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IMF Says One-Million Jobs Gap in GCC Risks More Unemployment

Nov. 12 (Bloomberg) -- One million nationals of oil-rich Gulf Arab states may be jobless or seek careers in a bloated public sector by 2018 unless measures are taken to create more private-sector employment, the International Monetary Fund said.

Private companies in the six-member Gulf Cooperation Council are expected to generate 600,000 jobs, one million less than the number of citizens likely to come into the labor market, Masood Ahmed, head of the Middle East and Central Asia department at the IMF, told a news conference in Dubai today.

“Most countries know now that the model of simply employing nationals in the GCC in the public sector is not a model that’s sustainable, because the public sector is running out of jobs to provide,” he said. “It’s just a measure of the challenge going forward.”

His remarks come amid a crackdown on undocumented foreign workers in Saudi Arabia as the biggest Arab economy seeks to enforce laws that require companies to provide more jobs to nationals. Clashes between Saudi police and foreign nationals during the weekend in Riyadh killed two people, including a Saudi citizen.

The jobless rate for Saudi workers is about 12 percent, according to official figures. Non-oil economic growth is forecast to stay little changed this year at 4.8 percent, IMF estimates show.

Expatriate Role

Foreign workers in Saudi Arabia “are and will continue to play a major role to play in the economy,” Ahmed said later in an interview. “The process of regularizing it, particularly when they’re dealing with undocumented workers, is always going to be difficult.”

Almost 70 percent of private-sector jobs in the GCC, which also include the United Arab Emirates, Kuwait, Oman, Qatar and Bahrain, go to expatriates, according to an IMF report presented today in Dubai. By contrast, citizens occupy 88 percent of government jobs.

“One element of expanding opportunities in the private sector is to limit public sector wage and job growth,” Ahmed said. “All the evidence shows that when you increase public-sector employment, you actually don’t reduce unemployment so much as you reduce private-sector employment.”

To contact the reporter on this story: Alaa Shahine in Dubai at asalha@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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