Markaz publishes a report on possible policies towards effective Kuwaitization of the private labor market

26/06/2012

The Kuwait Financial Center (KSC) “Markaz” recently published a study titled “Kuwaitis and the Private Sector: Possible Policies Towards Effective Kuwaitization of the Labor Market,” which is its third publication in a series of studies “Towards sustainable economic development.” This study examines the best ways To integrate Kuwaiti workers into the private labor market, where it applies systematic methods to analyze the successes and limitations of the current Kuwaitiization policies, from an administrative and economic point of view.

Markaz Vice President for Research, Mr. MR Raghu, stated: "We started at Markaz before our period of activity in the field of research related to public policies, and our third publication in this field deals with the issue of Kuwaitization of the private labor market, which is a very important topic, as it enters the market Approximately 25,000 Kuwaiti youth work annually, and it is obvious that the state will be unable in the long run to absorb all new citizens into the labor market, so a greater share of job opportunities must be created in private sector institutions for the Kuwaiti worker.”

Mr. Raghu noted: "The Center"

Markaz's report analyzes the views of all parties concerned mainly with Kuwaitization of the private sector, namely the government of the State of Kuwait, private sector institutions and the Kuwaiti citizen, in an attempt to find sustainable solutions acceptable to all parties. The report also contains information from the experiences of all other Gulf Cooperation Council countries in the field of labor market reform and job localization policies.

The study stresses the need to find a solution to the issue of integrating Kuwaiti workers into the private labor market due to its profound impact on the state's general budget in the long run. The government continues to provide the majority of job opportunities for its citizens at an increasing cost. In addition, there is the challenge of engaging Kuwaiti citizens to contribute to and manage the country's economic development and diversification of its sources of income. This necessity also lies in the future ability of the private sector to absorb a larger segment of the citizens coming to the labor market. The report also concludes with the following conclusions:

The incomplete effectiveness of Kuwaitization efforts in the private sector from two aspects, namely, a) the permanent availability of government jobs for the citizen, and b) the sponsorship system, which makes the foreign employee more attractive to the private sector.

Previous attempts at Kuwaitization through mandatory corporate decisions mostly ignored the basic market factors, and resulted in some increase in the share of nationals employed in the private sector, but it led to disavowal, phantom employment, and the emergence of informal markets, in addition to an uneven and unfair distribution costs to companies.

The government’s adoption of another policy that depends on market data, which is to provide support for citizens employed in the private sector, which contributed significantly to narrowing the income gap between public sector jobs and private sector jobs, but at the same time it made quota rules a problematic tool that does not take into account the supply and demand factors of the market. Work and the productivity of its human elements.

 The report also includes some essential recommendations, namely:
  • Market regulatory legislation should be developed to include reforms to the public sector employment policy and the national immigration policy.

In the future, the state must consider abandoning Kuwaitization through mandatory government decisions that do not take into account structural considerations in the labor market, in favor of a policy based on incentives and prices. This policy can include subsidies and fees in a more comprehensive and systematic form.

In order to control the issue of unjustified government salaries, the process of renegotiating more broadly the privileges of citizenship in Kuwait, and reviewing these privileges to be disengaged from employment in the public sector, must be taken into consideration.

The link between employment in the public sector and the privileges of citizenship can be disengaged by granting a guaranteed and unconditional income to every adult Kuwaiti citizen, in return for reducing public sector employment. In this way, the privileges of citizenship will be direct, more just and transparent, administratively easier, better for the quality of public administration in the state, and less distortion of the labor market and educational incentives.

The Center publishes a series of studies "Towards sustainable economic development" in cooperation with international experts in this field in light of the recent high oil prices, according to which the need to formulate objective public policies focusing on sustainable development has become a very important initiative. Markaz believes that this type of initiative will enable Kuwait to take the path of sustainable development by providing economic content aimed at supporting public debate and dealing with the many transformations in the Gulf Cooperation Council countries, where advice from monitoring centers and impartial advisory councils aimed at sustainable development in the region is scarce. The field of public policies, except for commercial advisory studies.

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About Kuwait Financial Center "Markaz"

The Kuwait Financial Center (KSC) "Markaz" was established in 1974 to become one of the reputable financial institutions in the Arab Gulf region in the fields of asset management and investment banking. The center now manages assets totaling 888 million Kuwaiti dinars as of March 31, 2012 (US$3.2 billion). Markaz was listed on the Kuwait Stock Exchange in 1997.