Over the past few months, there has been growing support from amongst some Gulf Cooperation Council governments to introduce some form of “time-limits” on the residency of expatriates working in the Gulf. The reasons seem many — to preserve local culture, demographic composition, promote national labor policies and reduce foreign labor dependency.
One labor minister even went so far as to liken the presence of foreign labor as representing “dangers worse than the atomic bomb or an Israeli attack.” While the esteemed minister has the right to express his personal opinion, this is taking it a bit too far. A more rational debate ought to now take place on what is a matter of concern to all regional economies and societies, as well as for the foreign guest workers themselves, who so often seen to be cut off from any debate on the matter.
The issue of foreign workers and how they are treated and eventually replaced must be approached with care and caution. This could become one of the most contentious issues in the years ahead. Most analysts have tended to discuss the matter in purely statistical terms and have refused to delve more deeply, beyond numbers of expatriates, to assess the potential economic implications should the national policies of “localization” — replacing foreigners with nationals — be mishandled.
It is difficult to speak of, say, a Saudi or UAE labor market, in the sense of a unified, open market where a single price is paid for a specific amount of labor. Instead in all the GCC countries, the labor market is characterized by segmentation into nationalities and different labor skills. Within such groups, pay scales are determined relative to labor markets in their country of origin. A more liberal labor mobility system is a necessary prerequisite for a labor market that would eliminate pools of unemployed expatriates in the Gulf.
At the same time, the labor market experiences price distortions because of the arrival of further expatriate workers under the current “Iqama” or Kafeel system. Already there is some public debate in Saudi Arabia to replace the current individual or company sponsorship system, with one that is fully managed and controlled by contracted companies to provide labor pools. This frees local companies and individuals from the headaches of administration, and simply focus on one main aspect - seeking to employ the most qualified expatriate from the available pool at market prices. Chasing runaway maids or absconding workers would be a thing of the past, and become the legal responsibility of such contracted labor supply companies. The discussions of imposing a time-limit on all foreigners working in the Gulf is not very clear whether it applies to all categories of workers. Some GCC labor ministers have stated that only non-skilled foreign workers would be affected.
This would most certainly be the case, given past experiences of imposing blanket decisions on all foreigners, as happened when the Kingdom imposed personal taxation on foreign workers in 1987, only to rescind the measure, after one series after another of foreign skilled workers were exempted due to resignations.
The same would happen again if an arbitrary time-limit was imposed on all categories, for which successful foreign worker, would uproot himself to work temporarily in the Gulf, only to be thrown out after an artificially imposed time period?
The issue of “localization” and finding suitable jobs for Gulf nationals is a matter of national priorities, given their youthful population. In the final analysis, this can be solved through the application of fundamental economic forces, whereby Gulf employers will chose nationals or foreigners based on their economic efficiency and work contribution, and not because of nationality or “wasta.” Market forces will drive nationals to acquire new skills and seek new jobs that were shunned before, and society as a whole will come to accept such menial jobs as being as important as “prestigious” jobs. It will take time, but this is how all societies have evolved.
Saudi Arabia has never accepted as permanent the immigrant communities in their midst; they have always planned that labor imports would be a temporary phenomenon. Saudi Arabia hopes, eventually, to repatriate all foreign nationals, although the Kingdom accepts the inevitability of some selective immigration and naturalization. Both options were discussed in 2004, when the Shoura Council debated granting Saudi citizenship to expatriates who met certain stringent requirements.
The Saudi authorities do not seem to have been caught off balance by the large numbers of foreign workers present in the country, and the Kingdom has shown a remarkable capability in managing this large flow that sets them apart from any nation in the world that utilizes migrant labor. Foreign workers were meant to fulfill their obligations, receive their payment and return to their homeland. At no point, over the past three decades, did Saudi Arabia, unlike some other GCC countries, feel totally overwhelmed by expatriates, or feel that they had lost control of the management and administration of this mass of people. This relationship sometimes puts a strain on the expatriate workforce. Most of them are in a temporary situation. They feel like they are in a hotel; they can never entertain the illusion of being at home. This feeling of isolation is magnified by the security threats faced by some Western communities following domestic bombings and acts of terrorism. National groups stick together, even though, with some exceptions, they did not know each other before. Together they are a collection of solitudes.
And what of the expatriates who return after a “stint” of duty in the region, ranging from the shortest possible contract of two years to several decades for many workers? They often face problems when they return to reclaim their place in the societies they left. They find that their friends and associates back home don’t understand or appreciate the things they have experienced. For those that do settle, their expanded experiences, the higher degree of responsibility they had assumed and the new technologies they learned, make expatriate labor more valuable to the home country.
Saudi Arabia and the other GCC countries, have undoubtedly added to the human “capital transfer” process that has benefited labor-exporting countries. For others that do not settle, there are a host of problems. They are forced to forget a whole area of their lives or to meet with other former expatriates, like veterans of campaigns. Some cannot make the adjustments and return overseas to become de facto career expatriates, moving from job to job around the world like nomads, maintaining contact with friends they have made along the way.
The current debate on foreign workers, the issue of “localization,” changes in the sponsorship system, are all to be welcomed to enable a viable and humane relationship to develop between host countries and guest workers in the Gulf. Once we delve behind bland statistics and acknowledge the rights and fears of both parties, then equitable solutions will be found.
(Dr. Mohamed Ramady is visiting associate professor, finance and economics at King Fahd University of Petroleum and Minerals, Dhahran.)