The Gulf's employment crisis (5)

This is the fifth in a series of blog posts exploring employment problems in the Arab Gulf states.

Part one: How it began

Part two: The iniquities of kafala

Part three: Female domestic workers

Part four: Working outside the rules

Part five: Jobs for citizens?

Part six: Jobs, politics and ethnocracy



THE ARAB Gulf states have long been dependent on foreign workers – so much so that non-citizens now make up more than half their population. In the beginning this was seen as a quick-fix aid to development, given the lack of numbers and skills among the local workforce. The foreign workers were viewed as temporary and dispensable, and no attempts were made to integrate them.

By the mid-1980s, however, their presence was looking far from temporary. Starting with Kuwait and Oman, the Gulf states began trying to reduce the numbers and thus create more jobs for their own citizens. This has proved extremely difficult.

A table compiled by Martin Baldwin-Edwards lists the various measures adopted by the GCC states (page 47). They include policies aimed at reducing both the supply of foreign labour and the demand for it, policies to adjust supply and demand among the local workforce, and others to reduce wage disparities between foreigners and citizens.

These efforts to nationalise the workforce – known locally as "Saudisation", "Omanisation", etc – have largely failed. Baldwin-Edwards concludes: "Overall, the evidence suggests that only Saudi Arabia [among the six GCC states] has had any significant success in its nationalisation policy." Over an 18-year period (1990-2008), the kingdom managed to reduce the proportion of foreigners in its workforce from 60% to 51%. 

Even this modest Saudi achievement (which, as we shall see, is partly due to fraud and false accounting) is far less than was promised. Andrzej Kapiszewski notes that in 2003 Prince Naif, the interior minister, boldly predicted that Saudi Arabia would reduce the number of foreigners to 20% of less of the indigenous population within 10 years. It hasn't happened.

Uprisings in other Arab countries have given new impetus to nationalisation of the workforce. The Gulf states have grown more concerned about unemployment among their citizens, fearing it could become a source of unrest. Oman and Saudi Arabia also have a "youth bulge" problem with a rising generation for whom it will be difficult to provide jobs.

In the past they have dealt with this by providing government jobs but the state sector is already bloated and, wealthy as the Gulf countries may be, they cannot continue expanding the state sector indefinitely. The key question, therefore, is how to get more of their citizens working in the private sector.

The first problem is that from an employee's point of view the state sector is a lot more attractive: higher wages, shorter hours, less demanding work, more job security and generous retirement benefits. Governments have also tended to view the provision of state jobs as a way of buying allegiance and political acquiescence.

Old habits die hard, however. In 2011, apparently in response to the uprisings elsewhere, Kuwait created 17,000 new jobs in the public sector in 2011 – double the figure for 2010 and more than at any time in the previous 10 years.

Fraud and fakery

Coupled with Gulf citizens' reluctance to work in the private sector, there is also reluctance by employers to hire them. To address that, governments have resorted to quota systems – forcing businesses to employ a minimum proportion of local citizens.

"In the private sector," Baldwin-Edwards says, "the quota policies were initially accepted, treating them as a kind of tax; however, as the quota levels were increasingly raised, companies resisted them." He adds: "Circumvention of quota obligations is now seen as a normal part of doing business in the GCC."

There are two basic ways of circumventing the quota system. One is to meet government targets by employing "ghost" workers who collect a salary but do no work. The Saudi Gazette reported one such case last week where a young Saudi applying for job with a private company had been asked whether he wanted a "real" job paying 3,000 riyals ($800) a month or a "Saudisation" job where he could stay at home and collect 1,500 riyals a month.

Thirty private schools in Saudi Arabia were also recently found to be employing "ghost" teachers. The schools appear to have made a profit out of this, since the government subsidies they received as a reward for hiring Saudis exceeded what they were paying in stay-at-home salaries.

The other common way of circumventing quotas is by registering "ghost" companies which obtain visas allowing them to bring in foreign workers. The visas are then sold (illegally) to foreign migrants who use them to work (also illegally) for other companies.

Visa trading, as it is known, is a very lucrative business and appears to happen on a huge scale. One such racket in Kuwait, which is currently being investigated, allegedly involves several members of the ruling family.

There are various reasons why private sector firms object to quotas, apart from the fact that employing non-citizens often costs less. Quotas force them to hire at least some of their workforce on the basis of race rather than ability and their most frequent complaints are that citizen employees lack relevant skills and commitment – often failing to turn up for work or leaving after only a short time in the job.

Because of their privileged position, citizens have developed a sense of entitlement. Some jobs – usually of the arduous, dirty or menial kind – have been done by foreigners for so long that they have come to be regarded as suitable only for foreigners. Citizens who engage in such work lose face and social status.

In Saudi Arabia, local media have recently been trying to encourage a stronger work ethic by highlighting tales of Saudis brave enough to take up jobs that might be considered beneath them. One story featured young men who were "proud" to work in a fish market while reportedly ignoring "the derogatory comments they receive from others who spend their time wandering in the streets and sitting on pavements".

In a doctoral thesis, "Saudisation as a Solution for Unemployment: The Case of Jeddah Western Region", Manal Soliman Fakeeh identifies three key problem with the government's policy:

"First, Saudisation as a policy is targeting the symptom (unemployment) instead of focusing on the problem: employability. In many respects, the education system and labour market situations are poorly aligned; strict religious controls over the content of the curriculum and a lack of forward planning means that young Saudis are not being equipped with the hard or soft skills necessary to meet economic demands. 

"Second, the policy is not tuned into the needs of the private sector and has failed to meet the concerns of employers or employees. 

"Third, the policy has failed to respect the varying situations of employers in different sectors of the labour market ..."

Jobs for women

Under the general heading of Saudisation there’s also a more specific programme known as “feminisation” – aimed at providing more jobs for Saudi women.

The authorities have approached this by declaring certain types of work to be out of bounds for men. For several years now, shops selling women’s underwear and accessories have been compelled to employ only female staff, and men are not allowed to enter the shops unless in a family group. This has proved difficult to implement and during the last year the Labour Ministry has forcibly closed more than 500 shops that were found to be “violating” the regulations.

Nevertheless, the ministry says more than 7,000 lingerie shops have now been “completely feminised” and it plans to “feminise all jobs suitable for women in the coming three years”.

As with male employment in Saudi Arabia, there is a mis-match between available jobs and available women. Large numbers of women aspire to be teachers, partly because teaching is one of the few socially-acceptable professions for women in the kingdom and – unlike many other jobs – the working hours suit mothers with families.

But demand for teaching jobs far outstrips supply. The director of the Saudi Arabia’s Human Resources Development Fund recently warned that private and government-run schools are “not in a position to absorb” female teachers in the numbers that would be required.

Where employment of Saudi women is concerned, the difficulties are compounded by insistence on gender segregation. Efforts to “feminise” the jewellery trade, for example, have run into problems because most jewellers’ shops are small – less than 40 square metres – which means it is almost impossible to divide them to provide separate facilities for women.

Another aspect of the kingdom's gender policies which creates a strong disincentive to women's working is the ban on female drivers. A survey in 2010 found that in the absence of an adequate public transport system women who work end up spending about 35% of their income on drivers and taxis.

Further reading:

Posted by Brian Whitaker
Sunday, 23 February 2014