Category Archives: Demographics

GCC Population Restructuring Calls: Mostly Illusory, or Dishonest, or Both…………


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“Abu Dhabi is not the only place in the region to be pushing more locals into the job market. Kuwait announced earlier this year that it would reduce by a million the number of foreign workers in the country over the next ten years. More drastically, it has begun to deport foreigners for traffic violations, though it has denied that that is part of a policy to reduce their number. Saudi Arabia has also long pursued “Saudi-isation”, whereby firms are made to replace foreigners with Saudi workers. Under the current law, known as nitaqat (“categories”), companies are classified by green, yellow and red labels that denote the extent to which they have complied with employment quotas. All firms, even those with fewer than ten employees, are supposed to hire at least one Saudi citizen. The three other members of the Gulf Co-operation Council—Bahrain, Oman and Qatar—have their own variations on the theme of making their citizens work. Across the region, a further cull of jobs for foreigners looks likely……………”

Also sprach The Economist.
this talk in the Gulf GCC countries over the past decades of changing the demographic structure is either illusory or insincere, most likely both. Talk of Saudi-ization, Emirati-zation, Kuwaiti-ization is basically wishful thinking or propaganda beyond the public sector. Here is why the potentates and those that control economic power are not sincere about this goal even as they repeat it:

  • A serious move to reduce the population of expatriate labor would wreak havoc with commercial real estate. Many thousands of apartment buildings and rental property have been built specifically with a certain level of demand in mind. They are mostly owned by influential potentates and merchant families and they are mainly rented to expatriates. Imagine commercial property prices from Dubai all the way to Kuwait, imagine what would happen to them with a few million less expatriates. Imagine the population of, say, the UAE cut back by 40% (assuming about half the foreigners remain).

  • The same applies to trade, the import business. Goods are imported and ports and airports are designed to meet a level of demand that includes millions of foreign workers. Reducing the level of foreign labor would cause demand for goods and services and airline traffic to crash. Merchant families, close partners of the ruling families would not, cannot, allow that to happen.

  • Other businesses, especially services like restaurants, have been established to serve a certain population. Reducing the population would cause a severe recession, nay depression, in these sectors. On the other hand, these sectors employ mostly cheap foreign workers, and would suffer increased costs.

  • Public policy of the GCC states encourages native population growth through subsidizing births. This has led to even more demand for foreign labor. Every new citizen born will require the services of some foreign labor, from nurses to housemaids to cooks, etc. The policy has caused the share of foreigners in the total population to grow.

  • This is seen as more a cultural issue than an economic one. Most GCC countries have more foreigners than citizens. In the UAE and Qatar foreigners form about 90% (more than 80% are non-Arab), and the ratio for Kuwait is more than 60%. Even Bahrain has seen an explosion of foreign residents mainly because the rulers are importing foreign mercenaries and security agents instead of giving jobs to their own Shi’a citizens. Even Saudi Arabia has somewhere between 7-8 million foreigners among its people.

  • Import of foreign labor to the Gulf serves to create a balance within the Middle East, where some states now have labor shortages and others have high unemployment. Ironically, some Gulf states with labor shortages also have very high native unemployment (Saudi Arabia, UAE). Any major policy shift would impact other regional economies and probably impact GCC foreign relations as well.

A tough problem with solutions that are either not feasible or not desirable or both. I expect we will be still reading promises (or threats) about it twenty years from now…………


Iranian and Arab Population Policies: It is the Quality, Stupid! It is the Economics, Stupid!………


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“Mohammadi represents a worrisome trend to the Iranian government: More young couples are wary of having babies in the climate of economic instability caused by international sanctions. The disenchantment comes as the ruling Islamist clergy, alarmed by Iran’s meager population growth rate — estimated at 1% in 2011 by the United Nations — has mounted a campaign for families to have more children. Iran’s leaders fear the prospect of an aging population that would burden the welfare system and severely diminish productivity. Without a change, Iran’s median age is expected to rise from 27 to 40 by 2030…………The desire to migrate has also played a significant role in the lack of interest among young Iranians to have children — along with a turn away by women from conservative religious values as they seek equal footing with men…..………”

I posted on this topic before regrading Iran, and also about the Gulf GCC population policies. I still suspect that the main reason for this policy reversal is economic and financial. The mullahs couch it in religious and nationalist terms because that is what their base, their political supporters, understands best. It is the same story in other places, especially Europe and Japan: as the population ages, there is more demand on retirement age-related resources and less money going in. They need to get creative and find ways of replenishing these resources and making them more productive. A huge population explosion now a la Egypt or India would only postpone the problem and have it pop up later on a larger scale.
Now there is an idea in our region that more people means strength. The rulers, especially on the Gulf, encourage population growth. It is probably a tribal-ethnic-sectarian thing. In the old days, and even now in some places, the larger the tribe the more powerful it is. Yet this is erroneous. Look at Israel with a population of around 6 million: she defeated all Arab regime armies in whatever combination one could think of, several times. Six million defeated more than 200 million. Look at Hezbollah: representing less than 50% of Lebanon, barely two and maybe a half million people, yet it defeated the mighty Israeli IDF, twice (in 2000 and 2006)! I have no doubt that they can also defeat any Arab army now (that includes the Bahrain and Abu Dhabi and Qatari and Saudi Wehrmacht combined).
It is not the quantity, stupid. It is the quality, stupid!