Amna Puri-Mirza
Research Expert covering the Middle East
Labor market in the GCC - statistics & facts
The prosperity gained from oil and gas revenue has given the Gulf Cooperation Council countries the opportunity to establish themselves as rentier state, which do not rely on taxation by any of their subjects. Consequently, the labor markets of all Gulf Cooperation Council member states are skewed in the following aspects compared to the rest of the world:
Most of the workforce in the core economies of the GCC region rely on foreign workers. This is evident across various jobs and skill levels. Traditionally, expatriates are either working in jobs requiring high technical skills, or they are employed as domestic workers or in the service and hospitality sector.
Gender distribution of the GCC workforce
The female workforce participation rate amongst nationals in the Gulf Cooperation Council has been traditionally low. A factor which has played a role in the unbalanced gender distribution of labor markets hails from the fact that countries like Saudi Arabia have had strict gender segregation laws. As for the ban on women driving or traveling on their own, certain relaxations and reforms of those laws were implemented in 2018.
Youth unemployment
As part of the wider Middle Eastern and North African region, the GCC region experiences high unemployment rates amongst its youth. Although the majority of the youth in the GCC region are very well educated, a few factors contribute to the high unemployment rate. On one hand, they are lacking opportunities to gain employment compared to the rest of the youth in the MENA region. On the other hand, there is a clear trend on preferences for public sector jobs as opposed to service or private sector jobs amongst nationals in the region.
Outlook
All four core Gulf Cooperation Council states have realized that their current economic reliance on oil and gas revenue is not sustainable, as energy prices have been very volatile in the recent year. The GCC countries are trying to future proof their economies by introducing VAT and income tax, as well as reforming the labor market. In the case of Saudi Arabia, this refers to the “Saudization” of its labor market, and for the United Arab Emirates the “Nationalization” of its labor market. This means that certain industries will be prohibited to hire foreign nationals or there will be financial incentives for the private sector to hire more local nationals.
These steps are important to combat their economic challenges, the GCC states are hoping to increase the number of their own nationals in their labor force and to reduce their citizens reliance on state support as well as to increase state income sources. This involves training their citizens for modern labor markets, which are trending towards higher automation rates.
Most of the workforce in the core economies of the GCC region rely on foreign workers. This is evident across various jobs and skill levels. Traditionally, expatriates are either working in jobs requiring high technical skills, or they are employed as domestic workers or in the service and hospitality sector.
Gender distribution of the GCC workforce
The female workforce participation rate amongst nationals in the Gulf Cooperation Council has been traditionally low. A factor which has played a role in the unbalanced gender distribution of labor markets hails from the fact that countries like Saudi Arabia have had strict gender segregation laws. As for the ban on women driving or traveling on their own, certain relaxations and reforms of those laws were implemented in 2018.
Youth unemployment
As part of the wider Middle Eastern and North African region, the GCC region experiences high unemployment rates amongst its youth. Although the majority of the youth in the GCC region are very well educated, a few factors contribute to the high unemployment rate. On one hand, they are lacking opportunities to gain employment compared to the rest of the youth in the MENA region. On the other hand, there is a clear trend on preferences for public sector jobs as opposed to service or private sector jobs amongst nationals in the region.
Outlook
All four core Gulf Cooperation Council states have realized that their current economic reliance on oil and gas revenue is not sustainable, as energy prices have been very volatile in the recent year. The GCC countries are trying to future proof their economies by introducing VAT and income tax, as well as reforming the labor market. In the case of Saudi Arabia, this refers to the “Saudization” of its labor market, and for the United Arab Emirates the “Nationalization” of its labor market. This means that certain industries will be prohibited to hire foreign nationals or there will be financial incentives for the private sector to hire more local nationals.
These steps are important to combat their economic challenges, the GCC states are hoping to increase the number of their own nationals in their labor force and to reduce their citizens reliance on state support as well as to increase state income sources. This involves training their citizens for modern labor markets, which are trending towards higher automation rates.
