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5 Inter-Arab Labor Movements: Problems and Prospects

Editor(s):
Saíd El-Naggar
Published Date:
May 1993
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Introduction

This paper deals with inter-Arab labor movements in the light of major developments in the Arab countries in the last two decades. With the quadrupling of oil prices and revenues in 1974, the oil exporting Arab countries witnessed an unprecedented economic boom. This period lasted until 1983, during which time the infrastructure was entirely constructed. With the drastic decline in oil prices and revenues, the economies of most Arab countries experienced negative growth during the 1980s.

Inter-Arab labor movements followed the same pattern of economic expansion and slowdown in the 1970s and 1980s. Moreover, such movements were also influenced by government policies, particularly in the labor-receiving countries. Although inter-Arab labor movements had a positive impact on Arab cooperation and development, the Middle East crisis and war dealt a heavy blow to this area through the sudden return of 1.5 million persons from the oil exporting Arab countries to their home countries.

The size of the inter-Arab labor movements, their impact, and the resulting problems will be briefly presented in this paper, and since the emphasis of this seminar is on future implications, the prospects for inter-Arab labor movements will also be discussed.

Before elaborating further, I would like to make three introductory observations. I would like to say how pleased I am that the topic of labor movements has been selected as one of the areas affecting the prospects of Arab economies. In spite of its economic and social importance, this subject has been almost outside the conventional economic literature. A few economists specialized in labor and human resources development studied labor movements, but it has not been given due attention in Arab economic thinking. Except for specialized articles and publications, it has remained the subject matter of Arab labor conferences and related activities.

Second, inter-Arab labor movements were and still are a debatable issue as they encompass human, cultural, social, economic, and political considerations. On many occasions, the treatment of workers was raised by states and led to high-level interventions. On the other hand, a lively debate is usually encountered when data related to the magnitude of imported labor and its classification into occupation, sex, educational attainment, nationality, and other categories is discussed. But debate and perhaps disagreement on these aspects should not encourage us to avoid studying the subject and its implications. Labor flows and labor stock should also be differentiated. Labor stock consists of all workers residing in a given country on a given date. Of course, labor stock is influenced by the trend and magnitude of labor flows.

Third, this paper does not tackle Arab migrant labor in Western Europe and other regions outside the Arab world. Although this movement is of great interest, it is outside the context of this paper, which confines itself to inter-Arab labor movements.

The migration of Arab workers to Western Europe and the Arab brain drain to the industrialized countries have significant implications. Arab countries, particularly in North Africa, are not able to provide enough remunerative job opportunities to their growing labor force. The number of migrant workers from Morocco, Algeria, and Tunisia in Western Europe is estimated at 2 million. Including their dependents, the number reaches about 3 million. To encourage migrant workers to return to their home countries, Germany and France introduced certain financial incentives.

In recent years, and owing to the economic slowdown, the European Community (EC) applied strict regulations against the entry of migrant workers. This trend has been strengthened by the high unemployment in the Community and the rise of nationalism. Arab labor migration to the European Community countries was one of the major issues raised in the 1970s in the Euro-Arab dialogue meetings. It is still one of the elements of the EC Mediterranean policy.

Inter-Arab Labor Movements: Assessment of Their Impact

The raison d’être of inter-Arab labor movements has been the resource imbalance in the oil exporting Arab countries, particularly the countries of the Gulf Cooperation Council (GCC). With a limited population base and relatively large oil revenues, these countries have to rely on “imported” labor to carry out development projects, to assist in performing government administrative functions, and to help in running private sector enterprises.

In contrast with the capital-surplus countries of the GCC area, the resource imbalance in other Arab countries consisted of a relative abundance of labor and a shortage of capital. Thus, a regional complementarity has been promoted on the basis of market forces since the early 1950s. At that time, slowly but steadily, labor flows began to occur from Egypt, Jordan, the Republic of Yemen, Lebanon, the Syrian Arab Republic, and Sudan toward Saudi Arabia, Kuwait, and others. These flows consisted of all types of labor: teachers, clerks, engineers, translators, salesmen, unskilled labor, etc.

The total population of GCC countries amounted in 1991 to 20.7 million with a GDP of $180 billion (Table 1). Although these countries accounted for 9 percent of the total population of Arab countries, their GDP amounted to 43 percent of total Arab GDP, which reflected a striking disparity among Arab countries in per capita incomes and living conditions.

Table 1.Some Indicators of Labor-Importing Arab Countries
Population

(millions)
GDP

(million U.S.

dollars)
Per Capita

Income

(U.S. dollars)
198019911980199119801991
GCC countries13.320.7223,484.7179,931.410,7968,692
Iraq13.219.653,586.655,633.64,0602,838
Libya3.24.735,142.529,977.810,9826,378
Other Arab
countries135.3183.5127,340.4150,655.1941821
Arab countries165.0228.5439,554.2416,197.92,6641,821
Source: Arab Economic Report, 1992, pp. 240–45.
Source: Arab Economic Report, 1992, pp. 240–45.

Up to 1973, the size of inter-Arab labor movements was limited. Some oil exporting Arab countries were even labor exporting: Iraq and Oman. However, with the jump in oil prices in 1974, oil exporting Arab countries began to experience a new economic era, during which their oil revenues multiplied, enabling them to initiate and implement ambitious development programs. Accordingly, many projects were executed establishing new infrastructure such as schools, hospitals, roads, ports, housing projects, communications, government buildings, and universities. The construction of these projects required the inflow of increasing numbers of workers of varied nationalities. Iraq and Oman also had to rely on imported labor. By the late 1970s, Jordan and Yemen had turned into labor-importing as well as labor-exporting countries. Thus, Jordan continued exporting to the GCC countries skilled technical and professional manpower, while importing from Egypt unskilled and manual labor, particularly in construction, agriculture, and the service sectors. Demand for labor also rose in the Libyan Arab Jamahiriya, whether from Arab countries (Egypt, Tunisia, and Sudan) or from other countries (Turkey, the Republic of Korea, Bulgaria, and others). In 1980, expatriate labor in Libya was estimated at 545.5 thousand, of whom 377.3 thousand were of Arab nationalities. Owing to unexpected changes in economic policies, imported labor varies from one time to another.

Iraq has become a major labor-importing country, particularly from Egypt and Sudan. In 1980, expatriates amounted to 1.25 million, of whom 1 million were Egyptians. In the 1980s, Iraqi demand for foreign labor increased, owing to the war with the Islamic Republic of Iran and the implementation of many development projects. It resorted to using Egyptian, Sudanese, Korean, and other labor, depending on the executing company. By the late 1980s, expatriate labor was 2 million. As of 1989, however, it declined, and with the Middle East crisis and war most non-Iraqi, including Arab, workers had to leave.

In the light of the above analysis, this paper will concentrate on labor movements to the GCC countries. Table 2 presents the size of the labor force in the GCC countries for 1975, 1980, 1985, and 1990.

In 1975, nonnationals amounted in the GCC countries to 1.1 million, thereby accounting for 46.5 percent of the total labor force there. Imported labor rose subsequently, to about 3 million in 1980—65.2 percent of the total. In spite of the considerable slowdown in the oil market during 1983–89, which was reflected in oil prices and revenues and in other economic activities in the GCC countries, the number of nonnationals continued to rise, to 4.4 million in 1985 (70.2 percent of total), and to 5.2 million (67.7 percent of total) in 1990.

Table 2.GCC: National and Foreign Labor Force by Country of Residence(In thousands)
Country of

Residence
NationalForeignTotalPercent of

Foreign

to Total
1975
United Arab
Emirates44.7234.1278.884.0
Bahrain45.838.784.545.8
Saudi Arabia1,010.7474.71,485.432.0
Oman88.9103.2192.153.7
Qatar11.757.068.783.0
Kuwait92.4217.6310.070.2
Total GCC1,294.21,125.32,419.546.5
1980
United Arab
Emirates53.9470.8524.789.7
Bahrain59.378.2137.556.9
Saudi Arabia1,220.31,734.12,954.458.7
Oman119.4170.5289.958.8
Qatar14.7106.3121.087.9
Kuwait180.5392.6501.178.3
Total GCC1,648.12,952.54,528.665.2
1985
United Arab
Emirates71.8612.0683.889.5
Bahrain72.8100.5173.358.0
Saudi Arabia1,440.12,661.84,101.964.9
Oman149.8335.7485.569.1
Qatar17.7155.6173.389.8
Kuwait127.2551.7678.981.3
Total GCC1,879.44,417.36,296.770.2
1990
United Arab
Emirates96.0805.0901.089.3
Bahrain127.0132.0259.051.0
Saudi Arabia1,934.02,878.04,812.059.8
Oman189.0442.0631.070.0
Qatar21.0230.0251.091.6
Kuwait118.0731.0849.086.1
Total GCC2,485.05,218.07,703.067.7
Note: See technical notes in annex.
Note: See technical notes in annex.

Saudi Arabia is the largest “importer” of foreign labor. In 1990, nonnationals were estimated at 3 million, accounting for 59 percent of total nonnationals in the GCC countries. The United Arab Emirates were next, followed by Kuwait and Oman.

Some GCC countries depend almost completely on imported labor. As shown in Table 2, this dependence has deepened over the years. In 1990, nonnationals accounted for 91.6 percent of the total labor force in Qatar, 89.3 percent in the United Arab Emirates, and 86.1 percent in Kuwait. Nationals of these countries work either in the public sector or as employers in the private sector.

As of the mid-1970s, the large income and wage disparities between the oil Arab countries and other Arab and Asian countries became widely felt. Travel to the GCC countries for work and higher income was the ambition of many unemployed or low-paid workers. Labor-sending countries were unable to regulate the outflow and relied on market forces. In some Asian countries, the private sector established too many competing employment offices to handle the outflow of their labor, particularly to Arab oil countries. Accordingly, labor-importing Arab countries had to apply restrictive labor policies: tough visa restrictions were imposed. Afterwards, restrictions were enforced on dependents, instituting a minimum salary to allow for the worker’s wife to accompany him. Wage differentials between nationals and nonnationals performing the same work were also instituted. Nonnationals were not allowed to own real estate, stocks, and private shops. This constraint compelled many nonnationals to register their assets in the name of national partners against an annual fee.

The labor-sending countries accepted the new pattern of labor relations. They actually had very little control over the movement of their own workers. They also realized that inter-Arab labor movements are beneficial from four aspects. First, the main benefit arising from labor movements emanates from the financial remittances of workers to their home countries. An International Monetary Fund study on financial flows among Arab countries showed that workers’ remittances amounted to $10 billion annually from 1980 to 1984 and $6 billion annually thereafter. In fact, workers’ remittances from the GCC countries were the most significant source of financial movement in the region, compared with official grants, loans, and investments. Remittances represented the main financial spillover to countries that were short of capital (Yemen, Egypt, Jordan, the Syrian Arab Republic, Lebanon, and Sudan).

The substantial amount of workers’ remittances helped meet part of the chronic balance of trade deficits of the labor-sending countries, ease their foreign exchange shortage, and finance industrial and agricultural services and real estate projects. As shown in Table 3, the combined workers’ remittances transferred to four labor-sending countries during the 1980s amounted to $57.7 billion ($32 billion to Egypt; $11.8 billion to the Republic of Yemen; $9–9 billion to Jordan; and $4 billion to the Syrian Arab Republic). During the past decade, workers’ remittances covered over 60 percent of the trade deficits of Egypt, Jordan, and the Republic of Yemen.

It should also be noted that the above figures on workers’ remittances underestimate the actual magnitude. Not all remittances are effected through the banking system. Rather, about 30 percent of the figures above are added through money changers and the amounts hand carried in cash or in kind by the workers.

Second, the GCC labor markets helped, particularly during 1974–82, to absorb part of the otherwise unemployed labor force in the labor-sending countries. These countries were facing structural unemployment owing to the high rate of population increase and the still higher rate of growth of their labor force. With the economic slowdown in the western Asia region in the 1980s, structural unemployment worsened.

Third, working in the GCC countries was also enriching for the nonnationals, particularly those who newly entered the labor market. They gained skills and know-how. With people from a diversified background and many nationalities, the working environment becomes highly competitive. Many migrant workers returned with some savings but even more with new ideas on how to start their own businesses at home.

Fourth, size, nationality composition, and trends in inter-Arab labor movements were always influenced by inter-Arab political relations. In that context, labor-sending countries considered labor movements an area for regional cooperation. Indeed, a number of labor agreements were reached in the context of the Arab labor organization dealing with labor movements and social security entitlements but were far from implementation. Also, inter-Arab labor movements helped in easing regional imbalances in the labor market (demand, supply, and wage levels) and the capital market. However, imbalances, though less acute, persisted, particularly in the light of certain labor policies that the GCC countries had adopted in the last decade and the limited ability of the labor-sending countries to create sufficient and rewarding jobs locally.

Table 3.Remittances Accruing to Selected Arab Labor-Sending Countries(Millions of U.S. dollars)
Total
Country19801981198219831984198519861987198819891980s
Egypt
Remittances2,6962,1812,4393,6663,6933,2122,5063,6043,7704,25732,024
Ratio of
remittances to
trade deficit88.8855.765.780.463.761.655.272.457.155.563.6
Jordan
Remittances7941,0331,0821,1101,2371,0221,1849388956279,922
Ratio of
remittances to
trade deficit50.949.650.952.371.962.483.063.963.485.560.9
Syrian Arab
Republic
Remittances7474364113873213503233343603554,024
Ratio of
remittances to
trade deficit40.819.925.218.417.316.724.438.456.435.8129.6
Republic of
Yemen
Remittances1,6091,3351,5911,6521,5211,2148641,01858143811,823
Ratio of
remittances to
trade deficit67.257.961.868.972.673.572.166.742.239.263.4
Source: United Nations Economic and Social Commission for Western Asia, based on computer printout. Department of International Economic and Social Affairs of the United Nations (New York, May 1991).

Trade balance recorded surplus in that year.

Source: United Nations Economic and Social Commission for Western Asia, based on computer printout. Department of International Economic and Social Affairs of the United Nations (New York, May 1991).

Trade balance recorded surplus in that year.

Limitations on Inter-Arab Labor Movements

In contrast with the 1970s, the 1980s were a “lost” decade in Arab economic development. In the 1980s, the Arab region suffered from many negative developments, including the war between Iraq and the Islamic Republic of Iran, the continuation of the civil war in Lebanon, the Palestinian intifada against Israeli occupation, the problem of external debt for many Arab countries, the economic slowdown with a high rate of population growth, the implementation of economic adjustment programs approved by the International Monetary Fund, and the disappointing momentum of the joint Arab action. To make things worse, oil—the main source of income—witnessed a severe decline, which affected overall economic activities and the main economic indicators. The decline in the oil market was due to two factors: the volume of oil exports and production dropped and the prices for oil decreased. Both factors led to a sharp drop in oil revenues. Production of oil in the Arab countries reached 22.2 million barrels a day in 1979 but was reduced to half this quantity in 1984 and remained below the 1979 level (16.1 million barrels a day in 1991). At the same time, oil prices reached $34.3 a barrel in 1981 and decreased thereafter to $13.5 a barrel by 1986.

The drop in oil revenues was more severe. The value of Arab oil exports amounted to $213.6 billion in 1980. It declined to $45.2 billion in 1986, less than one-fourth of the 1980 level. Although Arab oil revenues improved afterwards, they were short of the level of the early 1980s. They amounted to $75.8 billion in 1991, given that the purchasing power of the dollar decreased.

In addition to the economic slowdown of the 1980s, the Arab world witnessed new developments that adversely affected inter-Arab labor movements. Labor-receiving countries initiated new policies to encourage greater participation of the national labor force. Owing to lower wages, a trend toward replacing Arab with Asian workers was steadily taking place. Finally, the Middle East crisis and war dealt a devastating blow to inter-Arab labor movements by abruptly forcing about 1.5 million Arab workers to return to their home countries. Whether these negative developments are short-lived or not has yet to be determined.

Encouragement of Greater Participation of National Labor Force

Once most of the physical infrastructure had been constructed in 1974—82, the labor-receiving countries adopted new policies toward scrutinizing the inflow of foreign labor. One government after another has declared policies and programs for enhancing the participation of the national labor force. Some national development plans of the mid-1980s considered addressing the population imbalance a major national objective. Another country declared specific quantitative targets for participation of nationals in government departments, educational institutions, banks, etc. Most labor-receiving countries decided to give priority in employment to their nationals.

Although the motive behind these policies was understood, and every state has the right to give priority to its own nationals, particularly in the light of the population increase, the growth in the labor force, and the greater participation of women in the labor-receiving Arab countries, the application of these policies was not so simple. It appeared that the private sector had already adapted to a division of labor with nonnational workers whereby the latter was relied upon not only for manual and skilled labor but also for the professional and technical categories. Greater participation was justified and was achievable, particularly in the public sector. More success in this direction was noticed in Bahrain and to a lesser extent in Saudi Arabia. As shown in Table 2, the percentage of nonnationals to the total labor force rose from 46.5 percent in 1975 to 56.2 percent in 1980 and to 70.2 percent in 1985. However, it went down in mid-1990 to 67.7 percent, with 5.2 million foreign workers in the GCC countries. Accordingly, the participation of the national labor force was concentrated in the public sector, whereas the private sector maintained its preference for Asian workers. Both these trends had limitations on the inflow of Arab workers.

More Reliance on Asian Labor

Available data show that Arabs and Asians were always the two major groups of nonnationals in the labor force of the GCC countries. In the mid-1980s, each accounted for approximately 47 percent of total nonnationals. U.S. citizens and Europeans were no more than 5 percent at that time.

In the mid-1970s, Arab workers constituted a majority of 57 percent whereas Asians accounted for only 36 percent. It is believed that the shift from Arab to Asian workers took place in the early 1980s.

As for the distribution of the labor force by nationality and country of residence, there were two main absorption countries for Arab labor in the mid-1970s: Saudi Arabia, with an Arab majority of 82 percent of total non-Saudi labor, and Kuwait, where Arab workers constituted 69 percent. The rest of the GCC countries mainly attracted Asian labor, with a percentage varying from 88 percent in Oman to 55 percent in Bahrain. With time, the percentage of Arab labor decreased in all GCC countries, and whereas it remained high in Saudi Arabia, it decreased to 60 percent in the mid-1980s.

By that time the Asian labor force had become the majority in Kuwait. It is interesting to note that the Arab share in “work permits issued for the first time” in the private sector decreased from 40 percent in 1980 to 14 percent in 1985, whereas the Asian share increased from 56 percent to 80 percent.

It is believed that the decreasing trend of Arab labor in the GCC countries observed during the first half of the 1980s continued during the rest of the decade. Available fragmentary data from the two main attractive pools of Arab labor, Saudi Arabia and Kuwait, confirm this statement. In Saudi Arabia, for example, the Arab share in institutions employing 100 employees and over in the private sector did not exceed 7 percent during 1987–89, whereas the Asian share reached 57 percent during the same period. Although the above data cover a limited proportion of the total labor force, the low Arab share reflects a decreasing inflow of Arab labor into this country.

Thus, based on the above, a reasonable “guesstimate” may place the Arab share in 1990 at between 30 percent and 35 percent of the total nonnational labor force in the GCC countries.

One main reason for the decreasing Arab share is the difference in wages paid for Arab and Asian workers. Data available for 1987–89 related to wages in the private sector in institutions employing 100 employees and above in Saudi Arabia show that an Arab worker was paid on average twice as much as his Asian colleague in 1987 and three times more in 1989. Saudi workers were paid on average more than Arab and/or Asian workers in all occupations. For example, a Saudi “professional and technical” worker was paid 1.4 times more than an Arab and 3.6 times more than an Asian worker performing the same occupation. It is interesting to note that only Westerners were paid on average more than Saudis in almost all occupations.

There are justifications for the increased reliance on Asian labor other than wage differentials. During the construction boom of 1974–82, large contracts were carried out by companies from Korea, India, the Philippines, the United Kingdom, and Japan, which imported thousands of Asian workers in a work camp arrangement. Their direct contact with the local society, whether positive or negative, was kept to a minimum. Some of these workers seeped into the country after their contracts had expired.

Asian workers are considered or perceived to be more obedient and disciplined. They accept jobs that the Arab workers usually decline, namely, domestic helpers, nurses, and others. They do not insist on having their families accompany them. There are, of course, counterarguments. Arab workers tend to spend more of their incomes locally. They do not constitute a cultural and political threat to the character of the GCC countries. They also tend to be more educated.

Middle East Crisis and Abrupt Return of Arab Workers

The most serious negative development that affected inter-Arab labor movements was the abrupt return of about 1.5 million Arab workers as a result of the Iraqi occupation of Kuwait on August 2, 1990 and the ensuing war. According to up-to-date estimates, 731.8 thousand Yemeni workers had to return, mostly from Saudi Arabia. Other returnees included 250 thousand Jordanian workers returning mostly from Kuwait and 390.4 thousand Egyptians returning mostly from Iraq. Other Arab workers, though in much smaller numbers, included Sudanese, Syrians, and Lebanese.

Of all returnees, it was those working in the private sector that suffered most. Ex-government employees were paid, albeit after some time, their end-of-service entitlements. However, this was not so for workers in the private sector, except for those working in large establishments such as banks. The major loss was incurred by those self-employed in their small businesses, who had to liquidate them abruptly and under adverse market conditions. A large number of the Yemenis and the Jordanians had to sell their businesses under buyer’s market conditions.

There were other cases of massive expulsion of Arab migrant workers for political considerations, which usually lie beyond the domain of the workers themselves. In 1976 and 1987 Tunisian and Egyptian workers, respectively, were deported from Libya. It took a long time for the Arab and international mediators to arrange for the deported workers to be paid their indemnities and to be compensated for their properties.

The problems resulting from the massive return of workers go well beyond those of the individual worker. Their sudden return has caught their governments unprepared. Unemployment conditions have suddenly worsened. Remittances are expected, after a time lag, to decline. Pressures on schools, health facilities, housing, and other social and economic facilities mount. In addition, humanitarian factors cannot be ignored when such a return of workers suddenly occurs.

Problems related to inter-Arab labor movements were felt early on, before the Middle East crisis and war, and came to the fore in one way or another. But whenever an opportunity arose to discuss these problems, they were avoided on the grounds of being sensitive, political, or outside the agenda. Also, some of these problems were based on impressions and individual subjectivity. However, the attitude of labor-receiving countries boils down to the following.

A large number of Arab workers were needed when infrastructure had to be built and until the human resources (teachers, physicians, government employees, etc.) had been developed. Now we no longer need these numbers, and we must balance the composition of our population. In any case, we need some workers without their families, who cost a lot for education, medical care, and other services. High-income workers may have their families with them. Some jobs that require Arabic may need Arab labor until our program of enhancing the participation of national labor is totally implemented. For other jobs, we will leave the matter to the labor market, which will naturally see the value of Asian labor that is cheaper, more obedient, and less of a political and security problem. If Arab workers do not understand our policy, we shall enforce severe visa and residence restrictions. In any case, no real estate or business should be registered in their names.

From the viewpoint of the labor-sending countries, it was believed that the benefits of employment abroad continued to out-weigh the problems. They were not so happy with the increasing number and proportion of Asian workers. They felt that they had incurred large expenses to educate and train workers before they left. Remittances were not always used rationally: they led to inflationary pressures, conspicuous consumption, and sky-rocketing prices, particularly in real estate.

Prospects for Inter-Arab Labor Movements

Owing to the uncertainty of political and economic developments in the region, it is extremely difficult to present a concrete proposition on the prospects of inter-Arab labor movements. One can only refer to trends, possibilities, and nonquantitative prospects.

The most significant factors that will affect the magnitude and trends of inter-Arab labor movements are

  • Oil prices, oil revenues, and the percentage of these revenues that is allocated to domestic development activities (in contrast with arms purchases, lending abroad, and official assistance).
  • Security and political stability in the GCC region, including the Iraq-Kuwait situation, the prospects of lifting sanctions on Iraq, fundamentalism, Iranian policies in the GCC area, and border disputes.
  • Prospects for the Arab-Israeli bilateral and multilateral peace negotiations (stalemate, partial settlement, or overall settlement within a wider context of regional cooperation).
  • Policies of the labor-receiving countries toward the nationality composition of expatriate labor. Linked with these policies is the question of how much and when do we expect a revival of Arab cooperation in contrast with the fragmentation caused by the Middle East war.

With the uncertainty and complexity of the above major developments, one has to rely on a subjective assessment of the future. Without going into various possible scenarios, and judging from previous developments, the prospects for inter-Arab labor movements seem to show the following most probable trends.

  • Labor-receiving countries will continue to consider labor importation a matter of national sovereignty and an area of political relations. The implications of this position are that these countries will continue to control and scrutinize the size, national composition, security risk, and patterns of labor inflows. They also will be reluctant to give up these policy options in favor of agreed-upon bilateral and/or multilateral agreements.
  • The economies of the Arab countries are expected to grow over the coming decade but not at a high rate, probably between 3-4 percent annually. This means that the GCC countries will require additional foreign labor, although at a low rate of increase. Actually, when the economies of Western Asia recorded negative growth in the 1980s, nonnational labor increased in the GCC countries in 1985–90 by 3.3 percent annually. In addition to the demand for labor owing to economic growth, there is also some demand for replacement of the labor displaced during the Middle East crisis and war in addition to that caused by retirement. Thus, it will take up to the year 2000 and with an annual growth rate of 5 percent to reach the 1990 level of nonnationals in the GCC countries.

The percentage of Asian labor is expected to increase further. This may hold up to a certain point. Therefore, demand for Arab labor will continue, although it will be more selective and less of a massive flow.

One might expect that the present state of “disenchantment with Arab joint cooperation” will come to an end in the near future. Bearing in mind the minimum level of Arab cooperation that prevails at present, the national move should be to rebuild Arab cooperation on new bases. Inter-Arab trade continues to be marginal (8 percent). Inter-Arab investments, though important for some countries, are not yet a prime mover of regional cooperation. Arab investments abroad are facing an unfriendly environment. The rationale for regional cooperation remains as convincing as ever, particularly with the present worldwide trend toward regional economic groupings.

It is a given fact that inter-Arab labor movements depend on the overall relations among Arab countries. However, with the potential of regional complementarity, it is only rational to expect some revival of Arab labor cooperation, including more Arab investments in the labor-surplus countries.

Annex

Technical notes relate to the estimations given in Table 2.

Sources of data. In general, estimates are based on available national censuses and/or labor force surveys. The main sources used, in addition to current statistics (labor/residence permits), covering 1974–89, are shown below.

Saudi Arabia

1975: National population was taken from Ismail A. Sirageldin, Naiem A. Sherbiny, and Ismail Serageldin, Saudis in Transition: The Challenge of a Changing Labor Market (World Bank: Oxford University Press, 1984). Nonnational population was estimated on the basis of the 1974 Saudi population census.

1980, 1985: Estimates are based on data provided by the labor force surveys for 1977, 1981, 1986, and 1987.

1990: Preliminary 1992 population census results.

Kuwait

National population censuses for 1970, 1975, 1980, 1985, and labor force surveys for 1983 and 1988.

Qatar

National population censuses for 1970 and 1986 (preliminary results), and the 1981 survey.

Bahrain

National population censuses for 1971 and 1981.

United Arab Emirates

National population censuses for 1975 and 1980 (detailed results) and 1985 (preliminary results).

Oman

National labor force in 1975 and 1985, as given by World Bank (Sirageldin and others). Nonnational labor force based on World Bank and on total nonnationals employed in private sector and civil servants.

COMMENT

MOHAMED AL-AMIN FARES

The seminar organizers have made the right decision in choosing Mr. Tayseer Abdel Jaber to write this paper, “Inter-Arab Labor Movements: Problems and Prospects.”

The author’s involvement in labor issues goes back a long way—to when he was responsible for the labor sector in his country. Labor has also been the main focus of his research work. This involvement continued throughout his tenure as Secretary General of the Economic and Social Commission for Western Asia (ESCWA). A critical phase of his pursuit of labor matters came when he closely monitored labor dislocation caused by the Middle East crisis.

I would like, however, to make the following observations. The paper focused exclusively on labor migration to member countries of the Gulf Cooperation Council (GCC). Although these countries may be the most important importers of labor, the author has neglected other countries that are no less important, such as the Libyan Arab Jamahiriya and Iraq (the latter ranking second among the major labor importers in the first half of the eighties) and Jordan, both as a labor importer and exporter. It is likely in the nineties that both Iraq and Jordan could regain some importance as labor-receiving countries. The paper’s coverage seems to be exclusively confined to the members of ESCWA, even though it could usefully have been expanded to include all Arab countries and to discuss Arab labor migration to Europe.

The author has been somewhat prudent in his approach, as he attempted to treat labor migration issues without injecting any controversy. This careful approach might be quite justifiable, but within a framework of exploring the prospects of Arab economies in the nineties, such an approach loses much of its rationale.

Caution is particularly evident in the examination of the prospects for labor movements. Such caution is appropriate, given the uncertainty surrounding the prospects of Arab economies. But the occasion calls for taking some risk by offering options and scenarios, especially where vague references are made to Arab-Israeli peace prospects as they relate to labor movement and migration.

The author has been in the right place to monitor the consequences of the Middle East crisis on labor migration and movement. These consequences, however, go beyond the mass return of workers and the resulting hardships for both the returnees and their respective countries. It should have been possible to illustrate the new reality of migration and movement, a reality that has changed radically since the summer of 1990. This change is important for any consideration of labor movement prospects in the nineties.

In addition to these general remarks, the five sections of the paper raise some specific comments and a number of questions. They are meant to stimulate discussion and to link the subject with the main topic of the seminar.

Inter-Arab Labor Movements: Assessment of Their Impact

In this section, the author relies on data relating to distribution of the work force between nationals and nonnationals in the GCC countries during 1975–90. It is difficult to compile such data in one table without recourse to estimations and assumptions. As such, they are subject to different interpretations. For example, it may be argued that the total work force in Saudi Arabia in 1990 was not 4,812,000, as mentioned in the paper, but rather 5,771,000, as indicated in the Fifth Development Plan. Similarly, other estimates in the paper may be debatable. In a seminar such as this, however, it may not be as important to agree on accurate forecasts as on the actual trends in labor movement flows. The “clean slate” offered by the paper for labor force distribution seems adequate for the purposes of the seminar. But a distribution of the expatriate work force, which is missing in the paper, would have provided a clearer picture, even though any relevant estimates may become subject to further objections and disagreement. References to these were made in another part of the paper; but it is quite easy to disagree with such estimates by presenting figures on the ratio of expatriate Arab workers to the total of the expatriate work force as follows in Table 1.

In this section, the author argues that the labor policies of the GCC countries in the mid-seventies were developed along three specific lines. Although there is validity in this argument, some observations regarding such policies are appropriate.

Table 1.Ratio of Arab Nationals to Total Expatriate Work Force in Main Labor-Importing Countries
19801985
Bahrain19.015.2
Kuwait21.769.0
Oman10.89.1
Qatar31.923.4
Saudi Arabia77.656.1
United Arab Emirates21.719.4
Total58.456.1
Jordan77.926.4
Iraq90.085.0
Source: Estimates prepared by the Department of Labor Force Development, Arab Labor Organization, from various sources.
Source: Estimates prepared by the Department of Labor Force Development, Arab Labor Organization, from various sources.
  • The policy orientations referred to by the author have been in place since the beginning of the modern process of labor migration.
  • The reference in the first place to the fact that visa restrictions were imposed despite the existence of an Arab Economic Unity Agreement and an Arab Common Market must be viewed in its proper context as nothing out of the ordinary: Kuwait is the only state that has acceded to that agreement. The same reference, however, raises an important question about the usefulness and credibility of established Arab conventions, including Convention No. 2 on Movement of Arab Workers (1967); Revised Convention No. 4 on Movement of Arab Workers (1975); Convention No. 14 on Entitlement to Social Security Benefits for Arab Nationals Working in Other Arab Countries (1981); Strategy of Joint Arab Economic Action, adopted at the Eleventh Arab Summit Conference (Amman, 1980); and Declaration of Principles on Movement of Arab Workers (1984), issued by the Arab Economic and Social Council.
  • The author then refers to the wage variations between nationals and expatriates, and to the argument that discriminatory treatment is actually practiced among the expatriates themselves. Wages, it is claimed, are not tied to the type of work performed, but rather to the different wage systems in the labor-exporting countries for the same work. Wide wage variations do exist in wage levels in the labor-receiving countries. Whereas such variations tend to be narrower in the government sector, the private sector has enjoyed some immunity in the execution of contracts. Has the time come for a re-examination of such discriminatory practices in the light of the relevant international agreements and conventions?

Some people may find it acceptable to continue the practice of granting nationals preferential wages, arguing that part of such wages is not given in return for any specific work but rather as an entitlement by the nationals to a share in oil revenues. This would be similar to the other benefits enjoyed by citizens of a country pursuing a welfare-state policy.

The discriminatory practices, however, are beginning to hurt the employment opportunities for nationals, with the absorptive capacity of the government sector reaching its limits. Has the time come, therefore, for a re-examination of this policy?

  • The author then refers to the fact that expatriates are not allowed ownership of real estate, stocks, or private businesses. But this interdiction is not a monopoly of the GCC labor-receiving countries; it is an established practice in some other countries. The only difference is that anti-exploitation controls do exist in many of those countries, whereas in the Arab GCC countries excesses that are prohibited by law are common, including “name leasing.”
  • The author notes that the above-mentioned actions, or restrictions, have determined the labor policies of the GCC countries. However, other essential foundations of such policies may be advanced.The national labor laws, regulations, and schemes have generally followed international and Arab labor standards, while at the same time upholding the sanctity of free enterprise and private sector activities and at times condoning violations of essential provisions of such laws and regulations.Stringent security policies that accord high priority to perceived risks and involve the sponsors of expatriate workers in the application of these policies.Pursuit of a policy of temporary and fixed-term residence for expatriate workers as a basic deterrent against unapproved conduct.

This section also examined the positive aspects of labor migration from the perspective of the Arab labor exporters, including the alleviation of unemployment problems in these countries. While this may seem a natural outcome, it is far from certain: migration is a selective process, especially in GCC countries, and expatriates are often in search of better incomes and not merely jobs that are lacking in their home countries.

The exception may reside in the experience of labor migration to Iraq or to the Libyan Arab Jamahiriya, where visa and contract conditions were not strictly enforced; these two countries represented the second choice of those workers who could not find employment in their home countries and failed to obtain contracts for jobs in the GCC countries.

The question that should probably be asked—within the framework of the prospects for Arab economies in the nineties—is whether the time has finally come to consider more seriously exporting job opportunities to the Arab labor exporters, through expansion of investments, as a viable alternative to importing labor from them.

Limitations on Inter-Arab Labor Movements

In this section the author presents some clarifications on two items: provision of more employment opportunities for the national labor force; and increased reliance on Asian labor.

The policy of employing citizens as pursued by the labor-importing countries is incontrovertible and legitimate. Such a policy has met with a measure of success in the government sector, although chances for further success have become somewhat limited for a number of reasons, including the following:

  • The government sector has reached a point of saturation and is moving toward economic rationalization and privatization.
  • The national work force has witnessed increased growth both in quantity and quality, thanks to extensive efforts in education and training and more participation by women in economic life.

For the above reasons, the issue of employment of nationals merits a degree of attention in terms of its relationship with the system of expatriate employment, especially in countries like Saudi Arabia, and perhaps in Oman, Bahrain, and Kuwait as well. Being the largest importer of labor, however, Saudi Arabia represents the most important case. The Saudi Fifth Development Plan (1990–95) forecasts that 574,000 new workers will join the labor force during the plan period, including 60,000 women (half of whom will be university graduates), while new jobs are estimated at only 354,400. Accordingly, 220,400 Saudis would replace non-Saudi workers during that period. It is not the public sector that will provide jobs for the additional Saudi work force, considering that its capacity is estimated at only 8,700 jobs. The private sector will thus be counted on to employ a total of 204,800 people, that is, 95.9 percent, in addition to jobs released through replacement of expatriates, a process that involves the private sector as well. In this case, success of the policy of employing citizens is contingent on the extent of the private sector’s willingness to employ nationals.

The Saudi Development Plan predicts that achieving this target will be rather difficult and emphasizes the need for measures to reduce wage variations and to facilitate absorption of Saudi labor by the private sector. According to the plan, the main sectors where employment growth is to be expected include building and construction (8.5 percent a year), the services sector (7.3 percent), and particularly personal services (12 percent), that is, about 789,000 during the plan period.

It is therefore necessary to focus on the features of the changes occurring in the regulation of private sector employment on the one hand and to examine the composition of the work force that will influence the labor market, regardless of development plans and official orientations, on the other. In this context, it seems fair to question the validity of the plan’s forecast that the amount of expatriate labor will drop by 1.2 percent a year. It seems appropriate to ask whether Arab or Asian workers will be the ones affected by any such decline. One should take note of the concern expressed in the Saudi plan that employing Saudis may be adversely affected if employment is left to market forces alone.

In examining the apparent increased reliance on Asian labor, the author is right to point to the decline in the percentage of Arabs among expatriates; this percentage may have dropped to 30-35 percent in the GCC countries. Opportunities for Arab labor migration have generally been reduced with the loss of jobs in Iraq and the sharp decline of job openings in Jordan, even though some were still available in the Libyan Arab Jamahiriya.

Reliance on Asian labor is a phenomenon that merits further discussion. A priori, a number of facts must be set straight:

  • Asian migration from India and Pakistan to the GCC countries goes back a long way, to the time of the former presence of the British in the region.
  • The experience of Asian migration has been successful, in particular through the execution of turnkey or ready-to-operate projects.
  • Asian workers are well suited to perform personal services.
  • Asian workers are paid lower wages.
  • Access to Asian labor is easy.

However, a number of questions may be raised in this connection: Have the general impressions about Asian migration been supported by field research, especially with respect to their suitability and obedience? What is the role of private employment offices in Asia and labor importing offices in the GCC countries in promoting the advantages of Asian migration? Will the situation of Asian migration continue in the nineties in the light of the new international and Arab developments? What is the degree of compatibility between the pressing interests of employers and the medium- and long-term interests of the host countries in the area of Asian migration?

It may be advisable to consider two factors that determine the position of Asian migration in the host GCC states.

First, migration has become an important industry. Considering the modest size of the indigenous population in the majority of host countries, the recruitment of workers has often become an object in itself under the mandatory sponsorship system. The beneficiaries of this industry have grown to include at least three major groups.

The first group consists of Asian employment offices and intermediaries. These derive direct benefit from the workers themselves in the form of commissions, transportation fees, and cash guarantees. They are closely associated with the labor recruitment offices in the recipient host countries.

The second group consists of the sponsorship community whose members mostly obtain direct material and other benefits once sponsorship is granted or upon its renewal.

The third group is represented by the private sector businesses that thrive on the consumption and employment of expatriates, such as housing services, restaurants, education, retail trade, and transportation. This important group is controlled by the private sector and represents an indispensable area of economic activity and source of income.

The importance of the third group can best be illustrated by the real estate situation in Kuwait in 1992. According to a report of the Central Statistics Department in the Kuwaiti Ministry of Planning (February 1992), there were 47,000 vacant apartments, including 25,394 apartments in the Governorate of Hawally and 12,072 other apartments in the Governorate of Farwaneya. In comparison, the average number of vacant apartments during 1985–89 was only 6,358 apartments. It is in these two Kuwaiti governorates that most foreign workers live, and they must be served by a proportionate number of restaurants, shops, and other services. Hence, an important section of the population relies on expatriate labor.

The above-mentioned group encompasses a major section of the native population, which exerts influence on the labor-importing machinery, the number of workers, and their living conditions. That is why the relevant declared policies and plans have not been fully implemented. In the meantime, labor importing as an industry should perhaps be explored as to its prospects in the nineties together with the development of Arab economies.

The second factor that merits examination, although it may seem somewhat bizarre, is the relationship of the expatriate situation to the new world order. Although different opinions exist on the shape, feasibility, and fairness of such a system, one of its major features is its reliance on the principle of human rights on the one hand and its stand on sovereignty and the limits of sovereignty on the other. Mr. Boutros Ghali, the Secretary-General of the United Nations, and one of the people directly concerned with this new world order, has argued that the rights of the individual and rights of peoples are based on a dimension of global sovereignty that is the property of mankind as a whole. It guarantees to all peoples a legitimate right to be preoccupied by the issues that affect the world at large. This meaning is increasingly reflected in the gradual expansion of international law. On another occasion, he argued that the principle of absolute and exclusive sovereignty no longer exists.

On the occasion of preparations for the World Conference on Human Rights (to be held in Vienna, June 14-25, 1993), the countries of the Third World upheld the principle of nonintervention in the internal affairs of other countries or encroachment on their sovereignty on the pretext of human rights (recommendation of the Permanent Arab Commission on Human Rights, July 1992). It is clear, however, that this objection does not represent the final say, as the opponents also call for the “elimination of racial discrimination,” the “observance of rights of association and of religious and cultural freedoms in the development of guidelines,” and “studying the new challenges that obstruct the enactment of human rights, especially the rights of immigrants.”

Human rights are not confined to the Universal Declaration of Human Rights of 1948; there are more than 25 other conventions and covenants including the Convention on the Right of Migrant Workers and Members of Their Families (adopted by the United Nations General Assembly); the Convention on the Elimination of all Forms of Discrimination against Women; and the International Convention on Elimination of all Forms of Racial Discrimination.

As a consequence, it may be argued that the principle of sovereignty, as embodied in the laws and regulations of every state, is not a deterrent against the intervention of other parties with whatever means to establish what they consider to be “human rights.” Such rights are covered by several international conventions and covenants that cover the status of expatriate workers and their protection. This is one of the issues that might confront us in the nineties, especially as it relates to equal pay for equal work, social security benefits, and other advantages.

The above-mentioned factors illustrate the importance of state intervention to impose working conditions for expatriate labor in general and Asian labor in particular, in a manner that might limit the scope of freedom currently enjoyed by employers. Such measures also seem necessary for any meaningful effort to achieve full employment of nationals, and to prevent the spread of unemployment among the population of the host countries.

Middle East Crisis and Abrupt Displacement of Arab Workers

The author offers useful but extremely brief information about this dramatic event that has changed the composition of expatriate workers and perhaps the whole picture of foreign labor in the decade of the nineties. It should have prompted the presentation of a scenario on the status of expatriates and their nationalities. But in the present conditions of uncertainty, this may be too risky and too speculative. The other topics of the seminar may perhaps assist in projecting the future of expatriate workers in the region, something that the author has attempted to do in the following section.

Prospects for Inter-Arab Labor Movements

While fully conceding the validity of the four factors that might affect the magnitude and trends of inter-Arab labor movements, the following considerations should be highlighted:

  • The type of policies that the host countries will pursue toward private sector employers using foreign labor.
  • The need to establish declared or undeclared quotas for foreign labor according to nationality.
  • The willingness of host states to implement an active naturalization policy for selective categories of expatriate labor.
  • Possible restrictions on the importation of labor for personal services.

Another important factor depends on the migration cycle or length of stay of workers, as this will vary according to nationality, the host country, and the times. The shorter the cycle, the more it will allow for further migration movements without impinging on the actual stock of workers. This will, however, reflect seriously on the microeconomic level in the countries concerned.

Among the four factors was the prospect for Arab-Israeli bilateral and multilateral peace negotiations—a vague consideration despite its validity. It might perhaps be desirable, during the discussion, to examine possible alternatives, especially those related to ambitious regional projects to be implemented in cooperative efforts between the Arab countries and Israel. There is no limit to the imagination in trying to visualize the outcome of such a development on the composition of the population and on the currents of labor movements and migration, as well as the redistribution of the population and urban communities on the one hand and the distribution of wealth on the other. The debate might perhaps take the form of sterile controversy at this stage, but this does not mean that the feasibility studies and projects that have already been prepared in this or that area should be neglected.

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