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Of all Gulf Cooperation Council (GCC) countries, Saudi Arabia is leading a trend for regulating local labour, according to a Dr Jasim Ali, a Bahraini MP writing for Gulf News. The implementation of the Nitaqat or ‘Saudi-sation’, which went into effect in early July, were designed to apply pressure on private sector firms to employ more Saudi nationals where possible.
According to Dr Ali, the extent of local employment that Nitaqat requires varies from 6% in the construction sector to 30% for oil and gas extraction, and still to over 50% for banks and financial institutions.
Unemployment amongst nationals in Saudi Arabia stands above 10%. The real challenge relates to unemployment amongst youth, who make up the majority of the country’s population, hence the Nitaqat programme. Currently, there are four migrant workers for each Saudi native in the labour force.
Private sector companies receive incentives or penalties depending on the category they belong to, premium, green, yellow and red, reflecting the level of localisation of jobs. The best and worst are those falling in premium and red categories, in turn receiving rewards and punishment, respectively.
Other GCC countries could possibly consider the Saudi model if proven successful. However, fear of implementation of Nitaqat elsewhere in the region is not imminent, as each economy faces diverse challenges and opportunities.
Dr Ali is confident that prospective workers from Asian countries in particular should rest assured that demand for foreign workers in GCC markets should remain steady. Proof for that is the mushrooming of economic activities in the six countries, producing a large number of job opportunities for foreign workers.
For instance, Qatar is investing some USD 100 billion (AED 367 billion) on development projects ahead of the World Cup 2022, the most promising of which is the innovative Doha Metro, costing some USD 18 billion. For its part, Saudi Arabia has moved to develop Riyadh Metro at the cost of USD 22.5 billion.
Employment in GCC economies is exceptionally attractive for expatriate labour. For instance, three GCC states, namely Saudi Arabia, the UAE and Qatar, top the list of the four most preferred places to work in for Overseas Filipino Workers (OFWs). More than 2 million OFWs work in GCC economies, notably in Saudi Arabia and the UAE.
Foreign nationals make up the majority of population in three GCC countries; the UAE, Qatar and Kuwait. Foreign workers also constitute the majority of the workforce in all GCC countries, with no exceptions. In Bahrain, the smallest regional economy, expatriates make up around 77% of the total workforce.
Outgoing remittances speak for the significance of GCC economies to international workers. Remittances leaving GCC amounted to about USD 80 billion or nearly 16% of the world’s total of USD 514 billion.
At USD 32 billion, Saudi Arabia leads GCC countries in remittance amounts. The kingdom ranks first in the world with regards to economic significance of the remittances, accounting for more than 4.5% of its GDP.
The same World Bank report dealing with remittances suggests that worldwide remittances grew by 11% in 2012 whilst remittances from GCC countries grew by 13%, above the global average.
The presence of foreign nationals is an everyday fact of life in GCC states, something that is not going to change in the foreseeable future. Yet, streamlining labour market conditions should be seen in the context of ever-changing economic conditions, as change is the only constant.