Current Trends and Developments LABOR IMMIGRATION IN THE ARAB GULF STATES: PATTERNS, TRENDS AND PROBLEMS The Gulf region for many years had a low population density but in the last 25 years or so has witnessed a dramatic growth in population. Population of the Gulf states (Bahrain, Iraq, Kuwait, Oman, Quatar, Saudi Arabia and United Arab Emirates (UAE) during the 1950’swas estimated at 7,644,970. This figure increased to 28 million in 1983 (see Table 1 see page 682). This phenomenal growth was the dual result of high fertility and substantial immigration to the region from surrounding countries. An increase in oil revenues improved the economic conditions in the area and attracted workers seeking employment in the Gulf region. Employment opportunities are ample in the Gulf states for a wide variety of skills. Shortages of labor and an abundance of capital have contributed to the increased dependency on non-national workers and have made the nationals a minority in their own countries. For example, the percentage of nationals in the UAE declined from 36 percent in 1975 to 17 percent in 1985. This share is expected to drop to 9 percent in 1990 and to 2.5 percent in 2000 (Al-Hawadeth, June 1985). In 1983, the Indian population in the UAE reached 300,000 which accounts for one and a half times the number of natio- nals. Several factors have contributed to the dependency of Gulf states on migrant wor- kers. Among the more important are: 1. The young age of Arab Gulf states’ population. More than 45 percent of the populations were under 15 years of age in 1975 (Hamady, 1978). 2. A high illiteracy rate. In 1978 the percentage of illiterates ranged from 3 1 percent in UAE to 57 percent in Saudi Arabia (Al-Atiah, 1983). Moreover, the educa- tional systems lack the capacity and capability to provide adequate vocational and technical skills. Low participation of women in the workforce. Arabian Gulf women’s partici- pation in the labor market is considerably low. In Iraq, women’s share in the workforce is the highest at 9 percent, while in Bahrain the share is only 3.3 percent (Arab Institute for Labor Education, 1983). Rapid economic growth. In the late 1970’s and early 19803, the Gulf states launched ambitious development programs to improve social and economic conditions. These programs require skills, effort and knowledge which cannot be met internally. In 1975, the Gulf states imported more than 1 million expa- triates to manage and operate various projects. The figure increased to 3 million in 1983 (Jalyl al-Dean, 1985). 3. 4. 675
Transcript
Current Trends and Developments
LABOR IMMIGRATION IN THE ARAB GULF STATES: PATTERNS, TRENDS AND PROBLEMS
The Gulf region for many years had a low population density but in the last 25 years or so has witnessed a dramatic growth in population. Population of the Gulf states (Bahrain, Iraq, Kuwait, Oman, Quatar, Saudi Arabia and United Arab Emirates (UAE) during the 1950’s was estimated at 7,644,970. This figure increased to 28 million in 1983 (see Table 1 see page 682). This phenomenal growth was the dual result of high fertility and substantial immigration to the region from surrounding countries. An increase in oil revenues improved the economic conditions in the area and attracted workers seeking employment in the Gulf region. Employment opportunities are ample in the Gulf states for a wide variety of skills. Shortages of labor and an abundance of capital have contributed to the increased dependency on non-national workers and have made the nationals a minority in their own countries. For example, the percentage of nationals in the UAE declined from 36 percent in 1975 to 17 percent in 1985. This share is expected to drop to 9 percent in 1990 and to 2.5 percent in 2000 (Al-Hawadeth, June 1985). In 1983, the Indian population in the UAE reached 300,000 which accounts for one and a half times the number of natio- nals. Several factors have contributed to the dependency of Gulf states on migrant wor- kers. Among the more important are:
1. The young age of Arab Gulf states’ population. More than 45 percent of the populations were under 15 years of age in 1975 (Hamady, 1978).
2. A high illiteracy rate. In 1978 the percentage of illiterates ranged from 3 1 percent in UAE to 57 percent in Saudi Arabia (Al-Atiah, 1983). Moreover, the educa- tional systems lack the capacity and capability to provide adequate vocational and technical skills. Low participation of women in the workforce. Arabian Gulf women’s partici- pation in the labor market is considerably low. In Iraq, women’s share in the workforce is the highest at 9 percent, while in Bahrain the share is only 3.3 percent (Arab Institute for Labor Education, 1983). Rapid economic growth. In the late 1970’s and early 19803, the Gulf states launched ambitious development programs to improve social and economic conditions. These programs require skills, effort and knowledge which cannot be met internally. In 1975, the Gulf states imported more than 1 million expa- triates to manage and operate various projects. The figure increased to 3 million in 1983 (Jalyl al-Dean, 1985).
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Political unrest. The political instability in the region motivates the newly established states to utilize foreign nationals in their security forces (e.g., Pakis- tanian, Indian, etc.). Likewise the drive to build modem armies increases the need for foreign experts to train, maintain and operate highly sophisticated weapons. Attitudes toward work. In the oil rich states, nationals seek employment in the government sector. Government jobs provide them with easy money and status. These attitudes and the refusal to perform manual work make it imperative thal manual as well as highly technical jobs be assumed by expatriates. In Kuwait, for example, the nationals’ share of employment in construction, transportation or manufacturing does not exceed 1 percent (Socknat, 1982). The purpose of this paper is to discuss the patterns, trends and problems asso- ciated with labor migration in the Arab Gulf region.
Migration Process
It is possible to divide labor movements in the region into five phases. These phases revolve around political and economic shifts taking place as each country in the region adjusts to new realities (Choucri and Brecke, 1983). This categorization highlights the major factors which dominate each period, without ignoring the continuity, complexity add dynamics of the labor migration.
In the first phase most ofthe migrants were from neighboring Arab states, Iranians and Palestinians. The Arab share of the expatriate labor was almost 84 percent. The majority were Yemani, Egyptian, Syrian and Palestinians. This phase ended with the October War of 1973. During this period, the Gulf labor market was characterized by the following aspects: the wage differential was not high between the labor exporting and importing countries, few restrictions on labor movement, both Iraq and Oman were net labor exporters, and most migrants were unskilled. Furthermore, oil revenue was not a decisive factor in Arab internal politics. The center of influence in the decision making process was Egypt and the nationalist movement.
The second phase was initiated by the dramatic increase in oil prices. During this period, two events had taken place in the political arena which had an impact on the future trend of the labor market. First, the center of influence in Arab political affairs was no longer Cairo or Damascus, instead Saudi Arabia emerged as the dominant force. And second, Arab goals of unity, freedom and progress were defeated. Calls for Arab coope- ration and then coordination replaced the primary goals of unity and democracy. The regression of political goals and the shift in the Arab balance of power influenced labor migration policies in the area. Arab share in expatriate labor decreased to 65 percent by 1975. And, the non-Arab workers increased from 84,709 in 1970 to 344,420 in 1975. In fact, Asian workers in Bahrain, Oman and UAE outnumbered Arab workers by a large margin. Moreover, the Egyptians share in the non-national labor force increased from 5 percent in 1970 to 12 percent in 1975 (Choucri and Brecke, 1983). The increased demand for Egyptian workers reflected a change in the attitude toward Egypt.
As oil revenue increased, the Gulf states investment and demand for construction of residential and non-residential buildings and a vast array of infrastructural projects grew at an unprecedential rate. In 1975, expenditure in the construction sector was almost one billion dollars and construction employment accounted for 25 percent of the total labor force (Shaw, 1983). Also at this time there were 1.5 million expatriate laborers in the Gulf area (see Table 2 see page 683), an increase of 335 percent from 1970. A high percentage of them were unskilled. This period is considered the growth period both in terms of
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employment and expenditures. The Gulf states were occupied with investment opportu- nities and little attention was given to the implication of importing large numbers of migrants (Birks and Sinclair, 1983).
The third phase evolved through the later part of the 1970's. during this phase, Indians, Pakistanis and to a lesser extent Bangledeshis were almost as important as Arabs in the region. In 1979, there were 1.25 million Pakistanis, 500,000 Indians; and 23,848 Bangle- deshis in the area's work force. Between 1977 and 1978, the demand for labor slowed due to a decline in the growth rate of construction and to the completion of a large slice of key development projects (Birks and Sinclair, 1980; Shaw, 1983). In the meantime, the oil rich states became sensitive to the risk associated with the Arab migrants and preference was shifted to Asian workers. New rules governing the migration selections and duration of stay were introduced. Two other important aspects were noticeable in this stage: an increased demand for skilled labor to operate and manage completed economic projects; and that both Iraq and Oman became net importers oflabor. While Iraq opened its market to Arab labor, especially Egyptians, Oman relied on Pakistanis and Indians.
The fourth phase witnessed an increase in the number of Southeast Asian workers. In Saudi Arabia, for example, the number of South Korean workers increased from 2 18 in 1975 to 105,305 workers in 1980. And the number of Filipinos increased from 1,522 in 1975 to 306,092 in mid 1981 (Fans, 1983). While the number of South Asians increased, the rate of increase was relatively low compared to Southeast Asians. On average, the Asian share in the expatriate market increased from 46 percent in 1975 to 58 percent in 1980 (see table 3 see page 684).
The decline in oil revenue at the end of 1982, reduced government expenditures and increased insecurity in the Gulf signaled the start of the fifth phase. The phase is charac- terized by not only dependence on oil revenue and expatriate labor but also by cuts in investment programs. Policy makers display a high awareness of the incapability of indigenous human resources in operating, directing and maintaining the existing infra- structure or carrying out national plans to strengthen their economies. The phase is also characterized by a decline in the total number of migrants; a shift in demand for skilled workers; a reduction of expatriates employed in the government sector; and a substantial increase in the proportion ofAsian workers (3 million in 1983), with the Southeast Asian share of the Asian migrant labor increasing from 6 percent in 1975 to over 29 percent in 1983. The Philippine workers, for example, increased from 7,813 in 1976 to 323,000 in 1983. Over 70 percent of them work in Saudi Arabia (Jalyl al-Dean, 1985).
The Impact of Decline in Oil Revenue
Faced with a soft market and a dramatic decrease in oil prices, the Gulf states are at a critical stage in their economic and social development. These states must select a new direction by promoting a balanced distribution of human resources in relation to non- human resources (Shaw, 1983). Investment in the construction of social overhead capital creates population and employment problems (e.g. wage disparities, income inequalities, imbalances in population distribution). Shaw suggests that to alleviate these problems, policy makers need to reorient themselves toward development-related manpower and employment issues, and away from growth-related population. While the advent in this direction is slow, two positive developments have taken place in the Gulf first, most of the states established priority investment programs while scaling down their economic development projects and second, governments are beginning to think seriously about the future of their people and reducing their reliance on oil revenue. The cut in government spending and investments, results in slow growth in the private sector economic activities
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on one hand, and in the increasing awareness of the vital role the middle class plays in economic activities on the other. The middle class businessmen in the Gulf were econo- mically and politically passive in the past. Formation of classes in most gulf states is a recent phenomenon, since government bureaucrats were very generous in dealing with middle class businessmen ; most businessmen possess minimum education and knowled- ge, and relied heavily on expatriate labor to carry out daily activities; and family and kinship connections are the primary channel of influence in the society. Slowed economic growth and cuts in government aid programs, however, caused many to seek involvement in the decision making process.
Even though the impact of oil prices is not the same across countries, most of them are experiencing its effect. During the growth era, people enjoyed whatever share of wealth they could get. The increase in wealth was viewed as God's blessing. Recent events, however, indicate that people are not satisfied with their governments' policies. This has been reflected in their resentment of foreign domination and influence, and in questioning the worth of Western values. Doubt of the economic future and rapid change in lifestyle opened the door to a potentially destabilizing surge of Islamic movement (Ibrahim, 1985). Thus far the stronghold of the Islamic movement is the urban middle class. However, since the rural area stands the most to lose from cuts in government expenditures, the Islamic movement may establish itself in the rural areas as well.
Additional developments are taking place in the labor market. First, governments are more concerned with duration of stay for foreign workers. Restrictions on the entry of foreign labor are getting severe. Secondly, the fear of reduced employment opportunities and an absence of laws and regulations to protect expatriate workers persuade them to leave the Gulf in large numbers. While the departure of foreign labor creates problems to both importing and exporting countries, the Gulf market has experienced the immediate impact. The real estate market is the first to suffer. Rent and market values ofproperties in many states dropped to 50 percent. Likewise demand for a wide range of goods and services is decreasing (e.g. automobilies and leisure related services) (Al-Mastagbal, 1985).
Prospects and Trends in the Labor Market
Despite the decline in oil prices the labor market is expected to be relatively stable and even to grow at a slow rate. In Iraq, the decline in oil revenue will have a negative impact on economic development plans. The demand for expatriates, however, will continue even if the war with Iran comes to an end. Construction and restructuring of the economy cannot be achieved without the efforts and involvement of expatriates. The labor market in the rest of the Gulf states is expected to expand slowly with a high circulation rate. Since the cost ofextracting oil in the area is less than halfofthat in other countries, the decline in oil prices will possibly be offset by increasing oil output. Moreover, the oil-rich states have a huge amount of foreign currencies and their economies are more resilient (Nulty, 1986). In the meantime the Gulf states possess a substantial share of the world's oil and gas reserves. This share is expected to increase, rather than decrease, during the next 50 years (Zahlan, 1984).
The Arab gulf labor market is a function of various factors. Mere economic conside- rations are not adequate to explain the complexity and direction of the market. Factors related to the social and political environment, both inside and outside the region need to be considered. All these factors will shape the labor market in the 1980's and probably to the end of this century.
The demand for professional, managerial and skilled labor is likely to continue during the 1980's. This trend reflects inadequacies of education and training institutions in
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preparing a sufficient supply of skilled and trained personnel to meet increased demands (Naji, 1982). The well-established trends in health, education, commerce and communi- cation systems are expected to continue. Zahlan (1 984) predicts that Saudi Arabia will probably complete the expansion of its educational system during the next decade to cover all youth of school age: this implies an expansion ofalmost 100 percent in the educational system as it stands today. Such expansion requires new schools and new jobs for teachers and administrators.
Although most infrastructure projects in transportation and construction have been completed, the demand for maintenance and repair workers is continuing. Also, the large investment in the petrochemical industry requires that expatriate workers be maintained to assume technical and marketing jobs.
While the above discussion indicates that demand for foreign labor services will grow at a low rate, the skill composition will also be changed. Demand will be increased for the skilled categories. In Kuwait the share of expatriate construction workers decreased from 25 percent in 1980 to 22 percent. Over the same period the proportion of manual occu- pations dropped from 45 to 40 percent. In Saudi Arabia the demand for professional and skilled labor is growing despite the languid growth of government expenditures. The health development plan, for example, indicates that demand for doctors will increase from 6,000 in 1984 to 10,000 in 1990 and the need for nurses will increase to more than 20,000. Likewise the demand for radiologists and laboratory technicians will increase to 2,000 and 3,250 respectively. Saudi nationals will provide only 8 percent of nurses and 30 percent of doctors, radiologists and technicians (Jalyl al-Dean, 1985). The current Saudi development plan (1985-1990) predicts that the Saudi share in the total labor market will be only 5 1.2 percent by 1990.
ABBAS ALI Management School of Business
Fort Hays State University (USA).
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