Celebrate the Facts!
Oil-rich countries Saudi Arabia, Kuwait, and the United Arab Emirates leveraged their oil wealth to build exciting consumer societies with a permanent servant imported labor class. Saudi Arabia (38% imported labor), Kuwait (70% imported labor), and the United Arab Emirates (88% imported labor) have used cheap imported labor to provide construction, household services, and some technical and educational occupations, creating a lavish lifestyle. The downturn in oil consumption due to COVID economic consequences has created budget issues for these countries and consequent downstream suffering for imported labor.
Oil has been associated from its very beginning with boom-and-bust cycles – in exploration, production, and distribution. The worldwide depression created in large part by the United States’ flaccid management of COVID created a severe downturn in the world’s largest economy, resulting in a huge international drop in both oil price per barrel and the amount of oil consumption.
The oil-rich economies in the Middle East used the historical revenues from oil sales to support a ‘rent’ distribution economic system in which each citizen both directly and indirectly participates in the money provided by oil production.
Kuwait is representative of this concept in action. There is no income tax in Kuwait and energy, water, and food is subsidized, plus there is an entitlement to public sector employment for citizens. About 335,000 Kuwaitis worked in the public sector in 2018, compared to only 64,000 in the private sector. Kuwaitis in the private sector earn less on average than in government as imported workers are far less expensive than Kuwaiti citizen labor. For instance, an Egyptian educator will work for far less than a Kuwaiti citizen.
In 2018, imported labor was nearly 3.4 million of Kuwait’s 4.8 million total population. The bulk of imported labor works in low-skill occupations such as construction labor, household services, and other service industry and is very poorly compensated. Only about 60,000 of the 1.61 million, or about 4%, of imported workers in the private sector in 2015 earned above the poverty line.
All three of these countries have made numerous efforts at economic diversification. The United Arab Emirates government has financed films, entertainment activities, development of resort and shopping venues, and construction of offshore islands in the shape of palm trees visible from space. The Saudi Arabian governmental company Aramco, through Aramco Americas and its business unit Motiva, owns and operates North America’s largest refinery in Port Arthur, Texas. But regardless of publicly represented successes, the efforts of these governments at diversification have been ineffective and they remain dependent on oil revenue.
Life remains fabulous for the entitled citizenry of these nations, or, at least the men, as all three countries remain deeply entrenched in fundamentalist religious implementation including repression of women through arranged marriages, legal polygamy, and repression of basic human rights.
The exploitation of imported labor is not without some benefits on both sides. Imported workers contribute substantially to the development of these countries but also send much-needed money, technically known as remittances, to their families back home.
Imported workers in the Arab States remitted over $124 billion in 2017, with the United Arab Emirates and Saudi Arabia ranking second and third globally in terms of remittance outflow, and Kuwait and ranking eighth. The leader in remittances is the United States as the chief exploiter of imported labor so American exceptionalism needs to look deeply in the mirror before scolding anyone.
In the United Arab Emirates, imported labor visas tie the imported worker’s status to a sponsor through a contract. The contract agreements provide sparse protection for the imported workers plus there is not much in the way of any form of governmental protection of labor, including basic safety requirements. The contracts make it incredibly difficult for workers to get out of abusive situations, including long work hours, wage theft, and sexual abuse and as such encourage such.
Beginning in early March, Arab countries closed borders as a public health measure. As in the United States, business more-or-less came to a halt. When belt-tightening needs to occur in hierarchal economic systems the bulk of costs are incurred by the unempowered, in this case, imported labor. These countries could well have afforded to tend to their imported labor through subsidies or at a minimum honoring their contracts. Job cuts in Saudi Arabia targeted imported labor first with more than a million imported labor jobs eliminated this year. In the Arab region, an estimated six million jobs will be lost; the majority imported workers.
For imported workers, this has meant massive unemployment, unpaid wages because of failed businesses and attendant wage theft, arrest and deportation, and hunger. Wage theft in this instance meant denying workers their last paycheck and food allowance. Many were stranded due to travel bans or unaffordable tickets and so left in limbo.
Remittances could fall by $100 billion in 2020 because of the pandemic. This shortfall will affect the people in the countries that provide that labor – mainly India, Bangladesh, and the Philippines. This decline will have significant downstream economic and social costs.
The boom-and-bust nature of oil plus its environmental costs in pollution and carbon emissions (resulting in global warming) make it an unsustainable resource. The lack of recognized international labor standards also plays against the bulk of humanity creating a race to the bottom in wages and living standards with an artificial enrichment of the uber-wealthy. The grinding exploitation of labor in the oil-rich Arab nations is only one example of this phenomenon and these topics remain for future investigations. The solutions to these problems remain undiscussed while the suffering is tangible.
Country profiles and information on the number of migrants can be obtained at https://www.un.org/en/development/desa/population/migration/data/estimates2/countryprofiles.asp. Information on Kuwait was published at https://economictimes.indiatimes.com/nri/visa-and-immigration/kuwait-wants-to-bring-down-migrant-population-from-70-to-30/articleshow/76187375.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst. Data on labor inequity and other issues were obtained at https://www.ilo.org/beirut/areasofwork/labour-migration/lang--en/index.htm. Data on remittances was published at https://www.brookings.edu/blog/future-development/2020/09/17/pandemic-highlights-the-vulnerability-of-migrant-workers-in-the-middle-east/.
Michael Donnelly investigates societal concerns with an untribal approach - to limit the discussion to the facts derived from primary sources so the reader can make more informed decisions.