Stimulating Jobs Localization in GCC Through Recycling of Expatriates' Employment Fees to Private Sector.

Nationals face enormous difficulty getting jobs in the GCC labor markets due to the fact that these markets are saturated with huge numbers of expatriate workers whose acceptance of very low wages compel private sector to cling to their employment and be more resistant to localization efforts. In this study, we have shown that localization can be stimulated through recycling of expatriates' employment fees to private sector in the form of a subsidy paid to businesses for each national employed, provided that monthly salary exceed certain threshold. In Saudi Arabia, for example, we propose a minimum monthly salary of four thousands Saudi Riyals, inclusive of all benefits. As a result, business owners will not be burden with full cost of employing nationals enhancing their competitiveness in labor market. Moreover nationals being paid relatively reasonable wage would be more encouraged to seek jobs in private sector and be motivated to fallow a more stable employment pattern. Consequently, private sector would embrace localization efforts voluntarily rather than being coerce, and would not have the incentive to evade and circumvent such efforts. In addition, continuous rise in the cost of employing expatriate workers will gradually force private sector to adopt a business model that is more capital intensive, therefore labor productivity and percentage of high-skill and high-wage jobs would continue to rise and expand employment opportunities for nationals. [ABSTRACT FROM AUTHOR]