Middle East energy shock threatens 1.3 million EU jobs as industrial giants warn of regulatory drag

Morten Wierod, the Chief Executive Officer of ABB, the Swiss-Swedish multinational industrial technology giant, has warned that Europe could face mass unemployment unless it urgently deregulates its economy in the face of an energy shock triggered by war in the Middle East.

In an interview with the Financial Times, Wierod stated that European policymakers are failing to show the necessary sense of urgency regarding reforms, noting that rising gas prices are undermining the European Union’s competitiveness against the United States.

“I hope we don’t have to see a much more severe crisis that leads to mass unemployment. Such a crisis should not be a mandatory prerequisite to gain that sense of urgency,” Wierod said.

ABB, a global leader in electrotechnical and industrial automation, employs approximately 110,000 people worldwide and generates $33.2 billion in revenue. The company operates critical infrastructure businesses, including electrical distribution, building management, robotic equipment for manufacturing facilities, and data center support. Its technologies are utilized in one out of every four data centers globally.

Wierod argued that the single market and the EU as a whole must completely eliminate, rather than merely simplify, excessive regulations to stimulate economic growth. He also criticized Brussels’ plans to reduce dependence on foreign technologies, warning that this approach will lead to unforeseen consequences and rising costs.

“When you build regulation around the ‘Made in Europe’ debate, we always see that there are side effects,” Wierod stated.

Nevertheless, Wierod acknowledged that Europe possesses strong assets, including a skilled workforce, access to high-quality education, and extensive experience in crisis management. He cited the region’s success in reducing its reliance on Russian gas from 35% to less than 10% within a single year as an example of this capability.

However, Wierod pointed out that rising gas prices—driven by supply disruptions in the Middle East caused by the war between the US and Iran—have increased competitive pressures on Europe. “I am not worried that there will be no gas in Europe. There will be gas, but it will be at a higher price,” Wierod said, adding that elevated prices will persist until 2027.

Following operations by the US and Israel, Iran announced the suspension of trade through the Strait of Hormuz. The strategic waterway carries 15% to 20% of global oil, condensate, and petroleum products, as well as more than 30% of global liquefied natural gas (LNG) supplies.

Roxana Minzatu, the European Commissioner for Jobs and Social Rights, also warned earlier this week that rising energy prices could lead to the loss of up to 1.3 million jobs across the EU.

According to European Commission estimates reported by Reuters, the automotive sector is expected to suffer the largest employment decline, with a projected loss of 600,000 jobs. The construction, metallurgy, chemical, and transport sectors could lose 56,000 jobs combined. Additionally, approximately 85,000 jobs in battery manufacturing projects and 58,000 jobs in solar panel manufacturing are reportedly at risk.

European Commission data shows that in 2023, 68% of medium-sized enterprises reported a shortage of qualified personnel, and in 2024, 77% of firms identified this shortage as an obstacle to investment.

According to information obtained by Politico, the Commission plans to include a distinct, dedicated block in its recommendations for the first time, emphasizing the necessity of investing in education, vocational training, adult learning, and staff reskilling.

Data from Eurostat indicates that the EU’s manufacturing sector employs approximately 30 million people. In 2023, the sector accounted for one-quarter of the EU economy’s €9.9 trillion net turnover.

In an analysis published in March, The Wall Street Journal reported that the energy crisis stemming from the war between the US and Iran could drag the European economy into a recession. The newspaper forecast that this development would come as a “bitter surprise” for Europe, noting that most of the announced support measures require large and immediate public expenditures.