2013 saw a number of developments in the Kingdom of Saudi Arabia (KSA), Kuwait and the wider Gulf Cooperation Council (GCC) area which signals a new approach to expat workers in the region.
"More and more GCC citizens are graduating from universities and institutes and cannot find jobs. It is time for the GCC countries to intensify their efforts to find jobs for their people ... otherwise it will be too late." Gulf Cooperation Council Statement (2009)
This quote provides the context to the robust initiatives in some GCC countries to increase the proportion of national employees within the private sector and (in some instances) to actively reduce non-national numbers.
In common with other GCC States, KSA and Kuwait have a history of allowing vast numbers of non-national workers into their countries to perform jobs that nationals cannot or will not do. Typically non-nationals fill the low paid roles within the private sector as well as technical and professional roles for which a sufficient number of nationals may not be able to fill. Nationals generally work in the public sector. In fact the statistics for the region are quite stark. The number of non-nationals in most GCC countries is around 70-85% of the total population with an even higher percentage making up the private sector workforce.
All GCC countries have policies to increase the proportion of their national workforce in the private sector. As these countries move away from a hydrocarbon economic model the challenge of increasing national participation in the private sector is amplified.
KSA and Kuwait have been in the spotlight recently because of a well-publicised shift in their policies towards non-national workers.
A banding system exists (called ‘Nitaqat’) which labels employers according to the proportion of nationals they employ. An employer who does not meet its target could be banded in the red zone which would have severe consequences from a business operation perspective as no more non-national employees can be hired. There is anecdotal evidence that nationals were formally employed for Nitaqat purposes only but may not have actually been performing work.
However with effect from 2013, the KSA Ministry of Labour stipulated that a national will only be regarded as part of the headcount of an employer for Nitaqat quota purposes if he is earning not less than 3,000 Saudi Riyals ($800) per month. Furthermore an amendment to the Labour Law was ratified which stipulated that non-national employees may only work for one employer and may not work for themselves. The combined effect of the above two measures was to increase employer’s costs and also apply pressure on the non-national sector as many of those lower paid employees worked for themselves or another employer.
It has been reported that up to one million non-national employees, mainly from Africa and Asia, have since left KSA- either during the amnesty period before the implementation of the above measures or by way of deportation thereafter. There is anecdotal evidence that the cost of products/services in the sectors most affected by the above measures have increased due to the scarcity of employees.
Similarly the government of Kuwait announced a dramatic programme to increase the number of nationals in the private sector. Although there has been extensive media coverage on the proposed changes set out below there has been very little legislative change or implementation measures to date so the position remains fluid.
It has been announced that legislation is on its way to impose a requirement that nationals occupy at least 30% of a private sector employer’s workforce. The government has already in place a generous incentive system that provides nationals entering the private sector with substantial allowances.
In the public sector, the ‘Kuwaitisation’ programme includes a stated intention of significantly reducing non-nationals in government positions and this process has commenced already.
Earlier this year the government discussed measures to reduce the non-national workforce by 1m over 10 years. It has been reported that work permits for certain jobs were not being issued to non-nationals. The Kuwaiti initiative also focuses on the removal of those who are not lawfully working in the country. It has been reported that significant numbers of non-nationals are being deported for traffic violations and the media usually links this development with the general initiatives described above.
It is too early to ascertain the impact in Kuwait and legislation is awaited. The KSA measures appear to have created a labour scarcity in certain sectors of the economy with the resultant problems arising from that however it is still early days there too. In a similar vein Oman also announced that it would impose a cap on the number of non-national employees in the country.
What is clear is that the rest of the GCC are closely monitoring these developments to see if they are practical, replicable and sustainable. All eyes are focussed on whether these initiatives will be followed through to the fullest extent and the resulting economic consequences.