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Kuwait to slash 70% of expat jobs in favor of Kuwaitis in private sector?

Expats working in the private sector continue to face mounting pressure in the wake of impactful Kuwaitization leglislation. However, Kuwaitis are yet to show interest in private sector jobs.

Following in the steps of Saudi Arabia and the UAE, Kuwait's own nationalization scheme continues to open up opportunities for nationals Expats have seen many of their jobs slashed in recent years Kuwait continues to find it a challenge to entice nationals to apply for private sector jobs

As nationalization schemes continue to sweep the region, with countries like Saudi Arabia and the UAE pushing for the employment of more nationals, businesses in those countries have been under pressure to try and maintain profitability while complying with government legislation.

In Kuwait, a similar nationalization scheme is in place, and expats in its private sector are about to face some new difficulties in the wake of a government push for higher employment rates of nationals.

If Kuwaitis continue to enjoy unrivalled benefits and pay in the public sector, why would they consider applying in the private sector in the first place?

2020 will be a trying year for private businesses and expats

According to a report by Annahar, a Kuwaiti daily newspaper, and cited by Arab Times, “the Public Manpower Authority (PAM) is finalizing a plan to increase the proportion of jobs for citizens by about 70% in the private sector by 2020 and increase to 85% in early 2021.”

Kuwait is no stranger to shedding its expat workforce. In August of 2018, work contracts for 3,140 non-Kuwaitis serving in the public sector were canceled, Ahmad Al- Jassar, Chairman of the Civil Services Commission (CSC) said, according to the Kuwait News Agency (KUNA).

This time, however, the government’s focus has turned to the private sector.

Annahar explained that large private sector companies and banks will be expected to meet PAM’s decisions within the next fiscal year.

“The Annahar sources revealed that the new decisions to develop and adjust the ratio of jobs in the private sector come in light of economic reforms, population structure and absorption of education outputs, while investors warned of the high financial burden on the labor sector, especially on small and medium enterprises (SMEs), due to financial pressures resulting from higher wages,” Arab Times noted.

But do Kuwaitis want to work in the private sector? 

When Saudi implemented its nationalization measures, it began seeing a mass exodus of expats, numbering in the hundreds of thousands. However, the gap left by them in the private sector was not exactly filled upon their departure.

As it turns out, Saudis prefer to work in the public sector, where job security, salaries, and job benefits for nationals exceed those of the private sector. Kuwait’s public sector jobs hold similar benefits for their countrymen and women, and the country is now seeing a similar phenomenon.

Labour statistics shared by the government in 2016 revealed that nearly 58% of unemployed Kuwaitis refuse to work in the private sector, preferring to wait until a public sector job becomes available. 39% accept employment regardless of whether they are in the private or government sector.

252,800 Kuwaitis were employed in the public sector at the start of 2017, according to data by the Central Statistical Bureau (CSB). That is 74% of all public sector jobs.

Can Kuwait get its nationals to work in the private sector?

Kuwaitization was put into effect in the first place to address the economy of Kuwait. As it currently stands, the country is very reliant on oil to keep itself afloat. According to CNBC, Kuwait is the most reliant among all OPEC nations on oil for GDP, and in the long term, its economy can’t survive without significant diversification.

With this diversification in mind, Kuwaitization came to be.

Still, Kuwait will have to take some more drastic measures than just firing expats if it wants to get its nationals into private sector jobs.

According to Al-Anba daily, and cited by Arab Times, Abdullah Al-Hajri said the government sector provides job security for youth because it is less effort and more revenue. Therefore, “I believe that the solution would be to abolish the phenomenon of government luxury, through increasing working hours in the public sector, in addition to applying the similar work system as the private sector.”