The war raging in Ukraine and other overlapping crises are taking a toll on labor markets worldwide, the UN said Monday, suggesting a "sharp" slowdown was already underway.

In a fresh report, the International Labour Organization cautioned that the outlook for global labor markets has deteriorated in recent months.

"The ILO projects that if current trends continue, global employment growth will deteriorate significantly in the last three months of this current year 2022, and unemployment might start increasing," agency chief Gilbert Houngbo told reporters.

The UN agency warned that multiple, overlapping crises, compounded by Russia's war in Ukraine, were piling up with the world still in the grips of the Covid-19 pandemic.

Amid deepening energy and food security crises, swelling inflation, tightening monetary policy, and fears of a looming global recession, it said both employment creation and the quality of jobs were declining.

"While it normally takes time for an economic slowdown or a recession to result in job destruction and unemployment, available data suggests that a sharp labor market slowdown is already underway," the report said.

40 million jobs missing

At the beginning of this year, as the world began recovering from the height of the pandemic, employment-to-population ratios returned to or even exceeded pre-Covid-crisis levels in most advanced economies.

ILO said this uptick was especially apparent in high-skilled occupations — but cautioned that it was also driven by a surge in informal jobs, where social protections are generally lacking.

The situation has worsened in recent months, ILO said, estimating that overall hours worked was 1.5 percent below pre-pandemic levels in the third quarter.

That amounts to a deficit of 40 million full-time jobs.

As the number of jobs available is shrinking, surging inflation is causing real wages to fall in many countries, as many households are still grappling with pandemic-induced income declines, it said.

Ukraine employment plunges

Monday's report highlighted in particular the dire employment situation in Ukraine itself since Russia invaded in February.

Houngbo said the war had caused "a dramatic effect on Ukraine's own labor market."

Inflation in the conflict-torn country is expected to top 30 percent by the end of the year, while ILO estimated employment there would be 15.5 percent below the 2021 level.

That means 2.4 million jobs lost since the start of the war — half the number predicted by ILO in April, when the number of areas in Ukraine under occupation or facing active hostilities was higher.

But the UN agency cautioned the "partial labor market recovery is modest and highly fragile."

It highlighted the large number of internally displaced people looking for jobs.

"This risks pushing wages down in these areas," Houngbo said.

The report also estimated that 10.4 percent of Ukraine's pre-war workforce — some 1.6 million people, mostly women — had fled to other countries.

A recent survey found around a quarter of Ukrainian refugees had found waged work or self-employment in their host countries, ILO said.

'Deeply worrying'

Monday's report called for in-depth social dialogue to create the policies needed to counter labor market downturns.

It also warned that excessive policy tightening could cause "undue damage to jobs and incomes in both advanced and developing countries."

There is a "need to ensure that the monetary tightening to combat inflation … is really dovetailed with social measures, dovetailed with minimum social protection," Houngbo said, describing the global employment situation as "deeply worrying".

"Preventing a significant global labor market downturn will require comprehensive, integrated, and balanced policies both nationally and globally."