People Pressure (Part Three of the Economist's survey of the Gulf states)

Economist ^ | 03/21/2002 | Correspondent

[lds23]

People pressure

Mar 21st 2002
From The Economist print edition

The world's emptiest quarter is filling up fast

ON A WEEKDAY night this January, thousands of flag-waving youths packed Olaya Street, Riyadh's main shopping strip, to cheer a memorable Saudi victory in the GCC Cup football final. One car, rock music blaring from its stereo, squealed to a stop, blocking an intersection. The passengers leapt out, clambered on to the roof and danced wildly in front of the honking crowd. Having paralysed the traffic across half the city, they sped off before the police could catch them.

Such public exuberance was once unthinkable in the dourly conformist kingdom, but now young people there and in other Gulf states are increasingly willing to challenge authority. That does not make them rebels: respect for elders, for religious duty and for maintaining family bonds remain pre-eminent values, and premarital sex is generally out of the question. Yet demography is beginning to put pressure on ultra-conservative norms.

After all, 60% of the Gulf's native population is under the age of 25. With many more of its citizens in school than in the workforce, the region faces at least a generation of rocketing demand for employment. In every single GCC country the native workforce will double by 2020. In Saudi Arabia it will grow from 3.3m now to over 8m. The task of managing this surge would be daunting enough for any society, but is particularly forbidding in this region, for several reasons.

The first is that the Gulf suffers from a lopsided labour structure. This goes back to the 1970s, when ballooning oil incomes allowed governments to import millions of foreign workers and to dispense cosy jobs to the locals. The result is a two-tier workforce, with outsiders working mostly in the private sector and natives monopolising the state bureaucracy. In Kuwait, for example, 93% of the 200,000 native citizens who have jobs are employed by the government, whereas 98% of the 900,000 people working in the private sector are foreigners. The emirate's private firms are as productive as any. But within the government, claims one study, workers are worth only a quarter of what they get paid.

Similarly, in the education sector, 30 years spent keeping pace with soaring student numbers has taken a heavy toll on standards. The Saudi school system, for instance, today has to cope with 5m students, eight times more than in 1970. And many Gulf countries adapted their curricula from Egyptian models that are now thoroughly discredited. They continue to favour rote learning of “facts” intended to instill patriotism or religious values.

The system as a whole discourages intellectual curiosity. It channels students into acquiring prestige degrees rather than gaining marketable skills. Of the 120,000 graduates that Saudi universities produced between 1995 and 1999, only 10,000 had studied technical subjects such as architecture or engineering. They accounted for only 2% of the total number of Saudis entering the job market.

The party's over

Finding a future for the region's youth is not just a matter of numbers. The 1970s wave of excessive wealth has passed, but expectations remain high. Today's young people tend to assume that they will enjoy the same lifestyle as their parents, with a desk job and a state salary fat enough to support servants and idle wives, with cash left over for foreign travel and their childrens' costly weddings, as well as such perks as generous state housing loans.

That sort of government largesse is now out of the question. It is not that the pie is shrinking, but that it has to be cut into ever thinner slices. “This generation is beginning to realise they have missed the big party,” says an Omani anthropologist. “Their fathers had scholarships abroad, and came home to government salaries of $3,000 a month. These guys came out of our own universities, and have to hunt for work in the private sector, where starting rates now are more like $500.”

In Bahrain, Oman and Saudi Arabia, where oil income per citizen is relatively low, the frustrations are already evident. Overall unemployment may look low because of the high proportion of expatriates in the workforce, but the rate among local youths is rising alarmingly. On an unofficial count, it is over 20% among 18-30-year-olds in Oman, 14% in Bahrain and 15% among Saudi males (women barely register in the Saudi workforce). It is estimated that in the kingdom under half the 100,000 jobseekers entering the market every year currently find jobs.

In Bahrain, which was the first GCC country to strike oil and might be the first to run out, graduates already stage regular demonstrations to demand work. Kuwait, Qatar and the United Arab Emirates, with their tiny populations in relation to their oil riches, have so far been spared such unrest. But as Jassem al-Saadoun, a Kuwaiti economist, points out, “All that separates us from Bahrain is a little time.”

To ward off looming trouble, most Gulf countries have launched highly publicised campaigns to replace foreign workers with locals. There have been some successes. The native proportion of workers in private Omani companies, for example, has jumped from 10% to 20% since 1990. The “Saudisation” programme, which requires Saudi firms to raise the proportion of locals on their payrolls by five percentage points a year, has reduced the dominance of expatriates in sectors such as banking. And while many jobless youths do not bother to work because their families are wealthy and willing to keep them in comfort until “appropriate” positions arise, others have been forced into jobs once considered fit only for expatriates, such as driving taxis and working in petrol stations. This is the only way they can earn enough, these days, to go through the costly rites of marriage, home-building and child-rearing.

Yet anecdotal evidence suggests that the obstacles to employing locals remain formidable. Part of the problem is that although the Gulf has plenty of its own hard-driving high achievers, the years of easy money and state coddling have seriously weakened the work ethic. “I want to hire Saudis, but why would I hire someone who I know won't show up, won't care and can't be fired?” asks a Jeddah businessman. In Oman, some private firms resort to filling “Omanisation” quotas by hiring natives, then sending them home to let expats get on with the job. In Saudi Arabia, the government last year barred foreigners from working in the lucrative gold trade, then granted a flood of exceptions as dealers complained about a sudden surge in wage bills and a plunge in work quality. One international retail chain tried to please the Saudi authorities by hiring local sales staff. It received hundreds of applications, but after conducting large numbers of interviews turned away every single one of them for lack of qualifications or motivation.

The main obstacle to hiring locals, however, is simple economics. As an official in the Saudi Ministry of Planning explains, the classic principle is that wages should equal the marginal productivity of labour. “But here, since we've opened the gates to imported labour, we're talking about the marginal productivity of labour in Bangladesh.” In relatively poor Oman, many construction workers from the Indian subcontinent receive half the minimum legal wage for locals. With labour-exporting countries from India to Lebanon offering an unlimited supply of highly skilled, dedicated workers willing to accept low wages, the Gulf's employers naturally snap them up.

And it is not just businesses that think they are getting good value from expatriate workers, but private employers too. The estimated 3m domestic servants in the region, all foreigners, often endure conditions equivalent to indentured servitude, with housing and food subtracted from salaries, no time off and no fringe benefits. Some of them start off indebted to employers who charge a “fee” for gaining visas and work permits. The luxury of having a docile, cheap and disposable workforce is hard to resist. Kuwait, in a feeble effort to narrow the wage gap and so encourage the hiring of Kuwaitis, decided to make employers pay for expatriates' health insurance (medical care for Kuwaitis being free). A revolt by householders forced the government to exempt domestic servants from the rule.

But Kuwait remains intent on trying to make wage levels converge. Another way of achieving the same aim would be to try to limit the number of expats. This would have the added advantage of stemming the outflow of remittances, which now drain the Gulf countries of some 10% of their GDP. Even government officials, however, recognise that this will take time. Besides, the trade in foreign labour is lucrative. Selling “sponsorships”, like letting out the property that foreigners are forbidden from owning in most GCC states, has come to be seen as a natural right of their citizens. And some of the region's peculiar traditions make it hard to do without foreign labour. For example, Saudi Arabia employs some 500,000 private chauffeurs for the simple reason that its women are not allowed to drive.

Bored to distraction

There is another reason why having lots of young, underemployed natives kicking their heels is not a good idea: boredom. This is especially acute in Saudi Arabia, where most women still languish at home, unable even to go shopping without a male chaperone. A small but growing number do work, albeit in carefully circumscribed trades and spaces. For example, the chief of econometrics in the Ministry of Planning leads a staff of 20 female statisticians by Internet and closed-circuit TV, because he is not allowed to be in the same room with them. And men, whatever their job, have to do without cinemas, bars or other distractions.

It is all very well to visit relatives, or to have family picnics in the desert, but not all the time. Small wonder that Internet chatrooms get roaring traffic. Small wonder, too, that some people get rowdy, whether that means singing football songs or running off to join the mujahideen. As a diplomat in the region says, “It's not just that boredom is demoralising. Added to the confusion between tradition and modernity, it makes people extremely, even dangerously, manipulable.”

Saudi Arabia is the most restrictive of them all: in the halting English words of a Syrian bellboy in Riyadh, “It is a very...dry country.” Kuwait has cinemas and puts few restrictions on women, and its citizens are wealthy enough to go abroad on holiday. Qatar and Oman permit alcohol, although their people bother less about it than their “teetotal” neighbours. Dubai and Bahrain, with their ladies' nights and go-go shows, take things a step further. But all across the Gulf, the amount of aimless milling and flirting that goes on in shopping malls suggests that people would gladly spend their time more usefully, if only they had something better to do.

[lds23]

This is Part Three. Part Two, with a link to Part One, is here Middle Earth

[Pining_4_TX]

This is what happens when people have no useful work, no purpose in their lives. It is like our permanent welfare recipients. You can't keep people as if they were pets.

[lds23]

Apologies for not being able to post links to all six parts before:

Part One: Time Travellers
Part Two: Middle Earth
Part Three: People pressure
Part Four: No taxation, no representation
Part Five: The Pen and The Sword
Part Six: Beyond Oil