Unemployment in the Gulf States

Cite this

Introduction

The unemployment rate could be defined as the ratio between the numbers of unemployed to the number present within the labor force. The government statistics in the GCC defines unemployment as the overall representation of those without a job previously employed but are currently laid-off as well as those fresh in the labor markets but do not have jobs despite an active search. The average unemployment rate has been on the increase in the countries of the GCC and MENA comprising of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia as well as the United Arab Emirates.

Cut 15% OFF your first order
We’ll deliver a custom Sociology paper tailored to your requirements with a good discount
Use discount
322 specialists online

Member countries of the GCC are known to possess around forty-five percent of the world’s proven oil reserves (IMF, 2001). It has been noted with concern that the economic growth within the GCC countries has been decelerating leading to high strains within the labor markets. The issue of long-term unemployment has hit record levels in Arab countries due to slow economic growth and occurrences of regional conflicts within the GCC economies (Fasano and Goyal, 2004).

The foreign workforce and division of employment opportunities stand out as a unique feature of the GCC nations. Professional citizens prefer Jobs in the public sector owing to the attractive remuneration packages, a guarantee of tenure and esteem that comes with such positions. Foreigners contribute largely to the workforce in the nongovernmental sector which is financed by the citizens. These opportunities are easy to come by and are either by contracts or on specified terms. Though workers could possess the same skills, citizens are highly regarded and as such stand to be paid more than their foreign counterparts. The ratio of foreign nationals working in the informal sector to that of the professional citizens in the public sector stands at par, recording a high number of workers at both ends (Sassanpour et al, 2010, p3)

There is expected to be a shift in the employment scenario in the GCC nations owing to the entry into the market of a youthful workforce that can no longer be absorbed in the public sector. Some countries are deliberating allocation of resources whereas all emphasize the importance of developing the informal sector. The unfolding scenario presents a huge task to all those involved in shaping up the workforce market. Steps have been made towards opening up the job market to the citizens to develop a wider revenue generation and economic revamp ion (Sassanpour et al, 2010, p3). There exists a range of solutions that can be employed but the biggest test is to come up with a plan that would be effective.

The fact that GCC countries have tremendous oil wealth has made the countries pass through some crucial economic as well as social changes. These could be realized during the economic boom between the 1970s and early 1980s. And at the same time economic recession in the late 1980s and 1990s. The sharp increase in the global oil prices in the early 1980s made these countries recycle windfall oil gains through the lenient welfare system characterized by generosity, and tremendous public investment which focused on infrastructure, utilities as well as basic industries. To cope with these policies, the GCC governments performed the role of first employment resort which consequently led to overcrowding within the public sector as well as increased government expenditures on salary issues (Gray and Blejer, 2007).

The move made the GCC governments encourage citizens to join the public service sectors of government by giving them attractive pensions as well as social allowances for their respective families. The social contract structures led to the convergence of more than 85% of the native workers within the public employment hence resulting in underemployment. The issue of the social contract and its benefits created a society largely influenced by leisure patterns hence an increase in the returns towards leisure since people worked fewer hours but spent much time on vacations. This made the GCC countries pursue open border policies which welcomed foreign workers; this ensured a sufficient supply of labor at competitive wages at all skill levels. However, wages earned by the natives were higher than those of foreign workers at comparable skills (Al-Qudsi, 2005, pp 5-48).

The countries of the GCC faced unique challenges originating from the fact that the oil resource that they largely depended upon was exhaustible, volatile, and at the same time uncertain. The negative effects on the oil market and the economic catastrophe of the 1990s, as well as regional conflicts, reduced the rate of growth to a large extent within the GCC countries creating strain within the labor markets. These effects led to budget deficits within the GCC countries leading to retrench of several social programs which ultimately created large loopholes within the employment sector since the governments were later unable to provide sufficient employment opportunities to the public. Concurrently the private sector generated low-skill, low wages jobs which only attracted and benefited foreign workers (IMF, 2001).

On-Time Delivery!
Get your customized and 100% plagiarism-free paper done in as little as 3 hours
Let’s start
322 specialists online

Table1: showing Annual growth of unemployment rates in the GCC countries 1974-2002 (Data are based on official country estimates and IMF country reports. Bahrain’s unemployment ending value is from the Economic Development Board (2004).)

Period Country Unemployment Growth rate (% per year) Initial value Ending Value
1975-2001 Bahrain 5 3.9 14
1975-2004 Kuwait 6.9 1 5
1993-2002 Oman 3 13 17
1974-2002 Saudi Arabia 2.1 5.4 9.67
1975-2004 UAE 7.5 1.9 11.4

Determinants of the Unemployed

The GCC unemployment is majorly characterized by specific key dimensions which differ depending on the region described, these include; age differential, education differential as well as spatial differential. Concerning age and unemployment, there is a notably impressive age differential revealed by the GCC statistics. The statistics reveal that more than 70% of the total unemployed population comprises young workers especially those below thirty years of age. Bahrain population data reveals that 76% of the unemployed represents those 29 years and below, in Kuwait, the group represents 86% of the total unemployed population, Oman and Saudi Arabia represents 75% and 90% respectively (GCC, 2008b).

Concerning education differential, the increase in the number of educated workers within the GCC has led to market developments within the GCC countries (Al-Qudsi, 1989). For instance, the statistics show that the proportion of university-educated Kuwait national workers was approximately 24% in the year 2000. In Saudi Arabia, the number rose to 21% by the year 2002. Those with secondary education also rose in Kuwait by the year 2000.

The same rise was experienced in Bahrain amongst secondary-educated workers. However, despite the importance of education in economic growth, many educated individuals in the GCC remain unemployed for a fairly long time. There is a revelation that the contribution of education towards unemployment has been insignificant because the education system within GCC has been inadequate in preparing a productive workforce, hence high levels of youth unemployment (ESCWA, 1986).

Concerning gender, the unemployment rate seems higher amongst men compared to women nationals. The same is contrary amongst the university-educated where the level of unemployment amongst women is lower compared to men. Between the years 1999 and 2000, the unemployment rate amongst the university-educated women in Kuwait was approximately 7% with that of men standing at 5%. The case in Oman was found to be different where only a small proportion of females were found to be employed making the number of unemployed to be higher for males in all sectors. The case in Saudi Arabia showed that the unemployment rate amongst the secondary-educated stood at 23% for women and 10% for males (Al-Qudsi, 1985; GCC, 1981).

Get a custom-written paper
For only $13.00 $11/page you can get a custom-written academic paper according to your instructions
Let us help you
322 specialists online

Statistics reveal that most of the unemployment cases within the GCC countries could be traced to disability. There is a good percentage of the population suffering from disabilities due to several factors such as high traffic accidents. A field survey conducted by private firms revealed that those with disabilities encounter many difficulties in the process of looking for jobs since the possibility of being rejected remains high. Early 1990 research on the disabled population in Oman indicates that the level of unemployment fell disproportionately on the disabled population across all age groups (GCC, 2008a).

Macroeconomic Determinants of Unemployment

Research done on the issues of unemployment over the past decades reveals several plausible determinants of long-term unemployment. These factors comprise economic growth, inflation rates, unemployment insurance, active labor market policies, taxes, and wage-setting methods. Oil prices are one of the possible factors in the case of GCC countries; this is because the GCC countries are heavily dependent on oil as a source of income and revenue for the governments. Statistics collected in the year 2004 indicated that in Kuwait 42% of total GDP represented oil GDP, Qatar represented 57%, Saudi Arabia 30%, UAE 29% as well as Oman. Bahrain recorded the lowest standing at 13% (GCC, 2007).

Key indicators of population and unemployment

Countries within the GCC are all found within the Arab Region and are normally identified by enormous demographic, geographic, political as well as socio-economic diversity. Countries within the region such as Egypt have a population of over 80 million with the smallest countries such as Qatar having around 100,000 people. These countries within the region differ in terms of the level of fertility, since some countries around Palestine, Sudan, Somalia, and Yemen exhibit high fertility rates. This brings about sharp differences in population density with Bahrain being the most densely populated with approximately 1,400 inhabitants per square kilometer. This is contrary to some countries such as Libya and Mauritania (Al-Qudsi, 2005, p 7).

The issue of demographic trends within the GCC countries presents many challenges as well as opportunities to the various governments. These challenges range from unemployment, job creation, poverty alleviation, climatic changes, food and water inadequacies, scarcity of inhabitable land, rapid urbanization, and issues on housing and social needs. Statistics reveal that the population within the GCC countries tripled between 1970 and 2010. The level of the population within four of the countries including the Iraq region, Palestinian region, Somalia, and Yemen is expected to increase tremendously by the year 2050.

Statistics reveal that the average annual rate of the population dropped to 2.1% from 2.4% between the years 2005- 2010. Due to the high fertility rate experienced in some of the Arab countries, the level of population density is expected to rise exponentially by the year 2050. The population is characterized by a high number of children and youths which might pose big challenges to the governments making it strenuous in the provision of education and employment (Al-Qudsi, 2005).

The population representing the main working ages of between 25 to 59 years has been realized to be an all-time high within the GCC countries. The working-age population is expected to go higher within the next twenty years from the current 145 million to 278 million. World Bank report of the year 2004 indicated that there was high population growth within the GCC and MENA countries which ultimately produced a rapidly growing labor force making the countries unable to generate sufficient jobs for the new population within the labor market. The statistics revealed that within the seventeen countries an average of one in five young adults is jobless. The situation has encouraged the majority of the Arab youth to migrate resulting in an increasing loss of human capital within GCC countries (Al-Qudsi, 2005)

The higher fertility rate experienced within the GCC countries has made the countries experience a slower pace of population aging as compared to that in developing countries. Various countries such as Tunisia and Lebanon have been identified to have the oldest populations with the older persons accounting for 10% of the total population. The high fertility has led to the emergence of youth bulge resulting in a huge demographic transition over the past decades.

Projection concerning the same discovers that in the coming years there is a higher expectation of more rapid population aging among Arab countries. The number of older persons is expected to increase to a higher percentage exceeding the number of children. The nature of the aging population increases pressure on the government’s ability to offer adequate support to the older members of society. Statistics show that the dependency ratio will almost triple by the year 2050 with fewer working-age granting necessary support to one older person contrary to the current situation where more working-age persons support one older person (Al-Qudsi, 2005).

The level of Fertility

The Arab region has experienced a decline in the fertility rate with the total fertility declining averagely from previous 6.8 children per woman to 3.6 children per woman between the years 2005-2010. This reveals that the region is undergoing some level of heterogeneity infertility across the region. Algeria as one of the countries within the GCC region has experienced an increased level of infertility the same was experienced in neighboring Libya where the infertility was recorded to have dropped from 7.6 children in the previous decades to 2.7 children per woman between the years 2005 to 2010 (13). The decline in fertility rate was also realized in countries such as Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Morocco, Qatar, Saudi Arabia, Syria, Tunisia, and the United Arab Emirates between the years 2005 to 2010 (Al-Qudsi, 2005).

However, some countries within the GCC have experienced a constant increase in fertility rates. Eight of these countries currently experience high fertility rates with an averagely of four children per woman. In countries such as Occupied Palestinian Territory, Oman, and Yemen the rate is approximated to be more than five children per woman. United Nations report on population, projects the level of fertility rate within Arab countries to fall below 2.2 children per woman within the next thirty years. The anticipated level will vary depending on the structures put in place by various countries. United Nations report reveals that some of the countries such as Tunisia, Lebanon, and the United Arab Emirates have already experienced replacement fertility while the rest will attain replacement fertility after 2050 due to the slow pace of infertility.

The nature of the fertility decline within the Arab Region could be attributed to several factors some of which include; rising age at marriage, promotion on the use of contraceptives, female literacy, increased number of females within the labor force, delayed childbearing as well as an increased rate of urbanization (Al-Qudsi, 2005).

Health matters and mortality

The level of economic achievement a country can attain largely depends on the nature of its social and economic prowess. Improvement within the health sector contributed to the reduction in the level of a mortality rate within the 20th Century. The Arab region has experienced a decline in mortality rate since the early 1970s. Life expectancy within some of the GCC and MENA countries fell below the expected age of 70 years. This was attributed to several factors such as political conflicts leading to military actions, economic crises, and the emergence of infectious diseases. Much attention has been directed towards the infant mortality rate which is normally used as a clear indicator of the health status of the population. A low level of infant mortality largely contributes to the rise in the level of life expectancy.

Table 2: Estimation of the infant mortality rate 1970-2050.

Country Infant mortality rate (Infant deaths per 1,000 live births)
1970-1975 2005-2010 2045-2050
UAE 57 10 6
Bahrain 50 10 6
Saudi Arabia 105 19 8
Kuwait 41 9 6
Morocco 123 31 10
Qatar 57 8 5

Improvements made to curb the infant mortality rate have greatly improved in the GCC and MENA countries compared to other developing countries of the world. In the early 1970s, the level of infant mortality within the GCC countries was over 130 infant deaths per every one thousand live births. In recent times the number has reduced with statistics showing approximately 100 infant deaths per one thousand live births within developing countries.

However, the number has tremendously drooped in GCC and MENA countries with the record showing around forty-four deaths per one thousand live births compared to that in developing countries which recorded approximately over 50 deaths per one thousand live births.

The level of infant mortality in some of the Arab countries is still high drawing lots of concern towards these countries. Somalia records higher levels of infant mortality as well as countries such as Sudan, Yemen, and Djibouti. Low rates are recorded in countries such as Qatar, Kuwait, and Bahrain. Statistics drawn from various researches anticipate that the average infant mortality rate would decline to an average of seventeen deaths per one thousand live births by the year 2050. Despite the efforts made by most of the countries all over the world in reducing mortality rates, some GCC and MENA countries are not on track of meeting the stated Millennial Development Goal of decreasing the under-five mortality rate by the year 2015.

There are wide differentials recorded within the GCC and MENA countries concerning infant mortality rates. The least developed countries within the region record five times infant deaths compared to developed GCC member states. However, life expectancy at birth has shown positive results for both males and females within the GCC countries for the past two decades (ESCWA, 2008). There is also a considerable decrease in the level of maternal mortality which is largely attributed to increasing in the number of skilled health personnel. The condition is further boosted by the decrease in adolescent pregnancy since those below 19 years and below are five times as likely to pass on during childbirth contrary to those over twenty years of age.

Urbanization

The Arab region has experienced rapid urbanization for the past three decades. Almost half of the Arab population falls within urban centers, the countries within the region have attained significant diversity in the levels of urbanization. Some of the countries such as Qatar, Bahrain, Kuwait, and Lebanon have attained over 80% urbanization levels. The urban population has been identified to be highly concentrated within a few countries. The urban population has greatly increased within the GCC countries over the last decade with records showing an increase of approximately 250 million by 2050.

There is evidence of increased rural to urban migration across the Arab Region particularly working age (Al-Qudsi, 2005, p 10-40). A good number of people are frequently displaced due to conflicts and other politically-related wars, the Arab Region has experienced an increased level of population displacement with records indicating the region to have over ten million IDPs by the year 2010 (Al-Qudsi, 2005, p 5-45). Most of these displacements took place during the 2008 conflict in Iraq and Yemen.

International Migration

The GCC and MENA member countries comprise countries of immigration, emigration as well as channels of transit to many people all over the world. The total number of international migrants is expected to rise to 3% of the total world population. The GCC member countries are expected to accommodate nearly 12% of the total world’s migrants. The total international migrants within Arab countries are approximated to stand at 7% of the total world population has been increased levels of labor migration within GCC member states, countries which recorded the highest percentage of international migrants include; Qatar, UAE, Kuwait, Jordan, the Occupied Palestinian Territory, Bahrain, Oman, Saudi Arabia as well as Lebanon. One fascinating fact is the issue of decreasing number of migrants from the GCC and MENA member countries despite the increased flow of workers from Asia.

Almost half of the total migrants from all over the world were females; however, those that migrated to GCC member countries were estimated to be less than one-third of the total migrants. The number of international migrants to the Arab region increased over the last two decades. The increase was experienced in countries such as Saudi Arabia with an increase of over 2.2 million, UAE close to 2 million, Jordan recording approximately 1.8 million, and lastly, Syria recording around 1.5 million. Other countries within the region such as Iraq, Djibouti, and Morocco recorded a low number of migrants.

The effect of migration could be realized on the increased growth in population in the GCC countries. In some of the countries such as Qatar, the population growth was recorded to be higher from the net migration as compared to natural increase. The unique position of the Arab region makes the country a unique transit region being centrally located to all other continents of the world. The major transit countries include; Algeria, Morocco, Libya, Yemen as well as Mauritania (Al-Qudsi, 2005).

Recent Government Interventions

GCC member states have recently adopted administrative measures aimed at improving the general skills of their respective national workers. The countries have incorporated market-based strategies where training and education are organized to match the private sector requirements. The governments have recently intensified efforts aimed at eliminating the existing vacuum between the educational system and the labor market requirements. They have as well re-structured the labor policies with the focus of equalizing the nature of benefits from both public and private sectors (Ministry of Planning State of Kuwait, 2001).

GCC member states have embarked on a program that has seen an extension of retirement benefits as well as social allowances to citizens of their respective countries irrespective of the sector they are employed in. The United Arab Emirates and Oman are building strategies that will enable them to encourage nationals to join the self-employment labor force. This has been enabled through the provision of soft loans to the youths capable of running small businesses and at the same time equipping them through training in partnership with private sector companies (Oxford Analytica, 2008).

Implementation of appropriate policies has varied from different GCC countries. Qatar is considered to be more considerate when it comes to the implementation of nationalization policies. The country is recently relying heavily on upgraded training focused on strengthening their education system which ultimately enables their nationals to be absorbed by the private sector. In the UAE, the quota system has not been implemented and has been utilized only in the banking sector which is characterized by high wages within the private sector. In Kuwait, the government has decided to reinforce the rules encouraging quota system to incorporate the expatriates within the private sector (Fasano and Goyal, 2010)

GCC member states such as Bahrain, Oman, and Saudi Arabia have on the contrary forcefully incorporated quota systems for promoting nationalization within the labor market (Ministry of Labor and Social Affairs State of Bahrain, 1997). This has been applied considering the high unemployed population of their respective nationals. The hiring of the local population within the private sector has so much been hindered by fewer efforts made in upgrading the skills of the locals capable of meeting market requirements (Ministry of Planning Kingdom of Saudi Arabia, 2004).

Major Government Reforms in GCC member states

The GCC member states have signed several agreements aimed at opening up trade amongst the member countries. The agreements cater for lenient treatment of GCC firms as well as individuals which grants them the right to foreign establishments including freedom of movement and investment anywhere within GCC member states. The restrictive rules that once applied in the 1960s are no longer applicable; these included discriminatory taxes, restrictions on the use of local commercial inputs as well as licensing schemes.

For the last two decades, member states of GCC have strategized on improving the level of both technology and managerial skills to enhance the level of diversification within their expertise-deficient local economies despite their advanced capital status. To retain local capital and enhance the level of competition, the various governments have resorted to reforming their local investment plans (Dadush and Falcao, 2011, pp 4-13; Fasano and Iqbal, 2003).

The GCC member states have also committed themselves to provide multilateral service liberalization. The countries have enacted regulatory changes such as privatization much of which have been limited due to its characteristic concerns on rigid hiring and firing rules as well as the various possible government interventions in reducing subsidies (Bakheet, 1999). The governments plan to invest so much in the non-oil sector to create additional jobs. GCC member states plan to reduce high wages within the public sector since this helps in lowering the reservation wage and consequently encourages nationals to invest in skills capable of making them fit within the private sector (GCC, 2001).

In addition to this, the governments are making the necessary move of separating wages and social benefits within the public sector hence making all employees within both sectors beneficiaries of government benefits. The nationals are further made attractive to the private sector by the government move to grant time-specific subsidies to employers hence lowering employment costs. The other sensitive issue is the establishment of a clear set of rules dealing with the various dismissal appeals, fines, and penalties which may lower the overall costs of employing respective citizens (Oxford Analytica, 2008).

Economic Structures in GCC

Working opportunities are to a great extent determined by the rate of economic bustle, the depth of available workforce, and competence of production (Sassanpour et al, 2010, p3). The quality and cost of the workforce compared to certain factors such as capital, natural resources, and land decide the best possible relationship between the workforce and other inputs. Globally movable inputs include capital, natural resources, and workforce where land is an asset that can neither be sold nor bought. The GCC member countries have unique attributes some of which are discussed below.

They favor the free movement of goods, capital, and workforce within and without their borders. Despite their limited wealth, GCC largely exports natural resources and capital while also maintaining their profile as key importers of merchandise as well as workforce (Sassanpour et al, 2010, p4). GCC member states are predominantly, oil and gas driven economies: government expenditure (nonoil GDP) and oil GDP are all influenced by the production of oil. Both the expenditure and budget have been used to advance economic profitability (Sassanpour et al, 2010, p4).

Swift economic development in the GCC’s brought about a period of soaring oil prices in the 1970s and early 1980s this was coupled with big returns from government revenue and extra revenue generated from the external current account. This enabled them to develop their infrastructure and expand their production base. Liberalization of the economy brought about the growing financial services and economic activities that were not oil-related. The diminution of the oil prices from the mid-1980s significantly led to the deterioration of the economy creating financial imbalances, making the governments employ alternative plans that entailed expenditure cuts. The GCC’s accelerated their efforts to cut down revenue imbalances and advance informal sector growth and Job creation (Sassanpour et al, 2010, p4).

The economic development of the GCC nations depended largely on material and workforce import owing to their inadequate resources. The even balance between available resources and limitations offered minimal prospects of trade between these countries. However, their ties with countries from the MENA block achieved greater economic incorporation, especially through manpower linkages. The imported workforce brought about a transformation in the rate and organization of economic endeavors. The composition of the foreign workforce currently stands at about 55 percent in Bahrain, 65-70 percent in Oman and Saudi Arabia, and 85-90 percent in Kuwait, Qatar, and the United Arab Emirates (Sassanpour et al, 2010, p6)

All these features have added to the present scenario in the employment market and have set the scope of employment issues and plans for the future. The growth of the non-oil sector is largely attributed to the instability of the oil market. Financial planning and proficient deliberations have necessitated a review of administrative strategy together with those on remuneration and employment. The general growth of the economy and venture into other productions that favor services have been able to put in check the need for the workforce with disfavor on the highly skilled.

The relationship between economic development and job creation has declined over the years owing to effectiveness achieved, industrial growth advanced by technology, and change in reliance on a foreign workforce. The expatriate workforce has been least affected by changes in economic actions. Owing to the GCC’s liberal economies, costs of the expatriate workforce, capital, and natural resources are to a considerable extent influenced by the status of the global market, but the cost of internal workforce, is to a significant degree, planning adjustable and a societal option. The comparative contributive cost fusion produces a predisposition against the utilization of the domestic workforce in GCC countries (Sassanpour et al, 2010, p6).

Policies, Legislation, and incentives targeting employers

The issue of unemployment amongst the young generation needs consideration since it is considered a vital public issue affecting both social as well as economic sectors of government and individual lifestyles. Due to this fact, the GCC economies are committed to creating new industries such as manufacturing, aerospace, renewable energy, health, and tourism. The creation and maintenance of these industries require a highly skilled and stable labor force. The idea of involving a transient expatriate labor force can only give a short-term solution, hence calling for the GCC governments to focus on a skilled national workforce capable of maintaining sustainable knowledge economies (Bashir, 2010).

In the social sector, there has been a great influx of expatriates occupying most of the employment opportunities making the nationals remain in their jobless status for a long time. Such occurrences have greatly affected society’s social ties since the youths have been threatened with easy alienation. The situation of youth unemployment has been created by a mismatch between growing market needs and the required skills available from nationals. Cultural barriers have in some instances made the private sector unattractive to the nationals making the public sector a major employer within the GCC member states.

However, the number has been overwhelming to the public sector because more women are currently being employed and the majority of the GCC population are youths. The private sector within GCC has for a long time relied on the foreign workforce, to decrease heavy reliance on expatriates within the private sector, GCC has resorted to implementing policies touching on the nationalization of their citizens. These would ensure that the locals are granted enough opportunities of participating in the private sector. This is ensured through a quota system where employers are encouraged to hire more nationals within their various sectors (Bashir, 2010).

The structure of the educational system within the GCC countries has contributed a greater percentage of the unemployment problem. The system is not up-to-date concerning the needs of the GCC growing economies (World Bank, 2008). The region has adopted the use of nascent career guidance which helps in advising students on career choices as well as directing them towards the relevant fields of studies competitive within the labor market. Policies and employment programs addressing the gaps within the education system should be developed. This would ensure a reduction in the gap between market demands and skill supply (Bashir, 2010).

Activation of the labor market depends on the kind of policies dominating the market economy. Restrictive policies should be replaced with achievable programs promoting the creation of positive incentives. The programs should enable the creation of job opportunities as well as improving training programs enabling adequate employment services. GCC member states focus on improving education reform through the provision of vocational education and at the same time offer on-the-job training services aimed at sharpening required skills (Bashir, 2010). The nationalization movement could be reinforced through the adoption of the policy focusing on engaging private sector employers.

The employers will be involved in the process of guiding the required skills required in developing training within the education sector. The employment engagement policy will ensure non-compromising methods required for excellent productivity levels.

The GCC governments have also adopted the issue of nationalizing incentives by leveraging public sector procurement processes and including the same within the private sector. This enables the creation of a culture of corporate social responsibility. Through nationalization, the public and private sectors are required to set clear objectives concerning the nature and number of vacancies available and make them available to citizens. The policy encourages employers’ commitment towards benefiting the nationals as well as building a formidable workforce.

The policy on training support aims at sharpening the skills of the nationals hence making it possible for economic sustenance in the long run. The policy includes programs that focus on job seekers such as mentoring, demand-led training, entrepreneurship training, job rotations, giving advice to job seekers as well as connecting them to the right jobs linked to their areas of training. The policy aims at equipping nationals with advanced skills which would enable them to compete nationally as well as globally. The program would ensure that the issues concerning mismatch skills within the labor market are dealt with. Apprentice programs would target linking the educational system to the job market through giving people appropriate training on the recommended jobs (Bashir, 2010).

There is also the policy directed towards giving dedicated employment services, such as the Abu Dhabi Taw teen Council used in providing dedicated support to the unemployed by providing the necessary career guidance. The services offered by such programs are varied since they focus on assisting individuals to assess their areas of interest to meet professional goals. The program also assists job seekers on issues concerning resume writing, interview preparation, and how to go about finding available job vacancies. This would be reinforced by a mixture of training on-job and off-job similar to the system used within the banking sector.

There exist similar characteristics among GCC nations about the lawful structure and organizational rules that run the employment market. Both government and informal sectors have no legal framework for minimum wage and no practice of communal arrangements. Other GCC countries lack legal structures that would permit the setting up of social security or pension schemes in nongovernmental establishments. The only laws that exist seek to address the worker’s plight, curb child labor and hinder favoritism on grounds of race, religion, or gender (Sassanpour et al, 2010, p9). There exist as part of the legislation, a citizen’s entitlement to employment in most of the GCC nations.

Employers rarely exercise rules and stipulations surrounding the cutback of staff. In the public sector, employees are assured of their positions, which is a key characteristic of government employment. For an employer in the informal sector, there is the risk of having to employ a foreigner at a set contract in case a native has been relieved of their duties (Sassanpour et al, 2010). Foreign workers have to get a renewable sponsorship visa and work permits to enable them to get employment. A sponsor has to show necessity, assure employment and ascertain that they are capable of fulfilling the contract for the period indicated. This is a precondition for issuing Visas and work permits to foreigners.

Provisions and requirements governing the change of sponsors are under strict regulation and may not be affected. The foreigners may have to leave the country for some time to be regarded for a new position. The number of foreign workers to be employed has not been restricted; however, there are GCC countries that have assigned the issuing of visas to certain sectors or a maximum number of workers a sponsor is allowed to have.

The two parties involved agree on the terms and conditions of employment which are stipulated in a compelling contract. There are GCC countries that have stipulated sector-specific compensation procedures for employing foreigners. Though realistic remuneration is determined by circumstances prevailing within the market, foreign workers can seek redress from the legal system just as their native counterparts (Sassanpour et al, 2010, p10)

Population Structure and Labor Force

The GCC nations have registered a record population increase in the last thirty years. This is an indication of the soaring pace at which the native populace is growing as well as the entry of foreign laborers. The swift increase of the native populace is credited to the extraordinary fertility rates, valued at double the world average, and considerable improvements in the health and education sectors. The situation has brought a drastic decline in child deaths and an increased life expectancy of over 25 years since 1970 (World Bank, 2007). The youthful profile (40 percent below the age of 15) has stimulated the increase of the local workforce; declined involvement of the natives in the marketplace also affects the growth of the national workforce (Sassanpour et al, 2010, p7).

The extent of work market engagement in GCC member states is inferior to that of other nations that are relatively at par concerning economic progress. This can be attributed to several aspects, a significant number of the population is under age, and people are encouraged and motivated to pursue higher education to get better job opportunities in the public sector. The system allows for early retirement for government employees. There is a minimal contribution to the labor force by the female populace even though they are trained and capable. Kuwait has the largest number of women absorbed in its workforce compared to the other GCC nations (30 percent) even though it still does not meet the global threshold (Sassanpour et al, 2010, p7).

There is a tremendous advancement in adult literacy in the GCC’s owing to considerable venture in education and education guidelines. Compared to the MENA countries the rate of adult literacy in the GCC’s is superior. The male to female imbalance that disfavored women have been lessened with equal numbers being registered in institutions of learning even to the university level. The situation is compounded by the high number of female students in universities compared to the male students in the GCC nations. There are more openings for men in indigenous employment and the military which has led to discontinuation for most of them. There are also a considerable number of men pursuing education overseas. Previously primary, secondary, and tertiary training was highly regarded than technical and vocational education (Sassanpour et al, 2010, p9).

Slightly above one-half of the entire workforce is employed in the service sector in the GCC countries. Working opportunities in the industrial sector show the GCC countries’ varied approaches to liberalizing their economic base. In Saudi Arabia and Qatar, liberalization has brought about an insistence to build up hydrocarbon industries. Oman has affected the growth of its non-oil industry. Kuwait has prioritized the possession of assets overseas as part of its strategy of economic liberalization. In the United Arab Emirates and Bahrain, the growth of the service sectors is more prevalent than the industrial sector.

As a result, there has been an upsurge of Job opportunities in the Industrial sector in Oman, Qatar, and Saudi Arabia but a regression in the same for the other GCC countries. The agricultural sector has provided employment opportunities only in Oman and to some degree in Saudi Arabia among the GCC’s. The fact could be attributed to the declined ability of food generation as well as urban migration (Sassanpour et al, 2010, p9).

Female labor force

The GCC labor markets have been for a long time characterized by a low percentage of women’s participation. According to statistics, the Kuwait government recorded only 1% women workforce in the early 1960s. This was attributed to traditional gender norms which segregated women on occupation matters. Most of the women worked in the public sector as salaried employees. Some of the GCC member states worked on typical laws which confined women to only specified jobs. An example is Saudi Arabia where the royal decree prevented women from participating in any field of employment except education and nursing sectors.

The decree further denied women freedom of association since they were not required to associate with men within the workplaces (UNDP, 2006). Current statistics reveal that expatriate women form a greater percentage of women employed within countries such as Oman, Kuwait, and Qatar (Al-Najjar, 2006).

Table 3: Expatriate Women in GCC countries by 2002 (UNDP Arab Human Development Report)

Number % of the female labor force
Bahrain 426,000 6.8
Kuwait 241,000 71.5
Oman 145,000 79.2
Qatar 38,000 71.6
Saudi Arabia 426,000 6.8
UAE 261,000 4.8

Employment industry segmentation Targeting Unemployed Population

Employment opportunities in GCC nations are divided into various aspects i.e. government and informal sectors, natives and expatriates, and trained and untrained. The division in the employment opportunities exposes certain issues; one that stands out is the difference in the compensation packages and associated advantages for employees in government and informal sectors training and skills notwithstanding (Murphy and Topel, 1997). This disparity is also evident between natives and expatriates working in a similar setting. Promotions between foreigners and locals are not on equal footing and some opportunities are set aside for the natives. There is a disparity in the professional skills accrued through training between the locals and the foreigners (Sassanpour et al, 2010, p10).

It is hard to analyze and distinguish the compensation packages between employees in the government sector and those in the informal sector. This is due to different market organizations and unavailable data. Still, employees in the government earn more than their counterparts in the informal sector. Additionally, employees in the public sector are assured of a salary raise every year and elevation via a grading arrangement. The natives working in the public sector earn a lot for the same grades are appointed into their positions at advanced ranks and ascend quickly. Through their consideration for expatriate employees, The GCC’s have made certain the efficient provision of workers at reasonable compensation (Sassanpour et al, 2010, p10).

Other advantages meant for the natives working in the public sector include housing and transportation. Some GCC’s also offer inducements in the form of education, allowing their employees to go back to school while working. The informal sector offers meager benefits depending on the competence of the worker. Unlike their counterparts, the informal sector employees do not enjoy family allowances and formal training. Workers who have little expertise are provided with free accommodation while the rest are given housing allowance. In certain situations, they are offered transportation allowances in addition to their basic pay (Sassanpour et al, 2010, p11).

In Qatar and the United Arab Emirates workers in the public sector are given pension benefits without having to have made payments towards them. This is coupled with premature retirement. In Oman, Bahrain, and Saudi Arabia there is a provision for a pension scheme in the informal sector that only covers the natives. Gratuity is paid to foreigners as a reward upon their completion of service. There existed an offer of paid leave for public sector employees but it is no longer in force currently, although the brief business hours in the public sector allow employees to engage in personal business. Employees in the public sector also gain from nonfinancial benefits such as social esteem and job assurance (Sassanpour et al, 2010, p11).

All benefits accrued from employment in the public sector if converted to monetary value could equal or exceed the basic income. All these sums up to considerably raise the minimum earnings to which an employee would be willing to work. These minimal earnings are recognized as reservation wages. In the case of foreign workers, the reservation wages show their projected income in their respective states, matched up against financial responsibilities and savings, and still, it is very minimal. Asian laborers appear to have gained favor and as such their inclusion has efficiently minimized the standard rate of providing work for expatriates.

The Foreign workforces have been driven to accept meager salaries in the GCC nations owing to readily available services in the service sector (Sassanpour et al, 2010, p 11). Division of market is also attributed to the disparity incompetence of the fresh employees to the demands of the informal sector even at higher levels of employment and with advanced capabilities. As a result, mechanical and unskilled work is left to the foreigners while the natives take over administrative duties (Arab News, 2008).

Employment conditions

There exists a degree of rigidity in the employment scene that has contributed to longer search periods and increasing proof of stiff working circumstances for natives. The little that has been recorded about lack of job opportunities do not apply evenly across the GCC countries but differs considerably. Qatar advances itself as a good employer with an almost zero case of open unemployment; however, unemployment remains prevalent in Bahrain with statistics showing between 12-15 prospective workers are unemployed. The unemployment situation in the region falls within the range of these two nations.

Oman sits on the top echelons of this range. It has also been proved that the government sector has employed more workers than its limit hence adding to the below-par employment of the nations’ force (Sassanpour et al, 2010, p12). The unemployment scenario is coupled with several conflicting issues; among those listed as seeking employment are university graduates seeking public appointments, employees seeking enhanced pay, and workers who are tied down by cultural background. The unemployment scenario is being experienced across the board in the GCC countries and it calls for an urgent need to address the situation (Sassanpour et al, 2010, p12, Morada, 2002).

Some GCC countries need to review their emerging supply-demand activities in the employment scene. This is especially where there have been recent reports of unemployment. There has been a speedy growth of the available workforce owing to an increase in population which has overtaken the rate of absorption into employment. The absorption rate is also affected by sluggish economic growth and change of production procedures (World Bank, 2004).

This is further compounded by the disparity between the training and procedural qualifications of fresh employees and the competence of the sector. The government has been overwhelmed by the cost of sustaining the current excess workforce and cannot offer any more employment. It is seeking ways to cut down on the workforce costs it incurs. The government restrictive expenditures are turning back to upset employment opportunities indirectly. The informal sector cannot amend the situation because of constrictions in the employment industry (Sassanpour et al, 2010, p 12).

Conclusion

The unemployment rate and the issues concerning job creation need to consider the inflow of new entrants within the labor market. The percentage of the working-age population, as well as the level of percentage of women within the labor force, has recorded an increase within the last decade. Future economic growth within the GCC member states will determine to a greater extent the levels of unemployment.

The GCC member states should adopt a holistic approach towards solving youth unemployment. Lack of spending the governments receive from the unemployed population affects the economy of the GCC countries. The current unemployment status of the GCC countries calls for policymakers and business leaders to generate ideas necessary for overcoming the unemployment saga. The GCC countries need to adopt aggressive training programs directed towards the development and capable of equipping the youths with the required knowledge, skills as well as capabilities of competing favorably within the global job market.

There are several government intervention programs that policymakers should adopt for the realization of the intended results. These include; reinforcing the strategies dealing with the workforce, upgrading the relationships between the public and private sector with educational institutions, developing necessary measures within the community-based programs, and at the same time making training part of the investment.

To deal with the workforce, GCC governments and policymakers should practice comprehensive school-to-work programs capable of providing qualitative and quantitative research, evaluation of programs, development of professional skills, career guidance to the educated including youths and adults. This is made possible through the organization of seminars and workshops aimed at developing a comprehensive GCC workforce strategy.

Concerning the establishment of relationships with educational Institutions, GCC member states should upgrade the quality of the education system by incorporating cost-effective measures. The curriculum program for the primary students and junior schools should be standardized and at the same time promote critical thinking as well as problem-solving skills. This program can be made effective through team teaching where students are given opportunities of learning how to work in a corporate environment. Teamwork learning mechanisms enable students to improve their communication skills as well as relationships.

Such investment in human capital demands the establishment of a good relationship between teachers and the parents with the focus on improving the intellectual status of the children. In this case, teachers and local educators should improve in their nature of training. Best education programs should be provided through appropriate policies to those nationals interested in education. GCC member states quality investment in teacher education programs will eventually improve the quality of youth education (Arab News, 2005).

The other option which could be utilized by the GCC member states is the strengthening of the Community-Based Organizations. The governments’ cooperation with the unemployed can be reinforced through the CBOs by offering specified programs such as civic activities and organized classes. The classes promote and encourage the youths to work within volunteer programs which helps them learn more about value as well as personal responsibility. GCC governments can utilize such NGOs with the capacity and capability to offer developmental activities (Archive Editions, 1989).

The issue of unemployment can as well be dealt with through collaboration between governments, businesses, and industry. Focus and development of people’s skills and talents make companies benefit much. Public and private companies should invest much of their resources in developing skills since the ultimate result is endless dividends. There is an opportunity for policymakers to utilize the presence of expatriates by utilizing their skills in teaching various industries such as carpentry, building, and construction. The tradesmen can be utilized to superbly mentor many national apprentices.

The governments can utilize policies that encourage the hiring of skilled foreign craftsmen capable of teaching the same skills to the unemployed. Companies dealing with such programs can coordinate well with the government by exchanging their employees for government financial compensation.

GCC member states should treat training as an investment; they should design programs capable of increasing students’ chances t employment in the corporate world by aligning the nature of the courses with industry standards. A similar program yielded results in the countries India and Singapore where they utilized the Infosys program to connect campus students with industries in the marketplace. Such programs play important role in developing GCC human capital since it helps in decreasing the level of skill gap and increase the level of youth’s participation within the marketplace.

References

Al-Najjar, B. (2006). Labor Migration to the GCC Countries. Web.

Al-Qudsi, S. (1985). Earnings Differences in the Labor Markets of Oil-Rich Economics: The Case of Kuwait. Journal of Development Economics, 2 (18).

Al-Qudsi, S. (1989). Returns to Education, Sectoral Pay Differentials and Determinants in Kuwait. Economics of Education Review, 8 (3), 263-276.

Al-Qudsi, S. (2005). Unemployment Evolution in the GCC Economies: Its nature and Relationship to output Gaps. Journal of Development and Economic Policies, 2 (6), 5-48.

Arab News. (2005). Qatar Opens Stock Market to Foreigners. Web.

Arab News. (2008). GCC Common Market Becomes a Reality. Web.

Archive Editions. (1989). Near & Middle East Titles: Oil Concessions in Five Arab States 1911–1953: Kuwait, Bahrain, Qatar, Trucial States, and Oman. Slough, UK: Archive Editions. Web.

Bakheet, B. (1999). Developing GCC Stock Markets: The Private Sector Role. Middle East Policy Council Journal, 6(3). Web.

Bashir, R. (2010). Labor Policies and youth unemployment in the Gulf region. Middle East Policy Council Journal, 18 (2).

Dadush, U. & Falcao, L. (2009). Regional Arrangements in the Arabian Gulf. Deloitte Middle East, Carnegie Policy Outlook, (1), 4-12.

ESCWA. (1986). Native Labor Force in the GCC Countries. In Employment and Mobility in the Arab World Arab Planning Institute and ESCWA Experts Meeting, Kuwait.

Fasano, U. & Goyal, R. (2004). Emerging Strains in GCC Labor Markets. Working Paper WP/04/71. Washington DC: IMF.

Fasano, U. & Iqbal, Z. (2003). GCC Countries: From Oil Dependence to Diversification. Washington DC: International Monetary Fund. Web.

Fasano, U. & Goyal, R. (2009). Emerging Strains in GCC Labor Markets. IMF Working paper, (1), 2-34.

GCC. (2001). the Economic Agreement between the GCC States. Web.

GCC. (1981). Unified Economic Agreement between the Countries of the Gulf Cooperation Council. Web.

Global Investment House. (2007). GCC Market Review. Web.

GCC. (2008a). GCC Market Review. Web.

GCC. (2008b). GCC Market Review. Web.

Gray, S & Blejer, M I. (2007).The Gulf Cooperation Council Region: Financial Market Development, Competitiveness, and Economic Growth’, in Drzeniek Hanouz M. Sh. El Diwany, and T. Yousef (eds.), The Arab World Competitiveness Report 2007 – Sustaining the Growth Momentum. Geneva: World Economic Forum. Web.

International Monetary Fund. (2001).The Cooperation Council of the Arab States of The Gulf (GCC): Strategy for Sustainable Growth with Macroeconomic Stability. IMF Washington DC.

Ministry of Planning, State of Kuwait, (2001). Annual Statistical Abstract (1).

Ministry of Planning, Kingdom of Saudi Arabia. (2004). Seventh Development Plan.

Ministry of Labor and Social Affairs, State of Bahrain. (1997). Bahrain: Maximizing Human Resources.

Morada, H. B. (2002). Work and Work Conditions of the UAE Nationals: A Four Sector Comparison. Center for Labor Market Research and Information (Tanmia), Dubai.

Murphy, K. & Topel, R.H. (1997). Unemployment and Non-employment. American Economic Review, 87 (2), 295-3.

Oxford Analytica. (2008). Gulf States: GCC States Vie to Attract Investment. In-Depth Analysis.

Sassanpour, C., Joharji, G., Kireyev, A., & Petri, M. (2010). Labor Market Challenges and Policies in the Gulf Cooperation Council Countries. IMF Review.

World Bank. (2004). Unlocking the Employment Potential in the Middle East and North Africa: Toward a New Social Contract. Web.

World Bank. (2007). KEI Index. Web.

World Bank. (2008). Road Not Travelled: Education Reform in the Middle East And Africa. Web.

Cite this paper

Select style

Reference

Premium Papers. (2022, September 16). Unemployment in the Gulf States. Retrieved from https://premium-papers.com/unemployment-in-the-gulf-states/

Reference

Premium Papers. (2022, September 16). Unemployment in the Gulf States. https://premium-papers.com/unemployment-in-the-gulf-states/

Work Cited

"Unemployment in the Gulf States." Premium Papers, 16 Sept. 2022, premium-papers.com/unemployment-in-the-gulf-states/.

References

Premium Papers. (2022) 'Unemployment in the Gulf States'. 16 September.

References

Premium Papers. 2022. "Unemployment in the Gulf States." September 16, 2022. https://premium-papers.com/unemployment-in-the-gulf-states/.

1. Premium Papers. "Unemployment in the Gulf States." September 16, 2022. https://premium-papers.com/unemployment-in-the-gulf-states/.


Bibliography


Premium Papers. "Unemployment in the Gulf States." September 16, 2022. https://premium-papers.com/unemployment-in-the-gulf-states/.