Gulf states changing labor, visa and residency policies to attract foreign wealth, talent

Al-Monitor Pro Members

Dr. Robert Mogielnicki 

Senior Resident Scholar, Arab Gulf States Institute in Washington, DC 

Aug. 10, 2022

Governments in Gulf Cooperation Council (GCC) member states are vying to attract global wealth and talent as part of post-coronavirus, oil-fueled economic development trajectories. High-net-worth individuals, investors and specialized professionals can expect more schemes and incentives enabling long-term residency and employment in the Gulf region. Private-sector firms will simultaneously be expected to hire and train more local citizens over the coming years, with wealthier GCC governments likely offering financial incentives and policy flexibility to support broad workforce nationalization aims.     

Scenario 1: Gulf governments drastically increase demands on private-sector firms to hire and train local citizens through inflexible labor market policies, declining to offer state support through financial incentives and other initiatives. 

• It is tempting to believe that the coronavirus-induced economic downturn of 2020, when governments across the region focused primarily on urgent domestic challenges, has created a scenario wherein private-sector employers face intense pressure to assume greater responsibility for local employment. Longstanding workforce nationalization plans — especially in Saudi Arabia and Oman — and more recent moves, such as Saudi Arabia’s policy linking the provision of government contracts to foreign firms with the existence of a headquarters in the country, suggest the potential for more aggressive labor market policy demands on firms.  

• Yet the smaller Gulf states of Qatar, the UAE and Kuwait combine small national populations (reflecting a minority of total residents), substantial sovereign wealth holdings and large government bureaucracies. These states, therefore, face significantly less pressure to find suitable employment opportunities for their citizenry, resulting in less of a need for strict workforce nationalization policies. The remaining GCC states of Saudi Arabia, Oman and Bahrain must boost foreign direct investment as well as ensure the economic welfare of citizens, which constitute a larger proportion of total residents. Certain regulations pertaining to local employment will periodically be strict in these countries, but the broad policies will ultimately remain flexible, as these states must stay competitive with their regional counterparts.  

Scenario 2: Gulf governments begin to significantly curtail the ability of expatriates and their families to visit the region for longer durations, obtain legal residency and secure employment opportunities. 

• In the aftermath of the 2014-15 oil price drop and ensuing austerity period, regional governments sought to reduce the number of expatriates in their countries to increase the supply of employment opportunities for citizens. Widespread expat visa bans in Oman and the formation of a national committee on demographic management in Kuwait — both of which occurred in 2018 — served as two prominent examples. In this context, the increasing availability of expatriates and their families to enter Gulf countries to live, work, study or retire could be viewed as impinging on the economic welfare of the region’s citizenry. 

• Yet the economic growth trajectories of all GCC countries are closely tied to growing populations of expatriate residents. Expatriates are essential markets for service provision by state-owned entities. Advancing high-priority sectors of economic development strategies, such as in the digital economy, requires inflows of foreign talent over the short and medium terms.   

Robert Mogielnicki is a senior resident scholar at the Arab Gulf States Institute as well as an adjunct assistant professor at Georgetown University and the George Washington University. He serves as an advisor with Freedom House and an external consultant with Eurasia Group. Dr. Mogielnicki is the author of "A Political Economy of Free Zones in Gulf Arab States" (Palgrave Macmillan 2021), and he is currently working on an edited volume about the political economy of sovereign wealth funds in the Middle East and Asia. He is a term member at the Council on Foreign Relations and a member of the board of advisors at Henley & Partners, an investment migration firm. He holds a DPhil from Magdalen College, University of Oxford.