Except to see increased localization policies in 2024
Multinationals need to revise long-term market size assumptions as GCC markets push forward with workforce localization in 2024 and beyond. B2C multinationals should consider adapting their product portfolios to structural changes in needs and preferences as population dynamics shift. Markets such as Kuwait will see limited growth of addressable market size as expat numbers continue to decrease. Consumer sentiment will weaken in Oman and Kuwait as measures to tighten expats’ living conditions are maintained. Multinationals can also expect to see rising labor costs amid workforce localization.
Overview
Workforce localization efforts have intensified across the region. Recent measures include:
- Kuwait: Kuwait has deported over 25,000 expats since the start of the year. In addition, expats have faced tighter living conditions such as 50% higher utility bills in commercial and residential properties, difficulties in obtaining driver licenses, and stricter controls over visa renewals and job mobility. The current expat-to-local ratio stands at 70:30, with the aim of achieving a 50:50 ratio by 2025 and 30:70 by 2030.
- Oman: In July 2022, Oman announced a ban on expats working in 207 categories of jobs in the sultanate. Job categories include directors of human resources, recruitment, personnel, and public relations. In July of this year, the government announced major changes to its Labor Law, which stipulates non-Omani employees can have a contract terminated if they are replaced by an Omani worker.
- Bahrain: While Bahrain has been more measured in its localization policies, a key part of the country’s Economic Recovery Plan includes creating 20,000 Bahraini jobs and training 10,000 Bahrainis annually until 2024. We will see increased workforce localization as part of the economic reform plan, which means expat population numbers may continue to decrease.
- Qatar: Qatar’s cabinet has approved a draft law on nationalizing jobs in the private sector. In line with National Vision 2030, the government will continue to push for higher employment of nationals.
Our View
Acceleration of workforce localization will be maintained across the GCC, particularly in Kuwait and Oman. Kuwaitization remains a key tenet of Kuwait’s long-term vision for the economy. Similarly, Oman and Bahrain will continue to encourage local participation in the workforce. Qatar remains an outlier in the region, with efforts at workforce localization occurring at a gradual pace, and expats will continue to support addressable market growth.
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