EU industries brace for layoffs as Iran War drives energy costs

European automotive, construction, metals, chemicals, and transport sectors could lose up to 1.3 million jobs this year due to a sharp rise in energy prices linked to the US-Iran conflict, European Labour Commissioner Roxana Minzatu said on Wednesday.

Speaking at a news conference, Minzatu warned that energy-intensive industries across the European Union could face significant pressure as higher energy costs weigh on business operations and competitiveness.

"Due to the war in the Middle East, up to 1.3 million jobs are at risk, and we are talking about jobs in the energy-intensive industry, particularly," Minzatu said.

Automotive sector faces the largest potential impact

According to estimates from the European Commission, the EU automotive industry could experience the highest number of potential job losses among affected sectors.

The Commission estimated that up to 600,000 jobs in the automotive sector could be at risk.

The industry is considered particularly vulnerable to rising energy costs due to its extensive manufacturing operations and supply chain requirements.

The warning comes as policymakers assess the broader economic consequences of elevated energy prices on key industrial sectors across the bloc.

Construction, metals, and chemicals are also under pressure

Beyond the automotive industry, other energy-intensive sectors could also face workforce reductions.

The European Commission estimated that the construction, metals, chemicals, and transport sectors together could lose 56,000 jobs.

These industries rely heavily on energy for production, processing, and logistics activities, making them especially sensitive to fluctuations in energy prices.

The potential job losses underscore the wider challenges facing European industry as businesses contend with higher operating costs.

Clean energy manufacturing jobs at risk

The impact of rising energy costs could also extend to sectors associated with Europe's energy transition efforts.

According to the Commission's estimates, around 85,000 jobs linked to battery projects could be at risk.

In addition, 58,852 jobs in solar manufacturing may also be affected.

The steel industry could face further pressure, with another 4,500 jobs potentially at risk due to low-carbon measures, according to the figures presented.

The estimates highlight concerns that higher energy costs could affect both traditional industrial sectors and emerging clean-energy industries.

Higher costs for households

The economic impact may not be limited to businesses and workers.

The Commission estimated that low-income households could spend an additional 1.4% of their income on transport fuel as a result of higher energy prices.

Increased fuel costs could place additional strain on household budgets, particularly among lower-income groups.

Broad implications for Europe's workforce

The potential employment impact comes against the backdrop of a large European labour market.

According to figures cited by the Commission, the EU manufacturing sector employs around 30 million people.

The services sector accounts for nearly 87 million jobs.

Minzatu's comments highlight concerns over how sustained increases in energy prices could affect employment across a range of industries, with energy-intensive sectors expected to face the greatest challenges if elevated costs persist.