A report says that ongoing conflict in the Middle East has led companies to postpone hiring plans, which could negatively affect job creation and reduce the flow of remittances.
Firms in the Middle East defer recruitment due to ongoing war, threatening employment and remittance flows, report finds.
The labour market situation across the Middle East and North Africa region is expected to face noticeable strain in 2026, largely driven by ongoing geopolitical tensions and the resulting economic uncertainty. A recent analysis suggests that many employers in the region are becoming increasingly cautious about expanding their workforce, with recruitment plans being postponed or scaled back. This slowdown in hiring activity is likely to have wider consequences, particularly for the flow of remittances originating from Gulf Cooperation Council countries, where a large share of workers are foreign nationals.
In Gulf countries, migrant labour forms the backbone of much of the private sector. Estimates indicate that expatriate workers make up a dominant share of employment in this segment, accounting for anywhere between roughly three-quarters to almost the entire workforce in several industries. This heavy reliance on foreign workers means that any slowdown in job creation or hiring directly affects millions of households in workers’ home countries, many of which depend heavily on remittance income for daily needs, education, healthcare, and overall economic stability.
However, the current environment shaped by regional conflict is creating uncertainty for businesses operating in the Middle East. As firms attempt to navigate unpredictable conditions, many are choosing to delay expansion plans and freeze recruitment processes. This cautious approach reflects concerns over trade disruptions, fluctuating investment flows, and instability in key sectors such as tourism, logistics, construction, and services. With companies prioritising financial stability and risk management, job creation is expected to slow significantly over the coming year.
As a result, projections for the labour market in the broader Middle East and North Africa region suggest a weaker employment outlook in 2026. Rather than experiencing robust job growth, the region may see limited hiring activity and slower absorption of new entrants into the workforce. This trend could be particularly challenging for economies that rely heavily on foreign labour and remittance inflows, especially in Gulf economies where migrant workers are a crucial component of economic activity.
A recent report, the World Economic Forum’s Chief Economists’ Outlook, highlights this growing concern among global economic experts. According to the findings, a substantial majority of surveyed chief economists anticipate that employment growth over the next year will remain weak or even very weak. Specifically, around 74 per cent of respondents expect subdued labour market performance over the coming 12 months, largely due to companies delaying or reducing hiring activity in response to ongoing uncertainty.
The report further emphasises that several key economic drivers in the region are currently under pressure. International trade routes and volumes have been disrupted, tourism flows have weakened in certain areas, and foreign investment has become more cautious. These combined factors are contributing to an overall slowdown in economic momentum. Experts note that there is currently little indication of an immediate improvement or resolution that could restore confidence in the short term.
With trade, tourism, and investment all facing challenges, businesses are operating in an environment where long-term planning has become difficult. As a result, many employers are adopting a wait-and-see approach, prioritising cost control and operational stability over expansion. This behaviour is directly influencing employment opportunities, as fewer new roles are being created and existing vacancies are taking longer to fill.
For countries in the Gulf region, where remittances from migrant workers form an important source of external income for many developing economies, this situation carries broader implications. A slowdown in hiring could lead to reduced inflows of money sent back home by workers, which may in turn affect household consumption and economic activity in recipient countries. Given that millions of families rely on these funds, even a modest decline in remittance levels could have noticeable social and economic effects.
Overall, the combination of geopolitical instability, cautious corporate behaviour, and weakened economic drivers is expected to shape the labour market landscape in the Middle East and North Africa over the coming year. Unless conditions stabilise and business confidence improves, employment growth is likely to remain subdued, with ripple effects extending beyond the region through reduced remittance flows and slower economic linkages with labour-exporting countries.
The ongoing conflict in the Middle East involving major powers such as the United States, Israel, and Iran is increasingly weighing on the region’s employment landscape, creating widespread concern about the future of jobs. The situation has introduced a high level of uncertainty into labour markets across multiple countries, particularly those already vulnerable due to economic fragility or direct exposure to conflict. As tensions persist, the ripple effects are being felt not only in political and security terms but also in economic activity, hiring trends, and workforce stability.
According to the International Labour Organization (ILO), the instability generated by the conflict poses a serious threat to millions of jobs across the region. The organization highlights that economies directly impacted by violence or indirect disruptions are experiencing a weakening of employment conditions. In many cases, supply chains have been interrupted, foreign investors are adopting a more cautious stance, and infrastructure damage in affected areas is further limiting economic productivity. These combined pressures are reducing the ability of businesses to operate normally and, as a result, shrinking opportunities for job creation.
In regions where industries depend heavily on cross-border trade, manufacturing inputs, and international capital, even small disruptions can have significant consequences. Companies facing uncertainty tend to delay expansion plans, cut back on hiring, or shift to short-term operational strategies rather than long-term growth. This cautious behaviour contributes to a slowdown in employment generation, particularly in sectors that typically absorb large numbers of workers such as construction, logistics, hospitality, and services.
The findings presented in the World Economic Forum’s Chief Economists’ Outlook are based on detailed surveys and consultations conducted with senior economists from both public institutions and private sector organizations worldwide. The most recent edition of the survey, carried out between April 6 and April 17, 2026, captures evolving sentiment among economic experts regarding global and regional growth prospects. The results indicate a noticeable shift in confidence compared to earlier assessments.
Just a few months prior to the escalation of tensions, many economists held a cautiously positive outlook for global employment and growth. There was an expectation that post-pandemic recovery trends and investment flows would continue to support gradual improvements in labour markets. However, the outbreak and continuation of conflict in the Middle East has significantly altered this outlook. Experts now believe that the economic consequences of the instability are already becoming visible and may continue to affect the region for an extended period.
Saadia Zahidi, Managing Director at the World Economic Forum, noted that the mood among economists has shifted markedly due to the unfolding situation. She explained that what was once a cautiously optimistic environment has been replaced by concern, as the conflict has introduced new risks and deepened existing vulnerabilities. She further emphasised that the economic damage resulting from the current conditions is not likely to be short-lived, suggesting that the consequences may persist well beyond the immediate period of disruption.
Zahidi also pointed out that the longer the conflict and instability continue, the greater the burden will become for populations that are least equipped to handle economic shocks. This includes low-income workers, migrant labourers, and communities in fragile economies that rely heavily on external income sources such as remittances and foreign employment opportunities. For these groups, even temporary disruptions in labour markets can translate into long-term financial hardship.
Adding to these concerns, the World Bank has also warned that the crisis is exacerbating already existing structural weaknesses in the region’s economies. Many Middle Eastern and North African countries were already struggling with issues such as slow productivity growth, limited diversification of industries, and a lack of strong private sector expansion. The current conflict has intensified these challenges, making it even more difficult for governments and businesses to generate sufficient employment opportunities for a growing workforce.
The World Bank’s assessment suggests that without stable conditions and renewed investor confidence, job creation will remain constrained across much of the region. Structural economic weaknesses combined with geopolitical uncertainty create a difficult environment for sustained employment growth. Businesses are less willing to commit to long-term investments, and governments may face fiscal pressures that limit their ability to stimulate job markets effectively.
Despite these regional challenges, the more affluent Gulf Cooperation Council (GCC) countries are showing a comparatively stronger level of economic resilience. In several cases, labour markets within these economies continue to expand, supported by ongoing development strategies and diversification efforts. Saudi Arabia, for instance, is experiencing strong demand for skilled and semi-skilled workers across sectors such as infrastructure development, tourism expansion, and energy projects. These trends are closely linked to the country’s long-term transformation strategy, commonly referred to as Vision 2030, which aims to reduce dependence on oil and broaden the economic base.
Similarly, the United Arab Emirates continues to position itself as a leading hub for specialized talent in emerging and high-growth fields. There is particularly strong recruitment activity in sectors such as artificial intelligence, data science, financial services, and cybersecurity. These industries are benefiting from government support and private sector investment, helping the country maintain relatively healthy employment growth compared to many of its regional peers.
However, even these relatively resilient Gulf economies are not completely isolated from the broader geopolitical environment. The ongoing conflict creates indirect effects that can influence economic performance in several ways. Shifts in global capital flows may affect investment patterns, while fluctuations in expatriate remittances can impact both sending and receiving economies. Additionally, the tourism sector, which plays an increasingly important role in diversification strategies, may face volatility depending on regional stability and international perceptions of risk.
In conclusion, while the Gulf region continues to demonstrate pockets of strong labour market performance, the wider Middle East is facing considerable employment challenges driven by ongoing conflict and economic uncertainty. The combined warnings from international organizations such as the ILO, the World Bank, and global economic experts highlight a shared concern: that prolonged instability could significantly limit job creation and slow down economic progress across the region for years to come.
The World Economic Forum’s latest survey highlights growing concern that job losses or hiring slowdowns in Gulf Cooperation Council (GCC) countries, driven by the ongoing regional conflict, could have significant knock-on effects on global remittance flows. As employment conditions weaken in certain parts of the Gulf due to uncertainty and disruption, the income that migrant workers send back to their home countries is also expected to come under pressure. Since remittances form a crucial financial lifeline for many developing economies, any decline in these flows could have wider social and economic consequences beyond the region itself.
The report further explains that when local labour markets become unstable, the impact is not limited to job creation alone. A slowdown in hiring, wage stagnation, or job cuts among expatriate workers can directly reduce the amount of money that migrant workers are able to transfer abroad. These transfers are often used by families in home countries to cover essential expenses such as food, education, healthcare, and housing. As a result, even small disruptions in employment conditions in the Gulf can translate into noticeable financial stress in recipient economies, many of which depend heavily on these inflows.
In Gulf countries, the private sector workforce is heavily dependent on foreign labour. Estimates suggest that expatriate workers constitute an overwhelming majority of employees in this sector, with figures ranging from approximately 76 per cent to as high as 95 per cent in some GCC economies. This reflects the structural nature of labour markets in the region, where migrant workers play a central role in industries such as construction, domestic services, retail, hospitality, and infrastructure development. Because of this reliance, any slowdown in economic activity or hiring decisions disproportionately affects foreign workers and, by extension, the remittance channels linked to them.
The World Economic Forum report also notes a marked deterioration in the broader economic outlook for the Middle East and North Africa (MENA) region. Compared to earlier assessments, sentiment among leading economists has shifted significantly towards pessimism. According to the survey findings, as many as 88 per cent of chief economists now anticipate weak or very weak growth across the region over the coming year. This represents a sharp reversal from the beginning of the year, when expectations were considerably more optimistic and many respondents viewed the region as one of the stronger contributors to global economic expansion.
At that time, there was still a general belief that several Middle Eastern economies, particularly those benefiting from high energy prices and diversification efforts, would continue to show resilience despite global uncertainty. However, the escalation of geopolitical tensions and the resulting economic disruptions have altered this outlook. What was once seen as a relatively stable growth region is now facing heightened uncertainty, with reduced confidence in short-term economic performance.
The report highlights that the impact of these developments is not uniform across all countries in the region. Oil-exporting nations within the GCC may still retain some capacity to absorb external shocks due to their stronger fiscal positions and revenue streams from energy exports. These countries often have sovereign wealth funds and financial buffers that allow them to manage periods of volatility more effectively. As a result, they may be better positioned to sustain public investment and support domestic economic activity even during periods of regional instability.
In contrast, oil-importing countries and those already affected by conflict are expected to experience much more severe economic pressures. These economies often lack the financial flexibility to offset external shocks, making them more vulnerable to rising import costs, declining investment, and reduced tourism activity. For such countries, disruptions in trade routes, supply chains, and capital inflows can quickly translate into slower growth, higher unemployment, and increased fiscal strain.
Another key concern raised in the World Economic Forum survey relates to inflationary pressures across the region. According to the findings, around 55 per cent of chief economists expect either high or very high inflation in the Middle East and North Africa over the coming period. This reflects concerns that supply-side disruptions, combined with geopolitical instability, could drive up the cost of goods and services.
One of the major risks identified is the potential disruption of shipping routes and energy transport, particularly around critical chokepoints such as the Strait of Hormuz. This narrow maritime passage is one of the most important global transit points for oil and gas shipments. Any prolonged instability in this area could have far-reaching consequences for global energy markets. If supply routes were significantly affected, the resulting shortage of imported goods and energy supplies could push prices sharply higher across the region and beyond.
Rising inflation would add further pressure on households already facing economic uncertainty, particularly migrant workers and low-income populations. Higher living costs combined with weaker job prospects could reduce disposable income, leaving less room for savings and remittances. This would create a feedback loop where reduced remittance flows further strain economies in labour-sending countries, many of which rely heavily on these external financial inflows to support domestic consumption and development.
Overall, the findings of the World Economic Forum survey present a cautiously pessimistic view of the region’s near-term economic trajectory. The combination of geopolitical instability, weakening employment conditions, and rising inflation risks suggests that both labour markets and broader economic performance in the Middle East and North Africa may face sustained pressure. While some Gulf economies may continue to demonstrate resilience due to structural advantages, the wider region appears increasingly exposed to downside risks that could affect growth, employment, and financial stability over the coming year.
