Saudi, Oman face higher pressure to provide private sector jobs than UAE, Qatar

      Published on Tuesday, 8 October , 2019      132 Views     
Saudi, Oman face higher pressure to provide private sector jobs than UAE, Qatar

  • Gulf News

With low oil price prospects, Arab Gulf countries are expected to advance labour force nationalisation policies,



yet some countries of the bloc will go in for stricter policy implementation than others, according to Fitch Solutions.

“Countries like the UAE and Qatar that are relatively wealthier, have more fiscal flexibility and smaller youth population are under less pressure to implement labour force nationalisation,” Selim Elbadri, MENA Country Risk Analyst, Fitch Solutions said at a live webinar.

“There are divergent priorities with regards to labour force nationalisation across the bloc. This why we think some countries will be stricter than others when it comes to implementation,” he said.

“In Saudi Arabia for example, the foreign labour force is rapidly shrinking, meaning expats are leaving …we’re seeing the same thing happening in Bahrain and Oman as well,” he added.

The public sector wage bill occupies a large, if not the largest, part of total public spending in some of the GCC countries and in some cases, exceeds half of the total spending, according to Elbadri.

“In countries like Kuwait, with oil prices lower than historical averages, this will restrict government’s ability to expand public sector. This may be worse for countries with fairly sizable youth population. For example, Saudi Arabia’s youth population exceeds a third of the total population,” he said.

“If the government is unable to take in the youth, this could potentially lead to a feeling of marginalisation, so they will probably rely more on the private sector to absorb more of the youth into the labour force… But some GCC states will be under more pressure to generate private sector jobs than others,” he added.

Progress on implementation of labour force nationalisation has been mixed across the Gulf. While countries like Oman and Saudi Arabia are hiking expat fees and implementing foreign hiring bands, the UAE and Qatar have started offering 10-year residency permits for select expats, which underpins the core narrative that some countries will pursue stricter policies than others, according to Fitch Solutions.

Last month, the UAE issued 10 resolutions to provide 20,000 jobs to its nationals across several sectors over the next three years. 

Earlier in May, the UAE launched the permanent residency system for investors and exceptionally skilled foreigners.

This followed the approval of the Saudi Cabinet for granting ‘green card’-style visas for highly-skilled foreigners and owners of capital funds.

However, Fitch Solutions expects implementation of labor force nationalisation to be flexible across the GCC, in that “should it prove damaging to the non-oil economy or fail to attract public support, the authorities will likely backtrack on some measures,” according to Elbadri.

In Saudi Arabia, for example, earlier this year, the government introduced  $3.1 billion compensation scheme for firms that found it difficult to comply with expat fee hike. Saudi authorities also announced recently that they will bear expat fees’ costs in the industrial sector over the next five years.

“This leads into another core argument, which is that we are more likely see a targeted approach in the next two years,” Elbadri said.

He pointed out that with oil prices under pressure, labour force policies will remain a key policy dilemma for governments on multiple fronts, ranging from diversification efforts to shift in the social model to foreign investment inflows.

“Today expats occupy somewhere between third and 90 percent of population. Industries such as manufacturing, retail, trade and construction have become heavily reliant on expats,” he said.

Meanwhile, a substantial public-private wage gap will incentivise nationals to prefer government jobs that offer better benefits, which will limit the progress of labour market reform.



“As for the GCC economic model and social contract, the state offers generous wages and benefits as part of public sector employment, leaving less well-paid private sector jobs for expats,” he said.

Keywords:
Category Gulf News | 2019/10/08 latest update at 11:19 AM
Source : Zawya | Photocredit : Google
133 Views
Comments Add comment



Gulf Media

Related Articles

The editorial staff of Saudi Arabia Today would like to give all of its readers from Gulf and Saudi Arabia and the whole world the opportunity to participate actively in the development of the website! If you have something interesting, fun, scandalous - just something worth to be seen from more people. Capture it and share it in the Saudi Arabia Today with a short text.

Do you have information you want to reach our readers?

Send article/s

You can subscribe to our Facebook, Twitter and Google pages or use our RSS feed channel to always read the most important news about Saudi Arabia, the Gulf and the world.


Sponsored Publications



Saudi Arabia, Palestinians Agree on Joint Business Council Events

Saudi Arabia, Palestinians Agree on Joint Business Council

Saudi Arabia and the Palestinians agreed on Thursday to establish a joint economic committee and a business council,…

Pakistani Prime Minister Imran Khan in Riyadh after Tehran visit Government

Pakistani Prime Minister Imran Khan in Riyadh after Tehran visit

Pakistani Prime Minister Imran Khan met Saudi Arabia’s King Salman on Tuesday, Saudi state media reported, two days…

What did Putin gift King Salman and Sheikh Mohamed Bin Zayed? King

What did Putin gift King Salman and Sheikh Mohamed Bin Zayed?

On his visit to Saudi Arabia and UAE this week, the Russian President brought along a rare and expensive gift…

Bodyguard to Saudi king reportedly shot dead by friend King

Bodyguard to Saudi king reportedly shot dead by friend

A prominent bodyguard to Saudi Arabia’s King Salman bin Abdulaziz Al Saud has been shot and killed in…

GULF TV

Popular in GULF TV

PIRELLI “DREAMING” – THE CAL 2019 making of Full Version | Fashion Channel

2432 Views

A photographic tale of the aspirations of four women and their determination to achieve their goals, each one…

Latest videos in GULF TV

Events

Lifestyle

Culture

Sport

Science & Technology

Government