The European Commission has warned that up to 1.3 million jobs across the European Union could be at risk this year as higher energy prices linked to the war in the Middle East put renewed pressure on energy-intensive industries.
The warning was issued by Roxana Mînzatu, the Commission’s Executive Vice-President for Social Rights and Skills, during the presentation of the 2026 European Semester Spring Package. She said automotive, construction, metals, chemicals and transport were among the sectors most exposed to the price shock, with job losses possible where firms face higher energy costs, weaker demand and limited room to pass costs on to customers.
The immediate trigger is the surge in energy prices linked to the conflict involving Iran and the United States. The Commission has linked the shock to higher costs for companies and households, while its latest economic forecast says the EU economy has entered this period with easing inflationary pressure, softer labour markets, fiscal consolidation and tighter financing conditions. That makes the current shock different from the 2022 energy crisis, but not without risk.
Europe is less exposed to Russian fossil fuels than it was before the invasion of Ukraine, and its energy use has fallen through efficiency gains, renewable energy expansion and contraction in some energy-intensive sectors. But the current shock is being transmitted through global oil and gas markets rather than a single pipeline dependency. That spreads the pressure more evenly across economies and leaves European industry exposed to price movements it cannot fully control.
The employment risk is concentrated in sectors where energy is a major part of production costs. Automotive manufacturing is vulnerable because it combines high energy demand, weak consumer demand in some markets and pressure from the shift to electric vehicles. Metals and chemicals are exposed because electricity and gas prices directly affect operating costs. Construction is sensitive to financing conditions, materials costs and household spending. Transport is exposed through fuel costs and logistics disruption.
The Commission’s warning also connects with a wider industrial question. Europe has spent the past two years trying to strengthen competitiveness through the Green Deal Industrial Plan, the Net-Zero Industry Act, the Clean Industrial Deal and efforts to reduce dependence on imported strategic technologies. Yet higher energy costs weaken the very sectors expected to deliver batteries, low-carbon steel, clean technology components and industrial electrification.
This is where the employment issue becomes geopolitical. The war in the Middle East is not only affecting oil and gas markets. It is also testing whether Europe can protect industrial employment while reducing dependencies, financing defence, meeting climate targets and maintaining fiscal discipline. If governments respond with broad subsidies, they risk repeating the expensive support measures used during the previous energy crisis. If they offer too little support, some firms may cut jobs, delay investment or move production elsewhere.
The Commission has warned against untargeted energy measures. Its Semester documents say the 2022–2024 energy support measures carried a large budgetary cost and could sustain demand in ways that add to inflationary pressure. The message to member states is therefore to support vulnerable households and affected firms, but to avoid broad, open-ended subsidies that weaken public finances.
That is a narrow policy path. Low-income households are expected to be hit hardest by higher energy and transport costs, while energy-intensive employers face pressure to preserve margins. Mînzatu said member states should take targeted measures to support vulnerable groups. The difficulty is that a targeted response can be administratively slow, while the political pressure from consumers and employers can be immediate.
The jobs warning also comes as the EU tries to address skills shortages. The Semester package highlights the need to improve education outcomes and align skills with labour-market needs, particularly in strategic sectors such as cybersecurity, quantum technologies, artificial intelligence and semiconductors. But the risk of job losses in traditional industrial sectors complicates that agenda. Workers displaced from automotive, metals or chemicals cannot automatically move into high-tech sectors without retraining, investment and regional support.
The broader economic outlook remains uncertain. The OECD has warned that a prolonged war could drag down global growth and push up inflation, with Europe among the economies exposed to higher imported energy costs. That would reduce the room for the European Central Bank and national governments to respond without creating new inflationary or fiscal pressures.
For Europe, the employment risk is therefore not a separate labour-market problem. It is part of a larger competitiveness test. The EU wants to preserve industrial production, accelerate clean-energy investment and reduce strategic dependencies. Those goals become harder when external conflict raises energy costs and squeezes sectors already facing structural change.
The Commission’s 1.3 million figure should be read as a warning rather than a forecast of unavoidable losses. It signals where the pressure is building and where national governments may need to act. The policy challenge is to protect vulnerable workers and viable firms without locking in high-cost subsidies or slowing the transition to a more resilient energy system.
The next phase will show whether Europe has learned the main lesson of the previous energy crisis: emergency support can buy time, but it cannot replace affordable power, resilient supply chains and credible industrial strategy.
