Exodus of expats led to stagnant economy

KUWAIT CITY, Jan 27: An analysis by Economic Observer pointed to the demographic imbalance in Kuwait which consists of 3 million expats which constitutes 70% of the country's population of 4.3 millions. In 2018 the Kuwait government adopted a policy and a plan within framework to reduce the imbalance, the policy accelerated in the year 2021 and it is expected by year 2025 it is expected to decrease expats by approximately to 1.6 million.

The Kuwait government continues to implement Kuwaitization policy; this means that the number of expats in the country will remain a central issue in domestic politics over the next few years. The Non Oil Economy sector is expected to lose skilled workers as many expats are occupying top posts in the companies, banks and financial institutions.
The exodus of expats continues due to the pandemic situation along with governments Kuwaitization policy and tightening laws on immigration. In 2021 more than 18,000 expats were deported while 257,000 expats left the country for good. There has been a shortage of labor in the private sector which depends on expats and difficulty in absorbing Kuwaiti employees in the public sector has threatened growth of Kuwait's economy. 

The Economic Observer stated that there has been a tremendous shortage of manpower in a number of sectors such as health and education. The government is currently unable to replace foreign workers with national labor mostly in the areas where Kuwaitis are unwilling to work. 

Salary Inflation
The private sectors which depend mostly on inexpensive expats are facing salary inflation issues as there is shortage of labor, most Kuwaitis do not want to do many of the jobs which expats do, reports Al Rai. 

Lack of flexibility in government policies negatively reflects on direct foreign investment while other neighboring countries in the Gulf such as Saudi Arabia, UAE are engaged in fierce competition to attract investments with temptations such as permanent residence and foreign ownership. Complex and bureaucratic obstacles in Kuwait drive away foreign investment to other neighboring Gulf countries. 

Foreign workforce

Expats workers dominate the private sector in Kuwait with 1.6 million workforce and 73,000 Kuwait citizens. In the year 2021 about 205,000 expats working in the private sector left Kuwait which affected the retail and hospitality sector. Rise in labor cost will delay the economy to recover throughout 2022. Economic diversification program will witness turmoil in labor intensive sectors such as construction and manufacturing units due to increase in high wage expenditures