The Unemployment of Nationals in Job-rich GCC States

Description

GCC states are encumbered by three persistent demographic challenges: the majority of the workforce and the population are foreign and the unemployment of over one million citizens. Econometric tests show that past labor policies had little salutary impact on the employability of nationals in the private sector. Taking Kuwait as a GCC proxy country, policy failures are ascribed to government fringe benefits, welfare state, monopolistic environments, and a technologically challenged private sector. Prospects of the challenges are simulated under alternative policy options. The best option is if the government replaces 90% of its foreign labor force which would resolve the unemployment problem in six years. Looking ahead, a detailed three-phased plan is proposed: two-year training colleges; measures to eliminate current labor market distortions, and long-term policies to modify the social contract, adopt a high value added strategy, and energize the private sector.