Relative to the current size of the job market, the number of new jobs for nationals needed in the next two decades to meet labour market and social objectives is highest in Saudi Arabia and Oman and, to a lesser extent, Kuwait, said Moody’s Investors Service.
By contrast, despite their young demographics, pressures are less marked in the UAE and Qatar, where expatriate numbers are higher relative to nationals, which indicates greater scope to create jobs for nationals as long as skills requirements are met, the rating agency noted in its report on labour market nationalisation in the GCC.
Social and political tensions could rise if the nationalisation plans fail to increase employment sufficiently. Nonetheless, the authorities will find it challenging to create sufficient private sector opportunities to halt rising unemployment, at least over the near term, said the report.
Efforts by GCC countries to employ their nationals or localise the workforce may meet social objectives, but it would be at a higher price and cost to diversification, said Moody’s.
“Rapid GCC population growth is leading to increased demand for jobs as new entrants join the market and only modest numbers of workers retire. Social changes will compound higher employment demand, particularly if more women enter the workforce,” the agency noted.
“Nationalisation strategies can have both credit positive and negative implications for sovereigns. It will be credit positive if these strategies are effective in providing wider job opportunities for nationals, while preventing a rise in unemployment and as a result maintain social and political stability,” Moody’s said. “However, large increases in public sector wage bills for the government to accommodate an increasing number of nationals in the administration would reduce fiscal flexibility and, in some cases, weaken fiscal strength.” M