Foreign nationals constitute, on average, nearly 70 per cent of the labour force in the six oil-rich Arab Gulf countries — a percentage that many economists stress should be brought down.
But how and by when?
Is it feasible for the growing economies of the GCC to decrease the number of expatriates?
According to many economists, it is doable in the long run. However, it is unlikely in the short to medium term.
"It is impossible," responded Saudi Economist Ehsan Bu Hulaiga when asked whether the GCC can afford to cut down the number of foreign workers at present.
"The reason is because the dependence of the GCC on foreign labour, whether skilled, semi-skilled or unskilled, has lasted for decades and grew with time until that dependence became structural," Bu Hulaiga told Gulf News in an interview.
The foreign labour issue has come under the spotlight in the wake of uprisings across the region and as the GCC countries realise the importance of providing their citizens with jobs amid increasing unemployment. There is also a need to preserve their identity amid the number of non-nationals in the GCC region.
The imbalance between the number of jobs available and those taken up by nationals reflects the high level of foreign labour in the GCC job market. This comes as a result of several factors that are common in the six member states of the GCC, economists noted.
"Official figures show that there are many more jobs available in each of the six GCC countries than there are nationals of working age," wrote Farouk Soussa, chief economist at Citibank, in a paper on GCC job markets published earlier this year.
"Taken as a whole, there are twice as many jobs in the GCC than there are GCC nationals between the ages of 15 and 64," he added.
But the reality is GCC nationals suffer from unemployment, and "less than 50 per cent of Bahrainis, Saudis and Omanis of working age are actually officially employed," Soussa said.
The imbalance between available jobs and employed GCC nationals may lead to social friction and potential political instability, economists noted, in apparent reference to protests in both Oman and Bahrain earlier this year. Protesters were demanding not only more political freedom, but also better living conditions and more employment opportunities.
"What's more, the demographic profile of the GCC countries suggests that in the absence of a significant rise in labour participation rates across the GCC, joblessness will increase dramatically in the coming years," Soussa said.
Uncontrolled import
Already, many Arab Gulf states have started taking steps to provide their citizens with job openings.
Last May, the United Arab Emirates announced plans to set limits on the importation of unskilled workers as part of a policy to balance the country's demographic structure.
"Uncontrolled import of unskilled labourers should be limited and replaced by recruitment from within the UAE," the Federal cabinet said.
The UAE will instead focus on bringing in highly skilled workers based on "accredited professional and educational certificates".
In June, Saudi Labour Minister Adel Fakieh was quoted as saying that work permits of foreign workers who have spent six years in the Kingdom would not be renewed as part of a plan to create jobs for nationals.
Only 4 million of 20 million Saudis have jobs and 2.8 million are employed in the public sector, according to Saudi press reports. Fakieh noted that 90 per cent of the private sector workforce was made up of foreign workers and remittances to their home countries totalled $26.7 billion (Dh97.98 billion) a year.
But less than 24 hours later, a ministry spokesperson explained in a statement carried by the Saudi official media that the rule will be applied only to expats working for companies that do not meet new Saudisation criteria.
Saudi Arabia began a "Saudisation" programme in 1994, when it set quotas for the number of nationals private firms should hire. But, the programme, according to economists, failed to achieve a significant increase in the participation of nationals in the private sector, where Saudis still account for only 10 per cent of the employees. The percentage is expected to rise in the coming years, as almost 70 per cent of Saudis are under the age of 30, and the population is increasing by nearly 2.3 per cent annually, reports noted.
Supply curve
The six-year cap will be applied only on companies that fall under the "red" and "yellow" categories, according to the new system of Nitaqat (or categories). Companies in Saudi Arabia will have a three-month period to Sept. 7, 2011 to achieve the prescribed quota of Saudi employees.
Already, many Saudi businessmen have complained that the implementation of the Nitaqat system could inflict big losses on small and medium businesses, including those in the construction field, where only 5 per cent of the employees are Saudis.
The Nitaqat system has divided the companies into three categories: green, red and yellow, based on the percentage of Saudi citizens they have hired.
While companies in the green category should have no problems, visas for labourers in companies in the red would not be renewed, irrespective the years they have spent in the kingdom.
The yellow category will be given the opportunity to increase the percentage of Saudis.
The Kuwaiti government announced in June that it is working on plans to introduce a residency cap on expatriates to reduce them to 45 per cent of the total population.
"The government will suggest imposing a cap of six years on unskilled labourers, eight years on semi-skilled employees, 10 years on semi-skilled employees who are with their families and 12 years on skilled employees. Foreigners with rare expertise will be given an open stay," Kuwaiti local newspapers quoted sources as saying.
"The main weak point in all the ‘nationalisation labour' programmes in all the GCC is related to the supply curve, which is almost horizontal," commented Bu Hulaiga. "Which means this curve goes to infinity and this infinity goes to countries like India and the Philippines."
"As long as there are big numbers of workers hired [from abroad], there will be no nationalisation [for the labour market in the Gulf]. As long as the number of foreign labourers is not decreasing, nothing will change," added the Saudi economist. He noted that Saudi Arabia has issued 1.2 million working visas last year.
Hiring semi-skilled and unskilled foreign labour and limiting their contract to a certain number of years after which they move on to another job will not solve the issue.
"What the GCC countries should do is to hire skilled labour and bring them to the region as ‘mentors'," Bu Hulaiga said.
In such case, it will be very clear for the student that he has to learn the profession and for the mentor that he was hired to teach others, he said.
But, what happened so far is that such a relationship was not built in the first place. And after four decades of hiring large number of foreign labourers, "the transfer of knowledge and experience is still limited."
