Companies layoff staff, thousands of families leave

KUWAIT CITY, Sept 18: According to the National Bank of Kuwait (NBK), after the population census of Kuwait in 2020 witnessed the highest annual rate of decline in nearly 30 years by about 2.2 percent, the population decreased again by 0.9 percent from the beginning of the year until the first half of 2021 to reach 4.62 million people, reports Al-Rai daily. In its economic report, the bank attributed this decline mainly to the continued decline in the number of expatriates, while the number of Kuwaiti citizens continued to increase. It explained that the continued application of replacement (Kuwaitization) policy, and the weak economic environment due to the COVID-19 pandemic, have forced companies to layoff several staff members, which prompted thousands of expatriate families to leave the country.

Demographic
According to the latest demographic data issued by the Public Authority for Civil Information (PACI), the population of Kuwait decreased by 0.9 percent during the first half of 2021 to reach 4.62 million, after it decreased by 2.2 percent in 2020. The report attributed this to a decrease in the number of expatriates by about 1.8 percent. On the other hand, the number of Kuwaiti citizens witnessed a modest growth of 0.9 percent, amid a decline in the ratio of expatriates to the total population to 68.2 percent, which is the lowest level recorded in ten years. This comes at a time when data showed that more than 56,000 expatriates left the country during the first half of 2021. The report revealed a continued slowdown in the number of Kuwaiti citizens under the age of 15, which reached 0.1 percent from the beginning of the year until the first half of 2021, compared to 0.6 percent last year and one percent in 2018.

Despite this decline, this population segment, which comprises about 493,000 citizens, represents more than one third of the population of Kuwaiti citizens. This may impose more pressure on the labor market in the future. At the same time, there is an increase in the number of citizens of working age over 15 years old at a strong level estimated at 2.4 percent on an annual basis, in the first half of 2021. After the total number of jobs decreased by 4.2 percent year-over-year in 2020, it declined again by 1.7 percent year-over-year in the first half of 2021. This is attributed to the increase in employment of Kuwaiti nationals at a modest pace, the decline in the number of expatriate workers’ jobs, and the decline in the employment rate of Kuwaiti citizens from 2.1 percent in 2020 to 1.3 percent during the first half of 2021, driven mainly by the decline in employment in the private sector by about 1.5 percent or about 940 citizens.

The public sector maintained the pace of employment with an increase of 1.8 percent, or about 6,200 citizens, which, to some extent, is due to Kuwaitization efforts, as this type of employment will increase pressure on the budget, at a time when the salary bill alone represents about 60 percent of the total governmental spending. The report explained that the employment of expatriates decreased by 2.2 percent during the first half of 2021, after a decrease of 5.2 percent in 2020, against the background of a decline in employment activities in both the public and private sectors by 2.2 percent and 2.8 percent respectively. The jobs of domestic workers were less affected, given that they decreased by only 1.1 percent in the first half of 2021

Domestics
The report highlighted that the government allowed the return of domestic workers to the country as soon as flights resumed. Excluding domestic workers, the number of expatriate workers decreased by 2.7 percent as a result of the decline in employment activities in the private sector by about 2.8 percent, compared to 7 percent in 2020. It is believed that the main reason behind the decrease in the rate of employment of expatriate workers in the private sector, with the exception of domestic workers, lies in the sharp decline in the construction sector jobs by 9.8 percent, and the real estate sector by about 5.1 percent, in line with the weak pace of project completion and the declined activity in the real estate sector during the COVID-19 period. The report explained that the number of expatriate workers in other sectors such as manufacturing decreased by 5.3 percent, and in hotels and restaurants by 2.1 percent.

Expatriate workers with low wages and low skills were most affected by the repercussions of the COVID-19 pandemic, as about 94 percent of the jobs were lost, according to the bank’s report. Job losses and the rise in the cost of living had forced some expatriate workers to repatriate their families, as the number of expatriate families continued to decline at the pace of the previous year, which was 0.4 percent in the first half of 2021. The report concluded by stating that in the future, despite the possibility of the return of some expatriates who are stranded outside Kuwait with the resumption of flights, it is generally expected that more expatriate workers will leave due to the continuing repercussions of the COVID-19 crisis and the effects on Kuwait, which push companies to lay off their employees in light of the weakening economic environment.