Kuwait debates issue of expatriate workers
Washington - A furious debate has erupted in Kuwait over the large role of expatriates working in the Gulf country as the Kuwaiti National Assembly prepares to take on the contentious issue.
There are sharply differing opinions among members of parliament over how to reduce the number of foreign workers in Kuwait and whether expatriates should be taxed on remittances they send home.
Kuwait’s expatriate community is estimated to be about 70% of the country’s total population of 4.4 million, making Kuwaiti nationals a distinct minority in their own country. This has prompted MPs to propose sending up to 1 million expatriates home, at a rate of 100,000 per year. Indians and Egyptians, many of whom are unskilled workers employed in the construction and service sectors, comprise the largest expatriate communities in Kuwait.
So divisive is the issue that a special session of the National Assembly originally scheduled for February 2nd to discuss it was postponed when 21 MPs failed to appear and a quorum could not be reached.
The contentiousness of the debate reached a new level when MP Abdul Karim al-Kandari referred to expatriate workers as “settlers”, a loaded term usually used in Kuwait to refer to Israelis living on Palestinian land.
As Gulf Cooperation Council (GCC) members struggle with economic uncertainties resulting from low oil prices, the role of foreigners in the workplace is a hot topic and not just in Kuwait. Other governments are attempting to create more private sector jobs for their own citizens while considering additional sources of revenue that can be obtained from expatriate workers, including taxing personal income and remittances.
Saudi Arabia’s Shura Council on January 21st rejected a proposal to impose a 6% tax on expatriate workers’ remittances, with council members who opposed the plan arguing that it would encourage money laundering and smuggling and result in the flight of capital and investments from the kingdom.
The International Monetary Fund (IMF), in a policy paper late last year, warned GCC members about pursuing taxes on expatriate incomes and remittances, noting that levelling extra charges on money transfers from the Gulf would be “highly regressive” because the bulk of expatriates are low-income workers.
The IMF said that such taxes would prompt foreign workers to find back channels to funnel income home and create “reputational risks” for GCC members by lowering the attractiveness of the region for foreign workers. The GCC is one of the largest employers of expatriate workers in the world and more than 90% of them work in the private sector.
In Kuwait, divisions among lawmakers centre on how to reduce the number of foreign workers and rebalance the demographic make-up in favour of Kuwaiti nationals without serious repercussions, including the potential for a brain drain in important sectors.
For example, expatriate workers represent up to 70% of physicians and 94% of nurses in Kuwait and there are not enough qualified Kuwaitis to replace them in the near future. Foreigners dominate roles such as medical technicians, administrators, accountants and legal experts in the health sector.
Kuwait’s Ministry of Education last summer was reportedly preparing to fire up to 400 expatriate teachers to ensure that 25% of teachers in subjects such as social studies and computer science were Kuwaiti nationals. The Kuwaiti government appears to have made conditions for expatriate teachers more difficult by cutting rent allowances by more than half as of October 2016 and threatening to deport teachers who give private lessons without appropriate authorisation.
Kuwaiti MPs are demanding that the National Assembly take on the issue of traffickers who help move foreigners into Kuwait without having procured gainful employment for them.
On the other hand, there are lawmakers who recognise the effects of the large expatriate population and reject taking dramatic measures such as routine deportations and imposing taxes on remittances.
A group of lawmakers said in a statement published in a local newspaper at the end of January: “We do understand the significance of discussing the issue of the high numbers of foreigners living in Kuwait and the negative effects on the country’s demographics but we cannot tolerate making life harder and economically more challenging for expatriates who have been legally recruited nor do we accept threatening them every now and then with deportation.”
They did, however, agree with the idea that “marginal and free-visa” foreigners should be deported and those facilitating their entry should be held accountable.