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Unemployment challenges haunt the GCC 30 years on

Bloc has failed to come up with a clear-cut solution to rising unemployment rate

  • By Duraid Al Baik, Associate Editor
  • Published: 00:00 December 1, 2010
  • Gulf News

  • Image Credit: Hadrian Hernandez/Gulf News
  • Construction workers put together a scaffolding. Unscrupulous and isolated practices by errant employers have led to activists lobbying for the rights of foreign workers in the region. Picture for illustrative purposes only.

Dubai: GCC policy makers in the region have been faced with a two-fold labour problem for close to 30 years now — growing unemployment among young nationals and an increasing number of foreign workers in the region. The issues related to foreign workforces are also growing in a steady, upward negative trend.

The GCC has never succeeded in coming up with a clear-cut solution for what has become a chronic problem. The question which has been facing the Ministers of Labour and the leaders of the six-nation bloc in their annual meetings since the formation of the GCC is how to contain more nationals in one of the most prosperous regions in the world and maintain — at the same time — high growth rates spurred by the availability of low-cost foreign workers?

The balance between what seems to be two contradicting interests has proven difficult to achieve, especially with the pressure exerted by the local business community every time governments in the region seem to develop the will to correct the imbalance in labour policies.

The business community in the GCC has been accused of opposing any solution to the labour issue as it feels that much of its prosperity and growth has been achieved due to millions of the low-cost foreign workers being imported to the region.

Businesses have always wanted such policies to remain intact. Governments, on the other hand, believe that foreign workforce is costing business less because of the government subsidies of services and facilities.

Studies have proposed that local GCC workforce will exceed 20 million people in 10 years time from its present day levels of about 15 million.

The additional five million scheduled to enter the market in the coming decade require special programmes that revamp the educational, social and economic set-up in order to make sure that GCC citizens will be absorbed by businesses in the region.

Despite a significant drop in the unemployment rate in the UAE, Sultan Bin Saeed Al Mansouri, the UAE's Minister of Economy, believes that the current 4.2 per cent unemployment amongst nationals is still very high and needs to be lowered. The rate of unemployment was hovering around 14 per cent in 2008.

Never satisfied

Al Mansouri says part of the unemployment problem can be attributed to to a tendency exhibited by Emirati professionals of being choosy and constantly on the lookout for better paying jobs.

The UAE was the first GCC country to have an official unemployment figure. However, the unemployment figures in other Gulf countries are the outcome of professional studies carried out by institutions and research centres.

There are no official figures about the number of unemployed Bahrainis but the McKenzie report commissioned by the government suggests there were between 16,000 to 20,000 unemployed Bahrainis.

Forecasts have revealed that the number of unemployed people could top 80,000 in three years time.

"Labour problems facing policy makers in the GCC today [have] been growing and getting more complicated rather than [coming] under control," said Dr Abdul Khaliq Abdullah, Professor of Political Sciences at the UAE University.

"The two inter-related labour challenges facing the bloc have resulted in a variety of social and financial issues. Some of them are quite serious and [will] have [a] negative impact on the local social fabric in the medium to long-term..." Dr Abdullah said.

Hatem Samman, director of the Dubai-based Ideation Centre, said unemployment is one of the biggest challenges in the GCC. It has the potential to depress per capita standards of GDP, jeopardise standards of living, and breed economic inequality, he said.

"Although some of these consequences have been avoided due to the GCC's provision of welfare for its citizens and, in recent years, by high oil revenues, these are sources of income that will likely prove unsustainable at current levels," Samman said.

"GCC policymakers would like nothing better than to shift more of their workforces away from government jobs and into fast-growing new industries outside of oil, but they have had a hard time doing so. Despite recent efforts at diversification, few non-energy businesses are really thriving in the GCC," he wrote in a joint-study study he composed in 2009 titled ‘Meeting the Employment Challenge in the GCC: The Need for a Holistic Strategy'. The influx of foreign workers has also come at a political price. GCC governments are under political pressure from the governments of labour-exporting countries.

In many cases, this has been a way of releasing local political pressures in these countries rather than acting in the genuine interests of such countries' citizens employed abroad.

A number of human rights organisations have also joined the chorus of those crying for the rights of labourers in the Gulf. Isolated incidents of exploitation have been magnified to draw an unpleasant picture about the situation of foreign workers in the GCC.

Sponsorship system

The sponsorship system was introduced by different Gulf States in the early 70s. It was aimed at ensuring that employers took care of their foreign employees brought in for certain projects and specific jobs in the region.

The system has been misused by a number of unscrupulous employers. Sponsors have been accused of limiting the freedom of their employees by seizing their passports, preventing them from travelling inside the country of residence and abroad, and preventing them from leaving for green opportunities.

Bahrain was the first GCC country to scrap the sponsorship system. The sponsorship system was replaced in August 2008 by the Labour Market Regulatory Authority (LMRA).

The UAE said it will not cancel the sponsorship system because no country in the world allows foreigners without local sponsors.

The Ministry of Labour said it has relaxed the movement of foreign workers in the market and introduced a wages control system to prevent employers from exploiting their employees.

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