Analysis By Economist Intelligence Shows ‘the Other Side Of Midnight’ Of Kuwait’s Labor Market

The analysis compiled by “Economist Intelligence” highlights the chronic demographic imbalance that Kuwait suffers from, and explains that about 3 million expatriates constitute 70 percent of the country’s population of 4.3 million.

The analysis showed that government efforts to address this imbalance accelerated in 2021 within the framework of the plan adopted by the government in 2018 to achieve something like a population balance by 2025, when the expected number of Kuwaitis will reach about 1.7 million, which means that the number of expatriates will have decreased by approximately 1.6 million, reports Al-Rai daily.

The Economist Intelligence (EI) unit expects the government to continue implementing the Kuwaitization policy, and this means that the number of expatriates in the country will remain a central issue in domestic politics over the next few years, explaining that the non-oil economy is also set to lose skilled workers, as many expatriates occupy managerial positions in companies and banks and local financial institutions.

The EI pointed out that in 2021 Kuwait deported more than 18,000 expatriates, while more than 257,000 left the country permanently, attributing this exodus to the consequences of the Corona pandemic and the government’s continued implementation of the Kuwaitization policy, despite the difficulty of absorbing new Kuwaiti employees in the public sector.

While the private sector depends on expatriates, their displacement has led to a shortage of labor, which threatens to impede growth in various economic sectors.

The Economist Intelligence confirmed that the exodus of the expatriates due to the pandemic has already led to a severe economic recession, in addition to the tightening of immigration regulations by the authorities.

The EI explained that what happened was that the government found itself unable to replace foreign workers with national labor, most notably that the labor market needs labor in areas that Kuwaitis are unwilling to work, which led to a severe shortage of manpower in a number of vital areas such as health and education.

The sources pointed out that government policies in this regard lack flexibility and do not take into account the fact that most Kuwaitis do not want to do many of the jobs that foreigners do, besides that the private sector prefers the least expensive foreign labor, indicating that these measures have led to an unfavorable decrease in employment. The unprecedented labor supply and salary inflation hurt thebcorporate margins.

The unit stated that the lack of flexibility in government policies reflects negatively on Kuwait’s efforts to attract foreign direct investments, while other countries in the Gulf Cooperation Council, such as Saudi Arabia and the UAE, are engaged in fierce competition to attract these investments with temptations such as permanent residence and permitting foreign ownership, noting that in return immigration laws and the complex and bureaucratic obstacles in Kuwait deter foreign investment and push it towards other countries in the region.

The Economist Intelligence touched on the future of domestic workers in Kuwait, which constitutes about 22.8 percent of the workforce in the country, noting that about 41,000 domestic workers will leave the country permanently in 2021, which constituted a stifling crisis in this sector.

The unit raises the idea of ​​the government encouraging the establishment of private nurseries for children as a means to mitigate the impact of this crisis on the one hand and to increase national employment, especially female employment in the private sector, pointing out in this regard that Kuwaiti women in the public sector generally receive lower salaries than men, and therefore they may wish to work in private nurseries.

The Economist Intelligence believes that this applies to work in the retail and healthcare sectors, which are dominated by foreign workers.

If this is achieved, it will lead to a reduction in remittances of foreigners, which will benefit the national economy.

But all this is conditional, of course, that a sufficient number of Kuwaiti women replace foreign women in these special sectors, otherwise the economy will suffer more.

The Economist Intelligence reported that foreign workers dominate the private sector in Kuwait, which includes about 1.6 million expatriates and about 73,000 citizens.

The analysis indicated that in 2021, about 205 thousand expatriates working in the private sector immigrated, which affected companies, especially in the hospitality and retail sectors, suggesting that the rise in labor costs would delay the economic recovery from the Covid-19 pandemic throughout 2022.

In addition, it indicated that the economic diversification program will witness turmoil, as labor-intensive industries such as construction and manufacturing are disrupted by increasingly high wage expenditures.

 

SOURCE  :   TIMES KUWAIT

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