The International Political Economy of Gulf Migration

Over the past three decades there has been much discussion about the impact of labor migration to the Gulf on the countries of origin. However, much less understood is the impact of this labor migration on the Gulf Cooperation Council (GCC) states — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) and their citizens. There has been documentation that the patterns of migration have changed from Arab migrants to Southeast Asians. Furthermore, we have seen the dependency on migrant labor consciously increase in some places in the region, such as Dubai, as they diversify into service industries that are very labor intensive. Consequently, the goal of this essay is to shed light on the impact that labor migration has had on the national labor forces of these countries through the policies that have been adopted as well as practices in the marketplace.

The GCC states are among the largest “pull” states for migrants in the world, with many GCC states consisting of more migrants with temporary residency than nationals. As Table1 illustrates, Kuwait, Qatar, and the UAE have a majority foreign population. In addition to their numbers, migrant labor has been essential to the development of this region.

Although there was foreign labor in this region prior to the 1970s due to the rising demand for oil, it was mainly Arab labor from poorer states such as Egypt and Yemen. However, as the political dramas and power struggles surrounding the 1973 Arab-Israeli War unfolded, Arab petroleum producing countries took measures to pressure Western powers in favor of the Arab cause. First, they introduced restrictions against the sale of oil to certain states that supported Israel. Second, they cut back on oil production. By the end of December 1973, they had reduced the production of oil by 25% of its level at the end of September 1973, resulting in higher oil prices.^[1] Furthermore, on October 16, 1973, the ministerial committee representing the six Gulf countries, which are members of OPEC, decided to increase the price of oil by 70%. Coupled with the oil embargo, the price was later pushed up to unprecedented levels. These events, although politically motivated, served to fuel substantially the economies of the states in the Gulf region and their need for labor migrants.

The initiation and implementation of development plans in the Gulf states required large numbers of migrant workers of many nationalities. Much of the initial need was in construction, where many unskilled and semi-skilled workers were needed. Thus, Yemenis and Egyptians who were unskilled or semi-skilled continued to have easy access to the Gulf labor markets, but now other migrants from areas outside the region began to stream in. Nationals were inadequate in number and education to meet much of the need. Furthermore, governments in the region subsidized the public sector and used it as a way to benefit the indigenous workforce by employing nationals. These public sector jobs usually had much better benefits, shorter work hours, and better pay than the private sector. The private sector was reserved for migrant workers who were brought to the various countries in the Gulf under what was known as the kafala system.

Kafala is a system whereby a migrant is sponsored by an employer who assumes full economic and legal responsibility for the employee during the contract period. The system requires that the migrant only work for the sponsor and, in some cases, the sponsor will keep the passport of the migrant as insurance that the migrant will not try to leave the employer. Although the system has met with much criticism over the years, there has been little incentive by the governments of the region to change it. The kafala system also provides the government of these states with a means to regulate labor flows in and out of the country.

The large need for labor, coupled with higher wage rates in the Gulf relative to other parts of the world, led to a massive labor migration from various Arab states and Southeast Asia that climaxed and then abruptly slowed following the Gulf War of 1990. Although there already had been a movement in the GCC states to preference Southeast Asians over Arab workers, it became much more direct following the Gulf War. Due to a perception that Palestinians and Yemenis had sided with Iraq in the Gulf War, these communities were particularly affected. In the aftermath of the invasion Amnesty International recorded a large number of human rights abuses mainly of Palestinians.^[2] The Palestinians and Jordanians (many from Palestinian ancestry) made up the largest groups in Kuwait before the invasion. They were also the groups that were found in surveys to stay the longest in Kuwait, with many having resided as noncitizens for over 15 years.^[3] Yet, in general, throughout the GCC states there became an awareness of the negative consequences of foreign labor that had not existed previously among many of the citizens of these states. Even diversification strategies were called into question due to their heavy reliance on foreign labor.

Kuwait was particularly affected by the events of the first Gulf War as it did not see a huge increase in the price of oil like after the events of 1973, but experienced heavy damage that meant that it now had to rebuild the country at a very high price. The lack of productivity and poorly planned projects led to extensive expenditures and a belief by many Kuwaitis that there needed to be a “Kuwaitization” of the labor force. Consequently, labor laws were constructed that favored Kuwaitis, often allowing them to have lower qualifications than foreign born laborers. This process of passing policies that favored the indigenous population for employment quickly took hold throughout the Gulf. Many countries in the region focused on the energy and oil sectors, demanding that quotas of nationals be met. All these countries targeted the private sector where nationals had historically not been employed. They were also eager to move nationals into the private sector as the public sector could no longer keep pace with the large number of nationals entering the labor force each year.

Unofficial estimates put unemployment in Saudi Arabia, Bahrain, and Oman above 15% of the indigenous labor force.^[4] It also has been noted throughout these countries that unemployment will continue to climb if it is not addressed, due to the fact that all these countries have a very young population that will continue to enter the workforce over the next ten years.

However, these policies of favoring the indigenous laborer have not produced many results. Firstly, there is the problem of low productivity on the part of locals who know they are practically guaranteed a job. Migrant laborers, on the other hand, believe that regardless of how hard they work, they can never replace a national. Second, locals are often seen as being promoted regardless of qualifications and achievement. Due to the system that existed for decades, locals often think of their jobs and pay as rights of citizenship rather than job performance. Third, the resentment that has set in due to the favoritism of locals has led to a bifurcation of the society where nationals believe that they are discriminated against by many private sector employers and foreign workers view the nationals as rewarded with unearned jobs. There is also the problem of how to bring the education and skill levels of nationals up to those of migrant laborers.

Many outsiders to the Gulf see the foreign population marginalized and alienated by the indigenous population in spite of the fact that they often make up the majority of the labor force. However, many nationals feel a similar estrangement in their own labor market due to their mismatched skills and inability to secure work due to the saturation of the public sector and the reluctance of private sector employers to hire them. Consequently, we see the GCC states entering a new phase in their role as one of the largest employers of labor migrants in the world — confronting the challenge of how to preserve jobs for their nationals.