Kuwait debates issue of expatriate workers

There are sharply differing opin­ions among members of parlia­ment over how to reduce num­ber of foreign workers in Kuwait.

A 2011 file picture shows construction workers at the Jahra roundabout in Kuwait City. (Reuters)

2017/02/12 Issue: 93 Page: 18

The Arab Weekly
Jareer Elass

Washington - A furious debate has erupted in Kuwait over the large role of expatri­ates working in the Gulf country as the Kuwaiti National Assembly prepares to take on the contentious issue.

There are sharply differing opin­ions among members of parlia­ment over how to reduce the num­ber of foreign workers in Kuwait and whether expatriates should be taxed on remittances they send home.

Kuwait’s expatriate community is estimated to be about 70% of the country’s total population of 4.4 million, making Kuwaiti nationals a distinct minority in their own coun­try. This has prompted MPs to pro­pose sending up to 1 million expatri­ates home, at a rate of 100,000 per year. Indians and Egyptians, many of whom are unskilled workers em­ployed in the construction and ser­vice sectors, comprise the largest expatriate communities in Kuwait.

So divisive is the issue that a spe­cial session of the National Assem­bly originally scheduled for Febru­ary 2nd to discuss it was postponed when 21 MPs failed to appear and a quorum could not be reached.

The contentiousness of the de­bate reached a new level when MP Abdul Karim al-Kandari referred to expatriate workers as “settlers”, a loaded term usually used in Kuwait to refer to Israelis living on Palestin­ian land.

As Gulf Cooperation Council (GCC) members struggle with eco­nomic uncertainties resulting from low oil prices, the role of foreign­ers in the workplace is a hot topic and not just in Kuwait. Other gov­ernments are attempting to create more private sector jobs for their own citizens while considering ad­ditional sources of revenue that can be obtained from expatriate work­ers, including taxing personal in­come and remittances.

Saudi Arabia’s Shura Council on January 21st rejected a proposal to impose a 6% tax on expatriate workers’ remittances, with coun­cil members who opposed the plan arguing that it would encourage money laundering and smuggling and result in the flight of capital and investments from the kingdom.

The International Monetary Fund (IMF), in a policy paper late last year, warned GCC members about pursu­ing taxes on expatriate incomes and remittances, noting that levelling extra charges on money transfers from the Gulf would be “highly re­gressive” because the bulk of expa­triates are low-income workers.

The IMF said that such taxes would prompt foreign workers to find back channels to funnel in­come home and create “reputation­al risks” for GCC members by lower­ing the attractiveness of the region for foreign workers. The GCC is one of the largest employers of expatri­ate workers in the world and more than 90% of them work in the pri­vate sector.

In Kuwait, divisions among law­makers centre on how to reduce the number of foreign workers and re­balance the demographic make-up in favour of Kuwaiti nationals with­out serious repercussions, includ­ing the potential for a brain drain in important sectors.

For example, expatriate workers represent up to 70% of physicians and 94% of nurses in Kuwait and there are not enough qualified Ku­waitis to replace them in the near future. Foreigners dominate roles such as medical technicians, ad­ministrators, accountants and legal experts in the health sector.

Kuwait’s Ministry of Education last summer was reportedly pre­paring to fire up to 400 expatri­ate teachers to ensure that 25% of teachers in subjects such as social studies and computer science were Kuwaiti nationals. The Kuwaiti gov­ernment appears to have made con­ditions for expatriate teachers more difficult by cutting rent allowances by more than half as of October 2016 and threatening to deport teachers who give private lessons without appropriate authorisation.

Kuwaiti MPs are demanding that the National Assembly take on the issue of traffickers who help move foreigners into Kuwait without hav­ing procured gainful employment for them.

On the other hand, there are law­makers who recognise the effects of the large expatriate population and reject taking dramatic measures such as routine deportations and imposing taxes on remittances.

A group of lawmakers said in a statement published in a local newspaper at the end of January: “We do understand the significance of discussing the issue of the high numbers of foreigners living in Ku­wait and the negative effects on the country’s demographics but we cannot tolerate making life harder and economically more challeng­ing for expatriates who have been legally recruited nor do we accept threatening them every now and then with deportation.”

They did, however, agree with the idea that “marginal and free-visa” foreigners should be deported and those facilitating their entry should be held accountable.

Jareer Elass is a Washington-based energy analyst, with 25 years of industry experience and a particular focus on the Arabian Gulf producers and OPEC.

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