Academic journal article Migration Letters

A New Era for Labour Migration in the GCC?

Academic journal article Migration Letters

A New Era for Labour Migration in the GCC?

Article excerpt

Introduction

The GCC countries offer a unique demographic and economic landscape. The current GCC population of 53 million, including 60 percent in Saudi Arabia, is projected to increase by 25 percent to over 66 million by 2030, reflecting both relatively high fertility rates and significant in-migration.1 UAE has almost 20 percent of the GCC population, followed by Oman and Kuwait with about 7.5 percent each.

GCC countries had 10 million residents in 1975, including a quarter who were foreigners (Shah and Fargues, 2012; De-Bel Air, 2015). The foreign share of the population was expected to decline from a third in the 1980s, but instead rose to reach half in recent years. The foreign share of residents ranges from a low of 33 percent in Saudi Arabia to a high of 90 percent in Qatar.

Most of the foreigners in GCC countries are from South Asia. Eight countries led by India each have over a million citizens in GCC countries, and they collectively account for almost 90 percent of the foreigners in the GCC. The largest country of origin was India, with 7.4 million citizens in the GCC, including two-thirds in the UAE and Saudi Arabia. Bangladesh was next, with 3.3 million citizens in the GCC, including almost half in Saudi Arabia, followed by Pakistan with 3.2 million, also almost half in Saudi Arabia.

Egypt had 2.1 million citizens in GCC countries, including almost half in Saudi Arabia and a quarter in Kuwait. The Philippines and Indonesia each had almost 1.7 million citizens in GCC countries, with 40 percent of the Filipinos in Saudi Arabia and 30 percent in the UAE, while 90 percent of Indonesians were in Saudi Arabia.2 Nepal's 1.3 million citizens were distributed between Saudi Arabia, Qatar, and the UAE, while half of Sri Lanka's 1.1 million citizens were in Saudi Arabia and a quarter were in the UAE. There are additional foreigners from Ethiopia, Kenya, Nigeria, Uganda, and other countries in the GCC.3

The economies of the GCC countries are based largely on exporting oil and gas. GCC governments use oil and gas revenues to create jobs for nationals in the public sector and jobs for foreign workers in the private sector. Government revenue from oil affects migration flows, with more foreign workers arriving when oil prices are high and governments issue contracts for major infrastructure projects (Woodward, 1985; Dito 2010). Most firms providing services to governments are private, so foreign workers are concentrated in the private sector.

The price of oil, which averaged $100 a barrel between 2010 and mid-2014, has fallen to less than $50 a barrel in 2016 and is expected to remain below $50 because of new supplies, as from US shale, and pressure on OPEC suppliers including Iran and Iraq to pump in order to raise government revenues.4 Most projections echo the IMF, which predicts that "oil prices will remain relatively low for some time." (Baffes et al 2015).

GCC demographic prospects and economic patterns suggest that the status quo is not sustainable (Forstenlecher and Rutledge, 2011; Hertog, 2013). Analysts urge GCC governments to change their policies to promote economic diversification away from oil and to persuade natives to change norms and attitudes and accept private sector jobs. An IMF report on the GCC noted that "between 2000 and 2010, about 7 million jobs were created in the private sector (excluding UAE), of which 5.4 million were in the private sector...nearly 88 percent of these private sector jobs were filled by foreign workers (85 percent low skilled), while nationals filled over 70 percent of public sector jobs." (Callen et al, 2014, p12).

The question is how to achieve diversification away from oil but continue to generate government revenue and entice natives to work in the private sector. Dubai is often touted as a model for economic diversification, with construction, transportation and logistics, shopping and tourism, and finance creating a non-oilbased economy. …

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