Philippines among most exposed to Gulf labor slowdown — ILO
By Erika Mae P. Sinaking, Reporter
THE MIDDLE EAST WAR is rippling through Asian labor markets, cutting overseas deployments from the Philippines, weakening remittances and adding inflation pressure at home, the International Labour Organization (ILO) said.
“The Philippines illustrates the risks for labor-sending economies,” the Geneva-based agency said in a report released on Monday, after thousands of Filipino workers were repatriated from Gulf countries and overseas deployments dropped amid transport disruptions and weaker regional hiring.
It said close to 5,000 Filipino workers were repatriated from Gulf countries between early March and late April, while deployments to the region fell sharply compared with a year earlier.
Migrant worker outflows to the Gulf dropped to about 16,000 in March from more than 72,000 a year earlier, a decline of roughly 78%, according to the ILO report.
The ILO said the war is no longer confined to the Middle East, as higher oil prices, disrupted shipping routes and weaker business confidence feed inflation and labor market stress across Asia and the Pacific.
It estimated hours worked in the region could fall by 0.7% this year and 1.5% in 2027 under an oil shock scenario tied to a sharp rise in crude prices.
Real labor income in Asia and the Pacific may decline by 1.5% this year and 4.3% next year, equivalent to hundreds of billions of dollars in lost purchasing power, the ILO said.
The unemployment rate in the region could rise by 0.2 percentage point (ppt) this year and 0.8 ppt in 2027.
For the Philippines, the risks extend beyond overseas employment as remittances, a key driver of consumption, begin to soften.
The ILO said remittance inflows to the Philippines slipped from earlier months, raising concern that prolonged Gulf disruptions could weigh on household spending and growth.
Inflation accelerated to 7.2% in April from 4.1% in March, the fastest in more than three years and exceeding the central bank’s 2%-4% target, as higher energy and transport costs fed through the economy.
The ILO said higher prices increase pressure on household purchasing power as overseas income weakens.
It added that if sustained, these trends could weigh on domestic demand and labor markets in the Philippines.
The agency said Asia’s exposure is broad because many economies depend on imported fuel and Gulf-linked migration and trade.
About 22% of workers in the region are in high-exposure sectors including agriculture, manufacturing, construction and transport services.
Transport services were among the most vulnerable industries globally, with more than half of workers in high-exposure roles due to fuel reliance.
Manufacturing and construction also face rising costs and weaker demand as energy prices remain elevated.
The ILO said informal workers are likely to bear a disproportionate share of the shock due to weak income protection.
In Asia and the Pacific, about 24% of informal workers are in high-exposure activities compared with 17% of formal workers.
Labor migration is a key transmission channel for the crisis in South and Southeast Asia, the ILO said.
Early evidence from the Philippines and other South Asian countries shows sharp declines in Gulf deployments and rising repatriations.
Globally, the ILO warned that the conflict could erase the equivalent of millions of full-time jobs this year and in 2027 if oil prices stay elevated.
Real labor income worldwide could decline sharply, the ILO added, reflecting higher energy costs and weaker demand.
Benjamin B. Velasco, an assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations, said the impact might be temporary and unlikely to fundamentally alter migration patterns.
“The Gulf states are wealthy and have labor supply deficits so will be needing migrant workers in the foreseeable future,” he said via Facebook Messenger.
Migration to the Middle East has remained resilient for decades despite wars and recessions, he pointed out.
The ILO said governments across Asia are rolling out emergency measures including subsidies, tax relief and migrant worker assistance.
The Philippines has introduced repatriation support, monitoring systems and reintegration programs for returning workers.
The ILO warned fiscal constraints might limit support if the conflict persists and energy prices remain high.
