Expatriate Labor and the Population Structure in Kuwait
Panic and hysterics rarely deliver good and lasting solutions. Especially when the problem is old and ingrained. And, especially when it is as obvious as an elephant in the room, but we refuse to recognize it out of fear, indifference, or we are simply benefiting from its presence. Then, one day, we wake up to the fact the elephant has outgrown the room’s door and can’t get out!
First, some facts: No doubt, the expatriate labor has, for decades, benefited the country – and still does. No doubt, any rewards and returns it has received were rightfully well-earned. And no doubt, its has encouraged the citizens towards laziness and to addictively depend on others to do their work. But, above all, there is no doubt that it is morally, politically or even practically impossible to suddenly throw out the expat labor. So, what is the solution?
The problem is crystal clear, firstly, the expat labor (with their dependents) are multiple times bigger than the number of citizens, and most of them work in the private sector. Secondly, the educated and qualified citizen workforce refuses to work in the private sector due to the nature of the work and its poor financial returns. Thirdly, the ease of government employment for citizens, on terms way better than those of the private sector, has so inflated the public sector that it has become a major burden on the budget, while delivering very little in terms of efficiency and service quality.
However, Kuwait is still growing, and demand for labor continues to grow, especially in the private sector. But as the citizens are reluctant to meet this demand, the private sector is forced to bring in additional expats. In short, expat labor is growing because there is a demand for it!
The Unworkable Solutions:
1) Expelling the Expatriates: This is an impractical solution and is almost impossible to carry out. It bears many negative consequences, the most important of which are:
a. Moral: A sudden or forced expelling would be a human tragedy to a people who came at the request of the country, and in the process, may have incurred a huge cost to come, and then gave the best years of their lives in diligent service. And when they got old and less useful, they are thrown out into the cold. This is very much like a wife who, when she grows old and infirm, is divorced and replaced by a young bride, thus losing her comforts and security, without fault or cause on her part.
b. Political: It is naïve to imagine that there would be no reaction from the countries whose labor have been expelled. A much more benign example is how flustered we are now, because of a couple of unofficial demonstrations in Iraq by a small group of paid ruffians, over the long settled and internationally recognized issue of Khor Abdullah. How would we react if some heavy weights complained about arbitrary actions against their citizen workers?
c. Economic: Reducing the expat workforce may reduce their repatriation money outflows, as well as reduce the public cost of government services provided to them. But, they do deliver essential and needed services, and they cannot be replaced in the short term. Additionally, their departure will inflate the costs of all the services that we presently enjoy and take for granted. How would we like paying KD 30 for a minor electrical repair in our homes, instead of the present KD 3 that we now pay to the electrician from the Coop?
d. Damage the Private Sector: As any expelling is likely to be arbitrary and haphazard, it will affect some companies and bypass others, thus dramatically raising their operating cost and rendering them uncompetitive compared with their peers. This would create havoc in the market and unfairly redistribute power and wealth.
2) Impose Sudden Exorbitant Fees on Expats: The standard practice states that, any increase in expenses is immediately countered by a greater increase in the price of the goods or services sold, together with a likely deterioration in quality. And, this is before addressing the damage to expat morale and their possible reaction.
The Possible Solutions:
1) Solutions Related to the Expat Workforce: These must be calmly and carefully studied as follows:
a. Classify the Expat Workforce: segregate the workers to: Very Marginal, Marginal, Semi-skilled, Skilled, Very-Skilled, and assess the possibility of replacing them with national workers, estimate the cost and the time needed. This would include analyzing the job functions and the business sectors they are employed in.
b. Study the Implementation of Automation: Analyze the jobs and tasks that may be automated or mechanized, and assess their costs and timetables.
c. Expat Labor Reduction Program: On completion of the two above steps, the following program may be considered:
• Start from the Bottom: Begin with the marginal and semi-skilled expat labor and replace them with automation or mechanization. Thereafter, over a 5 – 10 year period, continue the reduction sequentially up the classification ladder.
• Non-specialized Jobs: In parallel to the above, begin reducing such jobs that are services related and non-specialized, and replace them with young national workers. This may be achieved by imposing high escalating fees on the firms, not on the expat labor.
• Compensation: In the beginning, to encourage the expat labor to willingly leave on their own, a “Golden Handshake” may be offered them, in the form of an attractive financial compensation. Such a “handshake” could be paying them the equivalent of 3 – 5 years of the cost of public services to support their presence in the country. This compensation offer would be reduced at the rate of 20% per year after the end of the first year it is initially offered.
2) Solutions Related to the Citizens: It is impossible to reduce the expat workforce without the citizens sacrificing some of their accumulated gains and privileges. This means:
a. Employing Young Citizens in the Private Sector: This requires the immediate cessation of employment in the government sector.
b. Shrinking the Public-Sector Cadre: Through performance and productivity improvements, and the transfer of surplus workers to other areas, without affecting their salaries.
c. Encourage Shopkeepers to work in their Shops: And hence replace hundreds of thousands of salesmen and clerks. The principle of a Small Business, requires owners to directly operate their shops. This would mean stopping all work permits, and/or subjecting them to very strict conditions.
d. Retrain Housewives: How to operate their smart and expensive home appliances. The West invented these machines because it doesn’t have housemaids, and needed to enable housewives (and their husbands) to do all their household chores easily and in minutes, not hours.
3) Solutions Related to the Government: It would be impossible to implement any solutions without the blessing, participation and funding of the government.
No doubt, the problem is big and ingrained, and solving it will be financially expensive for the government, as well as unpleasantly cumbersome for the citizens. Is everyone ready and willing to make the sacrifice? Bearing in mind that, any solution will be inflationary and substantially raise the cost of living, as well as force our youth to do jobs they are not used to do, nor dreamed of doing. But in return, a new society will be born, a society that relies on itself, and is able to confidently face the future.