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LAHORE: The world of work remains the primary channel through which macroeconomic instability transforms into a deeply personal, human crisis. The Gulf war, which began as a geopolitical or external supply-chain shock, has eventually filtered down to masses, reaching factory floors, agricultural fields and small enterprises.
In Pakistan, where the labour market is already navigating a fragile economic recovery characterised by high inflation and decent work deficits, the expanding Middle East crisis threatens to leave long-lasting scars. An ILO report rightly points out that global shocks first travel through the “world of work” before becoming human tragedies. Unfortunately, Pakistan is among the countries most vulnerable to this unfolding crisis.
A prolonged crisis or severe escalation in the Middle East puts immense pressure on migrant workers. Construction, transport, and retail sectors in Arab states, where Pakistani labour is heavily concentrated, are facing severe disruptions. This slows down the deployment of new workers from Pakistan and risks displacing those already there.
Pakistan’s fragile economy is heavily dependent on imported fuel. Any prolonged conflict in the Middle East immediately pushes up international oil prices, raises transport costs, inflates electricity tariffs and increases the cost of doing business. The ILO estimates that if oil prices rise by 50 per cent above the early 2026 average, global working hours could decline by 0.5 per cent in 2026 and 1.1 per cent in 2027, equivalent to the loss of 14 million and 38 million jobs globally. Real labour incomes could shrink by trillions of dollars worldwide.
For Pakistan, the implications are far more severe because the country already suffers from weak industrial growth, high inflation, falling purchasing power and widespread informal employment. A fresh energy shock may further cripple industries that are already operating below capacity due to expensive electricity, high interest rates and declining domestic demand.
Rising freight charges, disrupted shipping routes and higher energy costs could force more exporting factories into partial shutdowns. Small and medium enterprises, which lack financial buffers, may be pushed out of business altogether directly effecting millions of workers across sectors.
The construction industry may also suffer because rising fuel and cement transport costs increase the overall price of housing and infrastructure projects. Pakistan’s transport sector, already passing on additional costs to consumers. Agriculture too will not remain unaffected since tube wells, fertilisers and transportation all depend on petroleum-linked inputs.
With over 20 per cent of the regional workforce employed in these high-exposure sectors, Pakistan’s informal sector, which constitutes the vast majority of its domestic labour market, is particularly defenceless. Informal workers lack social safety nets, unemployment insurance, or formal contracts, meaning any reduction in working hours translates directly into immediate financial deprivation.
Perhaps the greatest danger lies in Pakistan’s dependence on overseas employment in Gulf countries. Millions of Pakistani workers are employed in Saudi Arabia, United Arab Emirates, Qatar, Kuwait and other Gulf economies. Their remittances remain one of Pakistan’s most critical economic lifelines, supporting household consumption, education, and healthcare and foreign exchange reserves.
The ILO warns that labour migration and remittance flows across Asia are already showing signs of strain. If Gulf economies slow down due to conflict, reduced construction activity, the migrant workers may face layoffs, delayed wages or reduced hiring. Any decline in remittances would hit Pakistan’s rural and lower-middle-class families particularly hard
The impact would not be limited to economics alone. Rising unemployment and shrinking incomes often deepen social distress, malnutrition, crime and inequality. Pakistan is already witnessing declining real wages and growing household debt. Another inflationary shock may push millions further below the poverty line. Informal workers, daily wage earners and small shopkeepers are likely to suffer the most because they lack social protection.
Policymakers must urgently prepare contingency plans to protect jobs, stabilise essential commodity prices and support export-oriented industries. Social protection mechanisms should be expanded for vulnerable households, while overseas Pakistani workers require stronger diplomatic and legal support in Gulf countries. The Middle East crisis for Pakistan could become another painful reminder that economic fragility eventually turns every global shock into a domestic social crisis.
