Downsides Of Imprudent Kuwaitization Policies

Most citizens would concur on the need for Kuwaitization of jobs in both the public and private sector as a means to achieve the necessary demographic balance in the country’s workforce and in the labor market. However, not everyone agrees that the government’s current policies on demographic balance, or the way Kuwaitization is being implemented, are in the best interests of the country or its citizens.

A recent analysis of the labor market imbalance in Kuwait has shown that imprudent decisions aimed at ameliorating the demographic imbalance, and many of the ill-conceived plans related to the Kuwaitization policy, were having a negative impact on the labor market.

The analysis by the Economic Intelligence Unit (EIU) — the research and analysis division of the UK-based media company the Economist Group — reveals that attempts by the authorities to revive the economy, following its slump during the height of the pandemic in 2020, were faltering due to the short-sighted plans and policies being implemented to achieve labor market equilibrium.

The analysis showed that government efforts to address the demographic imbalance accelerated in 2021 within the framework of the plan adopted by the government in 2018 to achieve targeted population balance by 2025 when the Kuwaiti population is expected to reach around 1.7 million — an increase of 300,000 nationals from the current 1.4 million Kuwaitis in the total population of 4.6 million people. The plan envisages halving the 3.2 million expatriates currently in the country to reach a 2025 target figure of 1.7 million Kuwaitis and 1.6 million expatriates.

The EIU expects the government to continue implementing the Kuwaitization policy, and this would also entail the non-oil economy losing skilled workers, as many expatriates occupy managerial positions in companies and banks and local financial institutions in the private sector.

The EIU 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 COVID-19 crisis and the government’s continued implementation of the Kuwaitization policy, despite the difficulty of absorbing new Kuwaiti employees in the public sector.

The displacement of expatriates has led to a shortage of labor, which threatens to impede growth in various economic sectors, especially in the private sector which depends largely on foreign labor. The analysis notes that the exodus of expatriates due to the pandemic and tightening or immigration regulations have already led to a severe economic recession in the country.
The EIU shows that most of the expatriates who left Kuwait cannot be replaced by Kuwaitis either due to lack of necessary skills and experience, or because the jobs vacated by foreigners are in sectors where nationals are unwilling to work. Moreover, the private sector is not keen to hire nationals and instead prefers employing the more skilled and less expensive foreign workers.

The EIU stated that the lack of flexibility in government policies towards expatriates impacts negatively on Kuwait’s efforts to attract foreign direct investments. Other countries in the Gulf Cooperation Council (GCC) states, including Saudi Arabia and the UAE, are engaged in fierce competition to attract foreign investments with alluring offers such as permanent residence and permitting foreign ownership. Meanwhile, in Kuwait strict immigration laws and the complex and bureaucratic obstacles continue to deter foreign investment.

On the issue of scarcity and consequent demand for domestic workers in the country, the EIU noted that domestic workers constitute about 23 percent of the workforce in the country. Around 41,000 of these domestic workers are reported to have left the country permanently in 2021, leading to a stifling crisis in this sector.

The EIU 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. Moreover, since Kuwaiti women in the public sector generally receive lower salaries than men, they may wish to work in private nurseries, as well as in the retail and healthcare sectors that are currently dominated by foreign workers.
However, this projected shift by Kuwaiti women to the private sector is conditional on a sufficient number of Kuwaiti women being available to replace foreign women in these specialized sectors, and the private sector willing to absorb the increase in labor costs; otherwise, the economy is likely to suffer even more than it does now.

In addition, the EIU 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 from having to employ nationals.

 

 

 

SOURCE  TIMESKUWAIT

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