Kuwait labor market is one of the major components of the country's economy and has played a significant role in current economic problems in the country. Since the beginning of the oil era in Kuwait, the country has increasingly relied on a growing workforce (labor market) across all sectors of the economy. Given the role of the labor market in the nation's economic growth and development, understanding the major issues facing Kuwait workforce is crucial towards addressing the current economic problems and promoting growth and development. It is increasingly important to deal with Kuwait's labor market issues because of the decrease in oil prices, which has numerous impacts on government spending and budget deficit. Additionally, addressing these issues will help in promoting the nation's economic growth and development.

Main Labor Market Issues

As previously indicated, one of the major components of Kuwait's economy is the labor market, which is directly linked to the current economic problems/issues in the country. While the Kuwaiti government recognizes the significance of restoring balance in its labor market and strengthening local workforce, there have been futile attempts to achieve this. The government has failed to develop and enact policies that enhance Kuwaitis' level of contribution in the labor market or workforce. This problem has been compounded by the fact that 80% of the total local workforce in Kuwait is concentrated in the public sector, particularly government departments despite the significant benefits to those working in the private sector. Kuwaitis working in the private sector, which accounts for 20% of the total local workforce, are supported through bonuses that are obtained from 2.5% taxation on net profits of listed companies in the Kuwait Stock Exchange (Alhayat, 2013). Despite these benefits, Kuwait's local workforce is concentrated in the public sector and governmental departments, which creates distortions and imbalance in the country's labor market (Alhayat, 2013).

The second major issue in Kuwait labor market is increased wage allocations in the public budget to an extent that they account for a high portion of the country's budget. These increased allocations emerge from the financial burden brought by government and public sector employment of Kuwaiti nationals. Third, this labor market is characterized by incompatibility between employment requirements and the professional capabilities of locals. This incompatibility is evident in the significantly low contribution of local workforce to the private sector and Kuwaitis' reluctance to hold private sector jobs. Kuwaiti nationals are increasingly employed by the government without consideration of their professional capabilities and economic implications. This trend increases the incompatibility between job-related requirements and professional abilities of Kuwaiti nationals.

Role of Kuwaiti Labor Market...

Kuwaiti government continues to spend more in the labor market because 80% of the nation's workforce is in the public or government sector. The local government continues to absorb more people into the public sector, which in turn increases government expenditure on the labor market. The high portion of the labor market in governmental departments implies that much of the government's budget is channeled towards labor. While the government has attempted to address this through providing incentives like bonuses to the private sector labor market, Kuwaiti nationals continue to prefer governmental or public sector jobs. This preference and influx into the public in turn increases the financial burden and forces the government to spend a significant portion of its budget on labor. For instance, as of June 2013, there was a total of 245,666 and 91,505 Kuwaiti and non-Kuwaiti nationals employed by the government respectively (Central Statistical Bureau, 2013). With oil prices going down, financial experts and specialists have argued that the Kuwait government will either run a budget deficit through introducing major cuts in governmental expenditures or increases in revenue.
In light of the major issues in Kuwait labor market and their impacts on government expenditures, there is need to find suitable solutions to this problem, especially those that will encourage locals to work in the private rather than public sector. One of the possible solutions to this problem is the establishment of a new employment philosophy and policy by the Kuwaiti government. The new philosophy should be based on economic and technical standards instead of political standards. Political standards have been used as the premise of current employment practices in the Kuwaiti public sector. These standards have primarily focused on securing governmental or public sector employment for Kuwaiti nationals with little or no regard of the actual employment requirements and individual professional capabilities. A new employment philosophy should be adopted and focus on hiring Kuwaiti nationals based on their capabilities and economic considerations.

Secondly, this issue can be resolved through reforming the educational system in order to train local employees to secure jobs in the private sector. The current education system does not adequately prepare Kuwaitis to fill blue-collar positions. As a result, Kuwaitis have increasingly preferred clerical and administrative jobs available in the public sector. The third potential solution is eliminating the disparities in salaries/wages in the public and private sector. Governmental jobs are preferred because of increases in the cadres of employees across various sectors and professions are recently adopted by the National Assembly and government. This has…