Last week, the state-run Kuwait News Agency reported that Prime Minister Sheikh Sabah Al Khaled Al Hamad Al Sabah intends to “resolve the demographic imbalance” in Kuwait by bringing down immigrant populations. He said that immigrants currently comprise 70% of Kuwait’s total population, and that he intends to bring this number down to 30%. Currently, merely 19% of the employees in the country’s private sector are Kuwaiti citizens. The PM’s policy aims to remedy this imbalance by increasing citizen participation in the country’s workforce and reducing the local labour market’s dependence on immigrant employees. With elections scheduled to occur this year amidst rising anti-immigrant sentiment, this could be a crucial strategy for the current cabinet’s political ambitions.
Over the past ten years, Kuwait has attempted to decrease its local unemployment rates by replacing foreign workers with Kuwaiti citizens in the public sector. The authorities have also cracked down on undocumented immigrants or immigrants residing in Kuwait without work permits. However, Kuwait’s desire to “nationalise” its workforce is not unique. The Prime Minister’s announcement draws parallels with the Nitaqat scheme in Saudi Arabia, also known as the Saudi nationalization scheme. The successes and failures of Saudi Arabia’s policy can be used as a tool to predict the impact of a similar strategy in Kuwait as the two countries have identical labour markets that are highly dependent on their expat population. Saudi Arabia’s policy was well funded, efficiently implemented, and strictly enforced, making it a suitable model for testing the sustainability of a similar approach in Kuwait.
The Nitaqat policy was brought into force in 2011. The intention behind the scheme was similar to that of the Kuwaiti Prime Minister–to increase the local population’s participation in the country’s workforce. The policy mandated that companies employ 5-30% Saudis in the workforce, depending on the total number of employees in the company. Further, firms that had less than the requisite proportion of Saudi employees were disallowed from renewing the visas of their foreign workers.
Like Saudi Arabia, Kuwait will struggle to substitute its expat employees with local employees. In fact, at the time of implementation of the Nitaqat policy, expats constituted 20% of Saudi Arabia’s population of seven million. The situation is even more imbalanced in Kuwait, where expats account for about 3.4 million, or about 70%, of its 4.8 million population.
A major obstacle faced by Saudi Arabia was the lack of skill and willingness amongst the local population, which made them unsuitable substitutes for their expat counterparts. Analysing the feasibility of the Nitaqat policy, Irudaya Rajan, an expert on migration studies at the Centre for Development Studies, said that the system is unsustainable as Saudis will now have to replace two groups of workers. The first group comprises of highly skilled workers, such as the doctors, nurses, engineers, and IT experts, who local populations will be unable to substitute due to a relative lack of expertise and education in this domain. Hence, this group of expat workers is effectively irreplaceable until the required training is provided to a sufficient number of citizens. The second group is made up of unskilled workers, including domestic help, drivers, gardeners, and other direct service providers, whose labour Saudis are largely unwilling to do. As witnessed in Saudi Arabia, due to the societies’ over-dependence on unskilled expat labour, particularly for the second group, this is likely to cause a surge in illegal employment.
By implementing a workforce nationalisation policy, Kuwait can expect positive short-term results, particularly with regards to the unemployment rate among Kuwaiti nationals. For instance, when the Nitaqat system was implemented, Saudi Arabia’s private sector employed 6.5 million foreign employees, and merely 700,000 Saudi nationals. After merely sixteen months of implementation, the employment rate of Saudi nationals increased by 13%. The surge in demand for Saudi employees also led to an unexpected increase in the employment rates of women. In fact, even years after the implementation of the policy, the number of women in Saudi Arabia’s workforce continues to steadily grow.
Therefore, it can be argued that the proposed policy in Kuwait will also yield similar long-term benefits by making its labour market self-sufficient. However, there will be several hurdles that Kuwait will have to overcome to reach such a position. To begin with, Kuwait’s economy is already vulnerable due to the COVID-19 crisis. Any such drastic changes in the workforce require “high upfront costs”. To sustain the model in the long-run, Kuwait’s government must invest in education and training of local populations.
Moreover, employers will also have to reorient their labour policies, which are currently designed to accommodate expat populations, to make them compatible with Kuwaiti employees. Currently, due to the Kafala system, Kuwaiti employers have grown accustomed to cheap and easily disciplined immigrant labour. This system delineates the relationship between employers and migrant workers, and holds the workers’ “immigration status is legally bound to an individual employer or sponsor for their contract period”. Hence, without the written permission of their employer, they cannot switch jobs or even enter or exit the country. This creates a skewed power dynamic between the immigrant workers and the local employers, which has led to severe exploitation of employees in the Middle East. However, if the expat workforce is substituted with Kuwaiti citizens, employers will no longer enjoy this privilege. This was a big struggle for Saudi employers after ‘Saudization’ of its labour market, wherein they had to pay Saudi labourers three times what they paid expatriates. Further, employers also struggled with other issues such as the inflexibility of Saudi workers and their unwillingness to work in “multi-cultural environments”.
While the positive impact of the Nitaqat policy can be advocated for, Kuwait’s position is not the same as that of Saudi Arabia’s in 2011. With 90% of the country’s earnings dependent on the oil industry, its economy has been heavily impacted by the COVID-19 outbreak and decreasing oil prices. Therefore, bringing drastic changes to the labour dynamics can have irreversible repercussions to Kuwait’s already vulnerable economy. Further, the repercussions of the policy would not be limited to Kuwait alone. South Asian countries, where a number of the expats originate from, will have to prepare for a massive “reverse exodus” in an already strained job market. These returnees will be in addition to the repatriations of workers from across the world due to the COVID-19 crisis, potentially causing a cascading global labour crisis.
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Image Source: New Indian Express