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Region must rethink talent acquisition

28 March 2024

Despite multiple policy reversals over the years, the GCC continues to stand out as one of the leading destinations of cross-border migration globally.

This reflects the long-standing dependence of the regional private sector on imported labour. 

However, the majority of immigration to the Gulf has always involved relatively unskilled labourers engaged in construction, trade, hospitality and household services. While there has always been a segment of skilled migration, the regulatory treatment of the foreign labour force has not meaningfully differentiated people by profession or educational background. The GCC has stood out due to its sharp regulatory demarcation between domestic and foreign human capital. 

In a world that is being disrupted by technological change and an advancing demographic transition, the recognition of the strategic importance of attracting and retaining skilled individuals is growing. This is tempered in some cases by populist anti-immigration impulses but, if anything, this political climate tends to reflect popular frustrations with policies that do not effectively differentiate among migrants. Technological innovation can moderate the need for migration, but will not eliminate it.

Strategic talent attraction is also an increasingly salient issue. The aspirations of creating a diversified, knowledge-based economy underpinned by productivity put a premium on talent attraction in the Gulf region. With appropriate regulations and incentives, the region has an opportunity to move away from its historical labour intensity in many lower-productivity sectors through technology adoption.

Growing the talent pool 

While the impact of technology on jobs can be ambiguous, a more productivity-driven economy requires more skills. Moreover, innovative capacity is linked to talent diversity.

The Gulf countries are exceptionally well positioned for a pivotal position in the emerging global economic order thanks to their connective infrastructure, increasingly competitive regulations and their attractive lifestyle. 

However, the ability to leverage these advantages hinges on multidimensional competitiveness that has to include human capital. The way forward has to combine more effective solutions for educating and training local talent.

These realities mean that the Gulf countries will have to navigate their way from the traditional labour laws based on the idea of temporary residency to something more fit for purpose. 

Efforts to liberalise the traditional labour laws have created opportunities such as self-sponsorship while generally making it far easier for expatriate employees to move between jobs. Such reforms have also made it possible for non-nationals to stay in the region past the age of retirement. 

The introduction of health insurance reforms and the progressive scaling back of subsidies has meant that the growing non-national residency base no longer imposes fiscal costs, which has sometimes been a source of contention in the past. Increasingly, foreign residents have become a source of significant government revenue.

More recently, there have been initiatives to introduce new visa categories to attract entrepreneurs and investors. 

Similarly, more governments now recognise the strategic importance of longer-term residency options that can give expatriates certainty beyond the traditional default option of two-year work visas. These efforts have coincided with initiatives to develop attractive housing options, international private education and steps to improve the quality of life.

In a world that is being disrupted by technological change and an advancing demographic transition, the recognition of the strategic importance of attracting and retaining skilled individuals is growing 

Gradual reform

While these reforms do not yet amount to a holistic immigration policy, they reflect a progressive shift in thinking. Some regional economies now offer a pathway to citizenship for long-term residents, even if the process is seldom formally defined and can involve considerable discretion. 

All these steps recognise that global competitiveness in the race for talent requires the regulatory flexibility to match the conditions available elsewhere. 

Steps to reform long-standing policies typically have to be gradual as their success depends on creating a public buy-in. However, the transition to a sustainable approach to talent attraction is growing in urgency. 

The number of people aged 65 and over is expected to rise from 783 million in 2022 to 1 billion by 2030 and 1.4 billion by 2043. Developing economies are now ageing more quickly than advanced economies historically did.   

As old age dependency ratios increase, more working-age professionals will find employment opportunities closer to home. This will entail a growing premium on foreign talent at a time when the structural need for it is increasing, not least because the GCC population is no less affected by the demographic transition than the rest of the world. The success of the ongoing economic paradigm shift of the Gulf hinges on devising sustainable policies for competing for talent.

 

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