The composition and growth of the labor force in Kuwait

Kuwait\u27s economy has grown substantially during the last few decades because of massive oil revenues. Economic growth increased such that labor demand far exceeded the indigenous supply. The large immigration of expatriate workers, needed to fill the demand for labor, transformed the society from being almost entirely indigenous to a composition where non-Kuwaitis became the majority. Two factors limit the Kuwaiti labor supply: small population size and low labor force participation. The second factor is mostly due to very low female participation and to the young age structure of the Kuwaiti population. Early immigrants were primarily Arab. Since the mid-1970s, Kuwait has pursued a policy to increase the inflow of Asian migrants to reduce the dependent population because Asian workers have a very low dependency ratio compared with Arab workers. Because of this policy, the Asian population increased to more than one third and the Arab population declined to two thirds of the expatriate population. The growth of the non-Kuwaiti labor force fluctuated in response to the cyclical pattern of the economy. The demand for expatriate labor increased during the 1960s when Kuwait was building its physical infrastructure, and declined when the physical infrastructure was completed. Demand went up again when oil prices increased in the 1970s and later declined because of the economic slow down during the 1980s. The impressive growth in the education and training system is reflected in increasing numbers of qualified Kuwaitis entering the labor force. The evolving occupational structure indicates an increased concentration of Kuwaiti workers in professional and technical, administrative and managerial, and social service occupations. The prospect of increasing the share of Kuwaiti participation in the labor force is associated with social and economic conditions. With a favorable social environment Kuwaitis could widen their participation across occupations and sectors. Kuwaiti women could accelerate their participation in socially acceptable occupations. But rapid growth in the Kuwaiti economy would cause labor demand to exceed the growth in the indigenous labor supply and hence reduce the share of Kuwaitis