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29 March 2024

GCC job market poised for sharp growth

Generating enough jobs to accomodate the nationals is a major challenge to GCC states as expatriates fill in most positions in the private sector. (FILE)

Published
By Nadim Kawach

An expected expansion in the economies of Gulf oil producers in the next few years because of higher crude prices will create much more jobs for nationals and foreigners, the region's private sector has said.

Given their heavy reliance on expatriate workers, the six Gulf Cooperation Council (GCC) countries should prepare for such growth by taking measures to regulate the movement of foreign labour within them, the Federation of the GCC Chambers of Commerce and Industry (FGCCI) said in a study this week.

It said high oil prices in 2010 would ally with heavy public spending to boost the combined nominal GDP of the 29-year-old economic, defence and political alliance by 4.4 per cent to nearly $983 billion and growth could continue in the following years on the back of strong prices and high capital inflow.

The report expected flow of foreign director investment into the GCC, which controls nearly 45 per cent of the world's extractable crude deposits, to pick up from around $48 billion in 2009 to $64.4 billion in 2010 and $81.3 billion in 2011. It projected private capital to swell from around $50.7 billion to $55.9 billion and nearly $68 billion in the same period.

"The job market requirements in the GCC are projected to record sharp growth in the coming years due to an expected expansion in the regional economies...demand for qualified labour, whether nationals or expatriates, will largely increase," said the Dammam-based FGCCI, which represents the Arab world's largest and wealthiest private sector.

"At the same time, pressure from international labour groups will gain momentum and this should prompt regional nations to adopt flexible laws and regulations that will take into consideration the interests of all parties and meet the demands of their membership in the World Trade Organization."

The study said such developments should also push the GCC countries to increase coordination on labour policies and laws.

"This coordination has become an exceptional priority...the movement of labour, including foreign workers, among the GCC countries has become easier with the creation of the Gulf common market last year," it said.

"This means the GCC countries should seriously consider taking collective measures to regulate their job market to ensure stability and serve all parties."

In a recent joint study, two regional banks urged the GCC governments to remove investment barriers and facilitate the expansion of the private sector to ensure jobs for their citizens given the limited capacity of the public sector.

International Bank of Qatar and National Bank of Kuwait said the GCC countries face a serious challenge in creating sufficient jobs for the fast-growing number of nationals as their public sector has become saturated.

The study noted that more than half the GCC nationals who entered the labour market in 2008 were employed by the government sector.

Its figures showed the number of national employees in the pubic sector stood at nearly 50 per cent of the total work force in Saudi Arabia and as high as 88 per cent in Qatar, 85 per cent in the UAE and 82 per cent in Kuwait.

"The GCC countries face two serious challenges in the coming decade...they include their ability to create enough jobs for their people and the possibility of the return of large deficits to their budgets," it said.

"The public sector is expected to have a limited capacity to absorb new employees and its ability could weaken further in the future as it has become saturated and a possible drop in oil prices could curb high public spending and push the budgets of member states into shortfalls again."

IBQ said such challenges should prompt the GCC, where expatriates workers are a majority in most members, to take measures to encourage the private sector to absorb the new national entrants to the labour market.

"The GCC countries must allow the private sector to play a bigger role in the domestic economy with the aim of creating sufficient jobs for nationals...it also should be enabled to become the main provider of public services instead of the government...to do so, GCC governments must adopt policies that will facilitate the expansion of the private sector and remove unnecessary barriers for investors...despite some progress in this regard, a lot more needs to be done."

Turning to economy, FGCCI forecast a 4.4 per cent growth in the GCC's nominal GDP, which accounts for more than 40 per cent of the total Arab economy.

From about $940 billion in 2009, their GDP is projected to swell to nearly $983 billion in 2010, its second highest level in current prices since 2008, when it surged to a record high of around $1,054 billion.

The surge in 2008 came after average crude prices jumped to an all time high of nearly $95 a barrel and the six members were pumping at near capacity.

"All indicators show that the GCC economies are on their way back to strong growth because of increasing oil prices, expansionary public expenditure and an expansion in the industrial production and export activities," FGCC said.

"Data also show that the project value in the GCC will slightly decline this year but it remains very high at around $two trillion compared with nearly $2.1 trillion in 2009 and $2.4 trillion in 2008."