International Labour Organization warns AI could reshape labour markets across the Arab region

The International Labour Organization (ILO) and the United Nations Economic and Social Commission for Western Asia (ESCWA) have examined how AI may reshape labour markets and employment patterns across the Arab region.

The organisations released a report exploring how AI adoption may transform jobs, productivity, and workforce dynamics by 2035. According to the report, outcomes will depend on policy choices related to skills development, labour protections, and social support systems.

The report outlines three possible scenarios ranging from inclusive AI-driven growth to increased inequality linked to insufficient labour protections and workforce adaptation measures.

One projected strong AI-driven economic growth, combined with large-scale investment in workforce transition and retraining programmes.

Another warned that rapid technological adoption without sufficient social safeguards could deepen inequality and displace large numbers of lower- and middle-skilled workers.

A third scenario envisaged a more gradual AI integration, supported by coordinated policy reforms and inclusive labour-market strategies.

The report identifies sectors such as healthcare, education, logistics, tourism, and digital services as areas where AI-related employment opportunities may emerge. At the same time, the organisations noted that automation could reduce demand for some routine and clerical occupations.

ILO Regional Director for Arab States Ruba Jaradat said AI technologies are already affecting workplaces across public administration and service sectors in the region. She added that nearly one-quarter of occupations may experience either displacement or technological augmentation linked to generative AI systems.

The analysis also highlighted widening skills mismatches between education systems and labour market demands, with some countries facing gaps ranging from 40% to 70%. The report also highlights the importance of investment in lifelong learning, labour market institutions, social protection, and AI governance frameworks.

The discussions took place during a preparatory session linked to the Arab Forum for Sustainable Development, where policymakers, labour organisations, and international experts examined how AI may affect youth employment, women workers, and lower-skilled populations across the region.

Why does it matter?

ILO highlights how developing and emerging economies may experience AI transitions differently depending on infrastructure, education systems, governance capacity, and investment levels. Policymakers across the Arab region are now under increasing pressure to modernise labour systems while ensuring that AI adoption supports inclusive growth instead of deepening social inequality.

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