Thursday, October 22, 2015

Changing Labor Market Dynamics

Kuwait deports 20,000 expats in nine months

Manama: Kuwait has deported 20,000 expatriates in the first nine months of the year for their non-compliance with the residence and labour laws.
“Those who were expelled from the country are from various nationalities and included expatriates without jobs or doing odd jobs, beggars and people implicated in the selling of alcoholic beverages, managing flats for suspicious activities or engaging in immoral acts,” security sources told Kuwaiti daily Al Seyassah. “The public order department has pledged a zero-tolerance towards all violations of the law and involvement in illegal or immoral activities.”
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Around 7,000 other expatriates, men and women, will be deported as soon as the paper work regarding their situation and their sponsors is completed, the sources added.
“They are in the police custody now and their sponsors have been called to pay for their return tickets and settle all pending issues with their employers. They are expected to be deported within days,” the sources added. 
However, some legal experts said that the security action should not be confined to expatriates staying illegally in the country, but should be extended to include those who traded in visas and exploited the system to take advantage of the situation.
“There needs to be strong action to tackle the roots of the problems, and not the results,” they said, quoted by the daily. “Some expatriates have done nothing wrong and they are in fact the victims of their sponsors. Some of them arrived in Kuwait, secure they have a job. However, they were shocked to discover there were no jobs and the companies mentioned in the arrangements before their arrival were fictitious and did not exist. Those who lied and abused the visa system should be brought to justice, particularly that the minister of social affairs and labour has often said there were bogus companies and threatened to name and shame the people behind them,” they said. 
In July, Minister of Social Affairs and Labor Hind Al Subaih announced the uncovering of 150 companies that did not exist on the ground.
The minister said legal measures were being taken against the companies in addition to the 60 other companies discovered earlier.

GCC unemployment rate to increase from 12% to 16% by 2020 

Unemployment across the oil exporting countries in the region including the GCC is expected surge as governments are poised to cut spending to cope with rising fiscal deficits, according to the IMF's regional economic outlook. 
In the GCC, excluding the UAE, more than 2 million nationals are expected to join the workforce by 2020. If private sector job growth were to follow past trends, and public sector employment growth is consistent with the current fiscal projections, more than half a million job market entrants will end up being unemployed, in addition to the 1 million who are already out of work. 

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"The aggregate GCC unemployment rate would increase from 12 per cent to 16 per cent. Clearly, if more fiscal adjustment were to take place, with some of it in the form of reined-in public sector hiring, unemployment rates would be even higher," said Masoud Ahmad, the IMF's regional director for Middle East and Central Asia. 
In the non-GCC region, about 8 million people will enter the labour force over the next five years. Under current growth projections, and using historical growth -- employment elasticities, the average unemployment rate would increase from 14 per cent to 15.5 per cent. In practice, the increase could be much higher, because cash-strapped governments will not be able to maintain the pace of public sector hiring. 
Limited direct employment 
Clearly, the private sector will have to take over from the public sector as the main source of job creation. However, the expansion of the private sector and the diversification away from oil that are needed to absorb the growing workforce have so far proven elusive. Though some progress has been made, most economies in the region are still deeply dependent on the capital-intensive hydrocarbon sector, which generates limited direct employment. 
Additionally, the private sector itself is highly reliant on government spending and needs to become self-sustaining through increased competitiveness in other markets including exports. Creating incentives for nationals to move to the private nonhydrocarbon sector, improving skills, and making those skills more relevant to the private sector by improving the quality of education are crucial in this respect.

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