IMF warns of rising unemployment in Gulf.

Gulf Arab oil exporters may see unemployment among their citizens rise in coming years unless they change a decades-old habit of relying on cheap foreign labour, the International Monetary Fund (IMF) said yesterday.

Since the 1970s, millions of mainly low-skilled workers from south and southeast Asia have supported rapid economic growth in the Gulf states, whose citizens tend to favour cushy, high-paid public sector jobs.

But this model is unlikely to be sustainable in the six Gulf Co-operation Council states - Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain - because of young, growing populations and high public wage bills, the IMF warned.“With a rapidly rising youth population...private-sector job creation for GCC nationals has become a challenge and unemployment could rise in the coming years unless more nationals find jobs in the private sector,” the IMF said.


Efforts to boost private-sector employment of nationals, such as through quotas, have yielded mixed results so far, the IMF said.“The recent revamping of the Saudi Nitaqat programme has had a modest impact so far in boosting private sector employment,” it said.

Only Kuwait and Oman have seen an increase in the proportion of nationals employed in the private sector over the past decade.The Gulf states should improve restrictive labour rules such as sponsorship systems which make it hard for foreign workers to change jobs and negotiate wages, the IMF argued.

“Allowing a more competitive labour market could help gradually raise the wages of foreign workers and make low-skilled nationals more attractive to employers,” it said.

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