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April 2012, Volume 19, Number 2

GCC: Migrants

The population of the six Gulf Cooperation Countries, almost 39 million in 2008, included 23 million natives and 16 million foreigners (41 percent). The foreign share of the population ranged from a low of 30 percent in Oman and Saudi Arabia to over 80 percent in Qatar and UAE.

The labor force of the six GCC countries was estimated at 16.5 million in 2008, including a third citizens and two-thirds foreigners. Saudi Arabia has half of the labor force in the GCC, some 8.5 million workers, and half of the workers in Saudi Arabia are foreigners. Qatar has about 1.3 million workers, including 1.2 million or 95 percent foreigners.

At least five million foreigners in GCC countries are not in the labor force. Half of the working foreigners and half of the non-working foreigners in GCC countries are in Saudi Arabia.

The labor force participation rate of GCC citizens 15 and older was 36 percent in Saudi Arabia in 2008 and 50 percent in Qatar; in most industrial countries, two-thirds of adults are in the labor force. In Saudi Arabia, Kuwait, Qatar and the UAE, citizen LFPRs have been rising as especially more young men seek jobs. Female LFPRs remain low, for example, below 15 percent among Saudi Arabian citizens.

Some GCC labor force data mix foreign and local workers, generating higher LFPRs. For example, a 50 percent LFPR for Saudi Arabia reflects 36 percent for Saudi Arabia citizens and 80 percent for foreigners.

Most GCC citizens are employed in public-sector jobs, while most migrants are employed in private sector jobs. Public-sector jobs often allow retirement with almost full pension rights after 20 years of service; most public-sector workers contribute less than five percent of their earnings for retirement benefits. In Kuwait, Qatar and UAE, almost all private-sector workers are migrants.

Unemployment is rare among foreign workers, since losing one's job normally means losing the right to remain legally in the country. However, among citizens there is unemployment. For example, with a labor force of about 8.5 million workers, Saudi Arabia had seven million employed workers in 2006, including 2.8 million in the public sector and 5.2 million in the private sector. Foreigners were five percent of Saudi Arabia public sector workers and 80 percent of Saudi Arabia private sector workers.

In all GCC countries, foreigners are a very high share of persons employed in construction, private households, retail trade and hotels and restaurants.

Most foreign workers in GCC countries are from Asian countries. The Asian share of migrant workers in 2009 was 80 percent or more in Bahrain, Oman, and the UAE. In Saudi Arabia, the Asian share of foreign workers was 60 percent and Arabs were 30 percent of foreign workers. In 2002-04, there were an estimated 3.4 million Indians in GCC countries, 1.7 million Pakistanis, and 1.4 million Egyptians.

About half of these Indians, 1.8 million, are in the UAE. Two-thirds of the Indians in the UAE are in the UAE labor force. There are many Indian tourists and business persons in the UAE, explaining why only two-thirds of the 150 Indian deaths a month in the UAE are workers.

The financial crisis of 2008-09 reduced the number of Indians in the UAE, and economic growth in India is reducing the number of Indian workers willing to work for 800 to 1,000 AED ($272) a month. More low-skilled construction workers are arriving in the UAE from Bangladesh and Vietnam; most domestic workers are from the Philippines and Africa.

Foreigners require sponsors or kafeel to be in GCC countries; the local citizen sponsor is responsible for the foreigner during his or her stay. Some GCC citizens sponsor foreigners for admission but do not employ them, sending those who arrive to another employer (and making the migrant illegal) or expecting the migrant to find a series of employers on his/her own, sometimes know as having a "free or floating visa," that is, the foreigner has a sponsor but not necessarily a work permit for the job he/she is doing.

Requesting more work visas than a GCC national can employ, or simply selling work visas to recruiters who in turn sell them to migrants, is a major business for some GCC citizens.

The sponsorship system was supposed to limit illegal migration and settlement, but failed on both counts. Irregular migration occurs when migrants arrive to find they have no jobs, when they leave their sponsoring employer, or when they fail to leave the country at the end of their contracts. In some cases, employers refuse to return worker passports to avoid paying end-of-contract bonuses of one month's wages for each year of work and the cost of return travel. Foreigners must normally have permission from their sponsor to leave a GCC country.

Saudi Arabia in March 2012 announced that it was considering shifting sponsorship to recruitment companies supervised by a Commission in the Ministry of Labor. Under the proposal, foreign workers in Saudi Arabia would retain their passports and the employer would not be responsible for migrant violations of Saudi Arabian laws outside the workplace. Instead, compulsory insurance would cover the costs of migrant violations and provide unpaid wages to workers.

The current effort of GCC countries to "regain control" over labor migration centers largely on "nationalization policies" that try to substitute native for foreign workers. These policies have both supply and demand components. Policies to reduce the demand for migrants include charging employers for the privilege of hiring foreign workers, charging them more if they employ mostly migrants, and subsidizing the employment of local citizen workers. The supply of migrant workers can be reduced by restricting entries of foreign workers and deporting irregular workers, or by banning migrants from certain industries and occupations.

Qatar, which is hosting the 2022 World Soccer Cup, is planning to spend over $35 billion on infrastructure projects, including building nine new stadiums and renovating three stadiums that will use solar power to provide air conditioning. NGOs hope to pressure the Qatar government to improve wages and working conditions for migrant workers.

Domestic Workers. Many GCC citizens hire foreign domestic workers. Most are women from rural areas who have not been abroad before. GCC governments require employers to pay all of the costs associated with documentation and travel from the worker's country of origin to the GCC.

Most of the recruiters who take money from GCC households to find domestic workers for them provide three-month guarantees, that is, if the contract is broken within three months, the woman will be returned to her country of origin and the recruiter will provide another domestic worker at no additional cost to the employer. However, recruiters who do not want to incur the cost of replacing a domestic worker have a variety of ways to ensure that the three-month probation is satisfied, such as encouraging the employer not to pay the worker for the first few months so that if she returns she will go back empty handed. Many recruiters encourage domestic workers to "stick with" the employer in the hope that things will get better.

Some GCC employers complain that they pay $5,000 to $10,000 for a domestic worker who, after the three-month probationary period, is not a satisfactory worker.

Saudi Arabia banned the arrival of new domestic workers from the Philippines in July 2011 because of a $400 a month minimum wage established by the Philippines government. In January 2012, agreement on the $400 a month minimum wage was announced, along with 30 days of vacation a year, a day off a week, and return travel at the end of contracts. The agreement also requires employers to allow domestic workers to keep their passports and forbids them from requiring domestic workers to serve several households.

Assessment. There are several effects of GCC labor migration policies. First, most GCC citizens are employed in the public sector, including many who are underemployed. Second, most private sector workers are migrants whose low wages reduce innovation and productivity growth. Third, there is widespread agreement that the status quo is not durable.

The SmartLife charity in Dubai, created by some of the 1.1 million Indians in Dubai, sponsors an annual cricket match pitting blue-collar against white-collar Indians. Most manual laborers work six days and sleep in bunk beds four to a room. SmartLife's "Adopt-a-Laborer" program pairs white-collar mentors with manual workers for weekly meetings and help on everything from learning English and computer skills to wiring money home.

Baldwin-Edwards, Martin. 2011. Labour immigration and labor markets in the GCC countries: national patterns and trends. LSE Kuwait Programme on Development, Governance and Globalisation in the Gulf States. WP 15. March. www2.lse.ac.uk/government/research/resgroups/kuwait/documents/Baldwin-Edwards,%20Martin.pdf