Raad Mahmoud Al-Tal

While macroeconomic indicators capture the scale of the economic shock, labor markets and poverty reveal the depth of its immediate social impact. According to estimates by the United Nations Development Programme, unemployment rates in Arab countries are expected to rise if the war persists by between 1.8 per cent and 4 per cent, translating into the loss of approximately 1.61 to 3.64 million jobs within a short period. These figures must be viewed in a broader struck.

tural context: Arab labor markets already face a chronic imbalance, with around 2.8 million individuals entering the workforce each year, while no more than 2.5 million jobs are created under normal conditions. In effect, the war is erasing more than a full year of job creation capacity.

The geographic distribution of job losses highlights uneven impacts across the region. Gulf countries are projected to bear the largest share, with losses ranging between 1.17 and 3.11 million jobs. The Levant follows with an estimated 320,000 job losses, while North Africa is expected to lose around 60,000 jobs. Despite higher absolute losses in the Gulf, the relative impact is more severe in lower-growth economies, where limited economic resilience constrains the ability to absorb such shocks.

Importantly, the impact is not evenly distributed across the labor force. Unemployment among low-skilled workers is expected to increase by between 3 and 4.5 percentage points, compared to a rise of 2.5 to 3.5 percentage points among skilled workers. This disparity reflects the vulnerability of labour-intensive sectors such as tourism, services, and trade, which are particularly sensitive to security disruptions and transport interruptions. The tourism sector, in particular, has been hit hard. In countries such as Jordan and Egypt, flight disruptions and a decline in air traffic of nearly 40 per cent have led to widespread cancellations during peak seasons, with immediate consequences for revenues and employment.

In Gulf economies, pressures on labour markets take a different form due to their heavy reliance on expatriate workers, who account for more than 40 per cent of the total labour force exceeding 30 million workers. Any economic slowdown or reduction in investment directly affects this segment, threatening job stability and, by extension, remittance flows to other Arab countries. This creates a direct and critical link between unemployment and poverty across the region.

On the poverty front, estimates suggest an increase of between 0.7 per cent and 1 per cent in poverty rates, pushing an additional 3.05 to 3.96 million people below the poverty line. Around 75 per cent of this increase is concentrated in the Levant, equivalent to between 2.85 and 3.29 million people. In North Africa, the increase is estimated to range from 137,000 to 560,000 individuals, while in the least developed countries it is expected to fall between 59,000 and 103,000. In these more vulnerable economies, poverty rates could rise sharply by between 4.45 per cent and 5.15 per cent, reflecting deep structural fragilities.

This expansion in poverty is closely linked to rising prices, particularly for food and energy. Fertiliser prices have increased by between $60 and $90 per ton, with spikes reaching up to 25 per cent in some markets. This raises agricultural production costs and heightens the risk of further increases in food prices. At the same time, higher energy prices are feeding into transportation and production costs, generating inflationary pressures that erode household purchasing power. This effect is especially pronounced given that food accounts for between 30 per cent and 50 per cent of household expenditures in many Arab countries.

Remittances remain a critical pillar of economic stability in several countries and cannot be overlooked. They account for approximately 33 per cent of GDP in Lebanon, 8 per cent to 9 per cent in Jordan, and 6 per cent to 8 per cent in Egypt. Any decline in these flows, driven by weaker labor market conditions in the Gulf, would lead directly to reduced household incomes, thereby deepening poverty and increasing economic vulnerability.

Taken together, these estimates underscore that war generates not only an economic crisis but a multifaceted social crisis. It disrupts labor markets, expands poverty, and places sustained pressure on living standards all at the same time making recovery more complex and significantly more prolonged.