World Economy

(P)GCC Facing Challenges of Low-Skilled Expat Labor

 (P)GCC Facing Challenges of Low-Skilled Expat Labor (P)GCC Facing Challenges of Low-Skilled Expat Labor

The Persian Gulf Arab economies are weak in terms of labor productivity compared with counterparts in other countries, according to the PricewaterhouseCoopers PwC Economic Bulletin for the Middle East, which has attributed it to Persian Gulf Arab countries’ dependence on low-skilled expatriate labor in many economic sectors.

Coincidentally, public sectors across the (P)GCC region (UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait) are experiencing a spike in hiring rates, which consequentially triggered other Persian Gulf Arab states, led by Saudi Arabia, to adopt localization principles, such as “Saudization”, in their respective economic sectors gradually, Asharq Al-Awsat reported.

PwC’s latest Middle East Economy Watch reports that productivity has been falling for many years across the region, with Oman and Lebanon among a number of countries that continued to decline in 2017.

Some Persian Gulf Arab states showed signs of growth, including the UAE, which exceeded the global average of 10% growth in real productivity between 2010 and 2017.

“Persian Gulf economies have weak labor productivity levels compared with peers as they rely on low-skilled expatriates in many sectors. Meanwhile, public sectors across the region are heavily overstaffed,” said Richard Boxshall, senior economist at PwC Middle East.

Heavy investment in artificial intelligence and robotics will have a huge impact on workforces across the region as expats rendered redundant by technology return home, creating a less dense but more productive population.

“The combination of investment, leadership and improving education could lead to substantial productivity gains,” Boxshall said.

Business environments across the region fared better, with the UAE and Saudi Arabia highlighted in the World Bank’s report Doing Business and the World Economic Forum’s Global Competitiveness indices.

“The Persian Gulf Arab countries have largely led the other Middle East and North African countries since the inception of both indices, although methodological changes in Doing Business contributed to sharp declines for some of these countries a few years ago,” Boxshall said.

In 2017, measures were introduced in Saudi Arabia to update the country’s business infrastructure, including a new online system for property registration and a reduction in the number of documents needed for customs clearance.

Reform in Saudi Arabia now seems necessary—and yet, at the same time, impossible. How will the royal family manage to reject the clergy’s support, stop the financing of fundamentalist networks and bring about nothing short of several revolutions regarding social rights? The kingdom’s stability is at stake and, as a consequence, that of the entire region, too.

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