A different approach to nationalisation

May 27, 2014 1:00 pm

By Sidra Tariq, Dubai

Statistics indicate that GCC countries have the highest rate of public sector employment in the world. But this sector will not be able to accommodate the scores of local talent entering the workforce. Hence, nationalization is high on the agenda for a number of GCC governments, who are looking to encourage the private sector to employ nationals. Over the years, the authorities have been using different ways to generate more jobs for its citizens, such as imposing quota systems for private sector companies and cracking down on illegal workers. In the past year, some countries have proposed stricter measures to address the issue of unemployment among nationals. The Ministry of Manpower in Oman, for example, recently announced that it will limit the percentage of expatriates working in the private sector from 39 percent to 33 percent. According to figures shared during the announcement, only 244,698 nationals work for Oman’s private sector, compared to 1,308,981 expatriates. Approximately 242,904 expatriates work in special service as well. Sara Khoja, who specializes in employment law and is a partner at legal outfit, Clyde & Co, says there were also talks in Oman of putting a tax on remittances, but the proposal is unlikely to be implemented as it is facing strong criticism. Meanwhile, Kuwait has been working on plans to curb the expatriate population, which accounts for roughly two-thirds of the country’s total populace. Last year, the Minister for Social Affairs and Labor, Thekra Al-Rasheedi, announced plans to reduce the number of expatriates in the country by more than one million by 2023 – approximately 100,000 every year. “It’s part of the ministry’s efforts to regulate the labor market, curb the phenomenon of marginal labor and restore the demographic equilibrium of the country,” she had said in a statement to the Kuwait news agency (Kuna). In February 2012, member of parliament Abdullah Al Tamimi proposed that in order to adjust Kuwait’s demographic balance, the country should impose a five-year residency cap for expatriates and ask 20 percent of foreigners to leave every year.


The feasibility of limiting the expat population to address national unemployment has come under debate. Khoja says that, in terms of sheer numbers, a residency cap on expats could prove some results, as the gap left by foreigners will have to be filled. Meanwhile, Professor William Scott-Jackson, chairman of Oxford Strategic Consulting, says that it may have a very short-term effect, but will not result in any long-term benefit. “Focusing on increasing the talent of nationals or the availability of national talent is much more productive than reducing the number of expatriates,” he says. Saudi Arabia is another GCC state that was mulling over a proposal this year to restrict the period of time foreigners can stay in the country to about eight years. In August 2011, the kingdom had introduced Nitaqat, a Saudization point system which categorizes companies according to how effective they are in employing nationals. Companies that didn’t meet the required national employment quotas or refused to hire locals were classified in the yellow or red categories, with the latter likely to face penalties. The new proposal sought to expand Nitaqat by implementing a point system where an expatriate is only allowed to accumulate up to three points if he or she wishes to stay in the county. The points are based on factors such as worker salary, duration of residence, and the number of family members. “At the time they said the plan was that if [your company is] in yellow or red, you would have a cap put on your visas for foreign employees so that they could only stay approximately eight years. But this year they pulled back and said they are going to postpone into launching that,” says Khoja. “The other thing that is happening in Saudi is that when foreign businesses are coming in to get licensed, they are being asked at the beginning of the whole process to show the licensing authority what their plans are to employ Saudi nationals; it actually has to be built in to the business plan.”