two months. The department lifted the ban on labor permits imposed since March 17 on April 7.