GCC countries have been actively pursuing workforce nationalisation policies to reduce their reliance on expatriate workers and create sustainable employment opportunities for their growing local populations. Notably, Saudi Arabia has set ambitious workforce nationalisation targets as part of Vision 2030 and for socio-economic transformation. By the first quarter of 2022 the Kingdom had achieved a localisation level of 23%, with the goal of reaching 30% by 2025. To meet these numbers, the country has introduced significant changes to its labour laws. In August 2024 the Council of Ministers approved amendments granting the Ministry of Human Resources and Social Development expanded powers to penalise non-compliance with Saudiisation quotas. Specifically, the ministry can refuse to renew work permits for non-Saudi employees in companies that fail to meet these quotas, potentially forcing employees to transfer to compliant employers.
The enforcement of Saudiisation has been rigorous. During the first half of 2024 inspections of 700,200 companies found that 107,329 firms were non-compliant with the Labour Law, with violations including unpaid salaries and improper employment of foreigners. Additionally, firms in the consultancy sector are now required to meet a 40% Saudi nationalisation mandate or face penalties. Similarly, 25% of engineering jobs must be allocated to nationals.
Proactive Measures
In the UAE, authorities have not published an official nationalisation target, but Emiratis make up 10% of the workforce, and the government has been taking proactive measures to increase this figure. To achieve higher levels of Emiratisation, the UAE government has introduced new regulatory changes. Starting in 2024, companies with 20-49 employees must hire at least one Emirati. Non-compliance will result in fines starting at Dh96,000 ($26,100), which will increase to Dh108,000 ($29,400) by 2025. The Ministry of Human Resources and Emiratisation has also increased enforcement of these policies, with fines for violations rising significantly. In July 2024, a private company was fined Dh10m ($2.7m) for fictitiously employing 113 Emirati citizens to meet targets.
In Qatar, the workforce nationalisation rate stood at 19% in 2022, with a goal to increase this to 20%, as per the Qatarisation Policy of 2013. The country is currently accelerating its nationalisation efforts, with the Cabinet approving a law in December 2023 aimed at enhancing Qatari employment in the private sector. The law aligns with Qatar National Vision 2030 and its focus on human capital development. These localisation policies are expected to impose specific quotas for Qatari employment in the private sector, influencing the recruitment and staffing strategies of companies operating in the country.
Financial Incentives
Beyond the Gulf’s threelargest economies, workforce nationalisation is also an important trend. Oman’s nationalisation rate stood at 19% in 2021, with a goal to increase this to 30% by 2040, as outlined in Oman Vision 2040. The country has expanded its Omanisation efforts through Ministerial Decree No. 501/2024, which added over 30 professions restricted to Omani citizens. These include roles in IT, engineering and hospitality management. Private sector companies must comply with these regulations, which will be implemented in phases from 2025-27. Financial incentives are also being introduced, potentially including salary contributions from the government to encourage the hiring of Omani nationals.
Bahrain has made significant progress with its nationalisation policy, achieving a localisation rate of 55% by the first quarter of 2021, and aims to raise this figure to 65-75% by 2030, in line with its Economic Vision 2030. In pursuit of this goal, in September 2024, Bahrain was reviewing a draft law that would limit foreign workers to 30% of the private sector workforce. This reform is aimed at creating 20,000 new jobs for Bahraini nationals by 2024 and would have a considerable impact on employers, particularly those that rely heavily on expatriate labour. Companies failing to meet these localisation requirements may face significant fines, as the government pushes to reduce unemployment from 5.4% to below 3.5%.
In Kuwait, foreigners make up approximately 3.2m of a population of 4.6m, which has prompted the government to intensify efforts to create more employment opportunities for Kuwaitis. Authorities target a 70% level of workforce nationalisation by 2035. In January 2024 the Ministry of Interior announced that 1211 jobs in the oil sector would be filled by Kuwaiti nationals by end-2024, with 629 positions allocated to Kuwait Oil Company and 507 to Kuwait Integrated Petroleum Industries Company. This decision is part of a broader effort to reshape the labour market by limiting expatriate employment in key sectors. Additionally, the government has taken steps to enforce stricter localisation quotas, and in October 2023 over 800 expatriate workers had their employment contracts terminated as part of a drive to reduce the expatriate workforce and boost opportunities for locals.
Challenges
While workforce nationalisation policies aim to promote the employment of nationals and reduce reliance on expatriate labour, their implementation has been met with mixed reactions, particularly from employees who face new dynamics in their professional environments. A 2024 survey conducted jointly by Indian tax and immigration service provider Vialto Partners and legal information service provider LexisNexis offers valuable insights into employee perspectives on these policies. The survey, which included a sample of businesses operating across the GCC region, revealed varying opinions about the effectiveness and practicality of workforce nationalisation quotas. Of the companies surveyed, 78% successfully met their localisation quotas, expressing a generally positive outlook. These companies reported that nationalisation policies had created new opportunities for GCC nationals within their organisations, particularly in terms of internal promotions and targeted recruitment strategies. However, 22% of the surveyed businesses found these requirements challenging, citing difficulties in sourcing local talent with the necessary skill sets. Moreover, the increased pressure on employers to meet localisation quotas has, in some cases, led to an inflation of operational costs, as 78% of businesses reported an increase in labour and operational expenses due to the adjustments required by the new rules. Finally, the need for companies to create internal programmes for localisation has reshaped their structure, furtherincreasing operational complexity.
Another potential challenge relates to the fluid nature of GCC regulatory frameworks. The rapid pace of policy changes and the shifting guidelines associated with nationalisation initiatives have created confusion for businesses and employees alike. Employers are often given tight deadlines to comply with new rules, putting additional strain on human resources departments and increasing the risk of administrative penalties. The fear of non-compliance, which can result in penalties such as downgraded company registration, suspension from hiring portals and loss of work permits, has led to a cautious approach from many companies. These concerns have a direct impact on employees, as firms may avoid taking risks in hiring and development, limiting opportunities for both local and expatriate staff.
Beyond employment, the impact of workforce nationalisation policies can extend to other areas of the economy. A significant risk is the potential exodus of expatriates as nationalisation policies become more stringent. In the GCC, expatriates have historically played a crucial role in driving economic growth, particularly in key industries such as energy, construction and services. Their departure could negatively impact economic activity, reducing consumer spending and diminishing the pool of entrepreneurial talent that has traditionally fostered innovation. Furthermore, expatriates contribute substantially to government revenue through taxes, fees and levies, which would decline if the expatriate population decreases. “With economies across the region rapidly diversifying, a skilled and adaptable workforce is essential to drive this transformation,” Abdulrahman Almohaimid, CEO of Saudi Arabia-based Abdal Human Resources, told OBG. “By strategically combining local talent and international expertise, businesses can enhance competitiveness to meet the demands of a dynamic global market.”
Moving Forwards
Ultimately, the success of workforce nationalisation policies will depend on the ability of governments and businesses in the GCC to balance the need for local employment with the realities of worldwide economic integration. While localisation policies are critical for creating sustainable job opportunities for nationals, the key is for country-specific initiatives to be implemented in a way that supports business growth and maintains the attractiveness of the region for global talent. The ongoing collaboration between the public and private sectors, coupled with strategic planning, will be essential in navigating the complex landscape of nationalisation in the Gulf region.
Read More from OBG
