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Expatriates and GCC economies
April 26, 2015, 10:37 am

The debate on whether expatriates are indispensable to Gulf Cooperation Council (GCC) states is really moot; they were never dispensable to begin with. Ever since oil was first discovered nearly a century ago, foreign workforce has been a crucial element in the growth and development of this region.

Today, expatriates have become so inextricably entrenched in the socio-economic fabric of the six-nation bloc that any GCC country without its foreign labor force is practically unthinkable, at least for any time in the foreseeable future.

The resolute hold that expatriates wield on Gulf states is evident from the fact that the flow of oil and gas, the lifeblood of these countries, depends on tens of thousands of foreign oil-workers. These legions of ordinary laborers and technical specialists are vital to ensuring that oil and gas gets extracted, refined, stored and exported in an efficient and timely manner. 

Similar multitude of expatriates are also essential in making sure that infrastructures and utilities in these countries are built on time, function properly and are regularly maintained.

Hundreds of thousands of foreign workers also form the nexus behind many services that these states offer their citizens, including in the delivery of healthcare, education and transport.

And then, there are the expatriates who are crucial in making sure that retail supply chains flow unhindered from farms to homes and from factories to showrooms. Even more important, are the millions of maids, nannies, drivers, cooks and gardeners who play an irreplaceable role in the smooth functioning of many GCC households. 

Yes, it is true that the army, police and many government offices could function without foreign workers, but again, only in a very rudimentary manner. Without access to cleaners, mechanics, consultants, advisers and technicians, as well as to the ubiquitous ‘tea-boy,’ the wheels of government would soon stop spinning.

A scenario where this entire foreign workforce will be replaced by locals can probably be envisioned in some utopian technological future, where household robots, autonomous autos and other computerizations take over the duties of expatriates.

So, rather than having tenuous debates on the ability of GCC countries to function without their expatriate labor, perhaps it is more pertinent to try and find the right demographic balance needed to safeguard the unhampered delivery of services to people, and ensure continued growth and development of these economies.

But then, arriving at this ‘right ratio’ between the number of expatriates and local citizens is something that governments in the six-nation bloc have struggled with ever since oil was first discovered in the region.

Governments in GCC states have at various times tried different measures to reduce the number and curb the flow of expatriates into their countries. Localization in public sector jobs, employment quotas for private sector, widespread crackdown on illegal residents and amnesty for residency law violators have all been tried, and continue to be tried, to create a more balanced demographic structure.

Not surprisingly, these half-baked attempts have failed to produce any realistic remedies to the population imbalance and the challenges posed by it.

Authorities in the region need to clearly identify what they aim to achieve by reducing expatriate numbers. Is it to provide more jobs for the national labor force, is it to improve national security, or is to curb the population surge that threatens to derail the state’s services and utilities? Perhaps it stems from a desire to control law and order violations, lower traffic congestions, fix social maladies, or it could be a combination of all these factors.

Once the objectives are clearly defined it would make it easier for governments to implement proper procedures and legislative reforms needed to fulfill their goals.

Slapdash attempts and one-size-fits-all solutions to lower the expatriate population are bound to fail. For one, foreign workers are not a homogenous entity over which facile solutions can be applied uniformly. 

Expatriates are a multi-national community made up of people from all corners of the globe and forming a heterogenous workforce ranging from low-end unskilled laborers and blue-collar workers to skilled workers and specialized technicians, as well as highly-qualified and experienced professionals. Categorizing this large and diverse foreign workforce into different labels and applying standard solutions is not a viable approach.

Moreover, implementing one set of solution often brings unintended consequences and unforeseen repercussions in sometimes seemingly unrelated fields. For instance, if the government suddenly decides to get rid of unskilled, unemployed laborers, this will have repercussions especially on the construction and retail sectors, which rely heavily on low-paid unskilled labor for many of their routine activities.

Also, this will not make any dent on the unemployment problem in the country, as local unemployed youth are not looking for low-paid, unskilled jobs.

In its attempt to tackle growing unemployment and continued influx of nationals into the labor market each year, GCC governments have regularly relied on doling out public sector jobs.

These jobs, many of them surplus posts created without regard to qualification criteria or job-related requirements, have financial ramifications that are only now, with fall in oil-prices, beginning to impact the economy.

For instance, in Kuwait, 72 percent of government jobs are occupied by locals and 82 percent of Kuwaiti workforce is employed in the government sector. Recently, while unveiling the annual budget, Kuwait’s finance minister noted that oil revenues, which accounted for 88 percent of the state’s revenues, would be KD10.5 billion (US$35.9 billion) in 2015. At the same time, the state’s salaries and wages bill would be KD9.9 billion ($33.8 billion) or nearly 52 percent of the government’s total budget spending.

Previous attempts by governments in the region to localize the workforce in public sector and impose quotas on private sector employers have also not been successful. In 1982, with the aim of delivering technical and vocational training to Kuwaitis and developing and upgrading the country’s manpower resources, the government set up the Public Authority for Applied Education and Training (PAAET).

In 2002, PAEET established the College of Nursing. Ten years later, in 2012, the number of nursing staff in the country was around 21,500, of whom only around 1,250 were Kuwaiti nurses.

Moreover, each year, the number of local nurses graduating from the college continues to decline while those currently employed in the profession are increasingly resigning from their posts.

In the years ahead, the gap between Kuwaiti and non-Kuwaiti nurses is only likely to widen as the government hires more foreign nurses to achieve the recommended nurse to population ratio, and meet the requirements of new hospitals on the anvil.

Getting youth to join the private sector and impose quotas on private companies have only met with limited success. The wide discrepancy in salaries and perquisites that exist between public and private sector jobs is not conducive to attracting young local talent to work in the private sector; many would rather wait for an opening in the civil service while enjoying generous unemployment dole outs from the government.

Meanwhile, private employers soon find out that local workers are not only less plaint and less conducive to working under supervision, but also that the new employee’s aspirations and expectations of salaries and perks are not commensurate with what is being offered and what they can deliver in the form of results.

Besides employment quality of the young recruits there is also the matter of work ethics, especially among those already ensconced in life-time government jobs. A recent ‘Time Use’ survey, by the Qatari government’s Ministry of Development, Planning and Statistics found that on average Qatari nationals work less than half the amount of time as expatriates. The survey showed that nationals work on average two hours and 52 minutes a day, compared to six hours and 42 minutes by non-nationals.

GCC governments need to do a proper introspection to find out if there is enough talent coming through their educational and vocational pipeline every year and whether youth are gaining the requisite experience and expertise, needed to fill new openings and replace skilled foreign manpower.

If not, they have to identify and rectify the shortcomings in the young talent pool. Then, and only then, should governments begin to discuss the possibilities of replacing foreign manpower from the region.

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