Kuwait is baffling the world with its intent on driving out expats from the country in an attempt to employ as many Kuwaiti citizens as possible in previously held jobs by foreigners.
While the idea of employing nationals is sound, the way the country is going about it is punishing those who spent years toiling and living in Kuwait and consider the country home for them and their families.
And the move seems unrelated to the tough economic conditions in the country. Kuwait faces across-the-board budgetary cuts of 20% for the fiscal year 2020-21, following the sustained slump in oil prices and the impact from COVID-19 lockdowns.
The national deficit is expected to reach 40% of GDP by the end of this year.
Are expats returning home in mass from the GCC for similar or other reasons?
The law’s main objective is to rebalance the country’s population structure.
Expatriates in Kuwait, both skilled and unskilled labor, account for roughly 3.4 million of the country’s 4.8 million people.
Prime minister Sheikh Sabah Al-Khaled Al-Sabah said in June that the Gulf state would like expat numbers to be reduced to 30% of the country’s population, meaning that 2.5 million people would need to leave the country.
Kuwaiti MPs have already called to replace all expat jobs in the government within one year.
In June, the country announced that it will ban the employment of expatriates in state-owned Kuwait Petroleum Corporation (KPC) and its subsidiaries for the year 2020-21.
Kuwait’s Municipality also said in May that it would soon dismiss all expat employees and replace them with Kuwaitis.
In July, Kuwait’s National Assembly passed a law that Indians should not exceed 15% of the population. Around 1.45 million Indians reside in Kuwait and as many as 800,000 could be forced to leave the country once the law is implemented.
Egyptians, Filipinos, and Sri Lankans must not account for more than 10% each, and Bangladeshis, Pakistanis, Nepalis, and Vietnamese must not cross 5% each.
In the private sector, the law imposes a limit on the number of expats a business can recruit each year, with regulations based on their specializations.
The decision also called for freezing employment applications from expats, canceling appointments under process, and not renewing the contracts of existing employees.
Around 13,000 expatriates have been deported from Kuwait in the past 10 months.
In a more telling move, the Kuwaiti Ministry of Economic Affairs last week proposed increasing the service fees it charges expats by 150%.
When approved, residency permit fees, visas, insurance, and health and education costs will all increase by up to 200%.
The General Authority for Statistics’ (GaStat) latest labor market release shows that unemployment jumped to 15.4% in Q2 2020, up from 11.8% in Q1 2020
The number of expats in the labor market declined by 19 thousand, on a net basis, in Q2, quarter-on-quarter.
The highest number of Saudi job losses in the private sector were seen in education, wholesale & retail, and professional activities, similar to trends observed on an international level.
Q3 data from the General Organisation of Social Insurance (GOSI) shows that the number of Saudis in employment rose by 81,000 while the number of foreigners declined by 236,000.
There was a net decline of around 155,000 in the number of registered private sector employees during Q3 as more Saudis are finding work at the expense of exiting expat, the data said.
Jadwa Investment said the majority of the decline in foreign workers was seen within the SR1,500 ($400) or less salary band while most of the rising number of Saudis employed fell into the SR3,000 ($800) a month salary band.
Saudi Arabia expects a budget deficit in 2020 close to 12%, declining to 5% of GDP in 2021, and be balanced only by 2023.
The VAT, introduced in 2018, was increased to 15% from 5% and the latest data from the General Authority for Statistics (GaStat) showed that prices rose by 5.7% year-on-year in September.
In a May 2020 report by Reuters, it said 35 million foreigners form the Gulf’s economic backbone.
The Oxford Economics report also said the GCC is in recession as lockdowns continue and low oil prices persist. Consequently, employment across the GCC could drop by around 13%, with peak-to-trough job losses of some 900,000 in the UAE, and 1.7 million in Saudi.
This could result in the population decreasing by between 4% (in Saudi and Oman) and around 10% (in the UAE and Qatar).
In Oman, the number of expatriates has dropped by 16.4% during the first nine months of this year as the country is set to add 5% to expat visa fees to support a job fund.
According to the October bulletin of the National Centre for Statistics and Information (NCSI), a total of 263,392 workers of different nationalities left the Sultanate during that period, reducing the total to 1,449,406 from 1,712,798 at the end of 2019.
“The expatriate exodus is expected to be larger than after the 2008-2009 financial crisis and the 2014-2015 plunge in prices for oil,” Reuters said quoting the ILO and the International Monetary Fund (IMF).