The Small Gulf States

i) Development strategies and programmes

As with the labour -short NICs and ASEAN countries, segmentation of employment structure in the Gulf States was also partly created by their industrialisation strategies and programmes of economic diversification. Their economic restructuring strategy was import-substitution and large-scale capital intensive, export-promotion labour-intensive industrialisation in the 1970s and 1980s. The public sector pioneered large scale capital intensive labour-saving industrialisation programmes, while the private sector focused on small-scale light industries, mainly for the domestic markets (Dabdab and Mohyuddin, 1984).

Since the 1980s, the Gulf States have increased their budgets for further industrial diversification, especially aimed at reducing dependence on oil (Roukis and Montana, 1986). Segmentation of their labour market and employment structure was created because their economic development strategies and industrialisation programmes also led to increased employment of foreign labour in occupations and industrial sectors which locals could not fill either due to lack of qualifications and skills, or because they did not want to work in them. Kuwait in the 1980s, for example, issued a new industrialisation policy, emphasising import- substitution, under which policy, nationals and non-nationals were encouraged to participate in business ventures. The International Bank of Kuwait provided monetary help through loan schemes; and the government used fiscal measures to protect new businesses and to limit repatriation of profit.

For Oman, in addition to its infi*astructural expansion programmes, economic diversification was also included in its five-year development plans. This diversification strategy was also import-substitution led growth, to be accomplished through the encouragement of light industry. Despite the categorisation of the industrial divisions, big or small, heavy or light, the

demand for the majority of manpower, skilled and unskilled for all these industries was mainly sourced by foreign workers. Moreover, the massive investment by the Gulf States in infrastructural projects has meant that many of the hundreds of thousands of foreign workers who were initially required for building have also been needed for maintenance subsequently (Addleton, 1991). Indeed, although the government has been actively promoting Omanization in the private sector, success remains slow and hence the low participation ratio of Omanis to expatriates in the private sector still prevails (Al-Lamki, 1998). This situation is similar to that in Brunei where most jobs in the private sector are sourced by foreign labour while the locals prefer public sector employment, thereby engendering a segmented workforce.

Generally, the Arab Gulf States try to implement their industrialisation programmes with an emphasis on labour-saving. However, due to their large-scale industrialisation programmes, heavy recruitment of foreign labour of different skills was triggered because their domestic labour supply was inadequate (Fergany, 1984; Richard and Waterbury, 1990).

ii) Mismatches between local labour demand and supply

Similar to the NICs and ASEAN countries, segmentation also occurred during the Middle East’s development process because of changes in the nature of local labour demand, which created a mismatch with the skills available. It is argued here that the existence of a mismatch between the local labour demand and supply in these countries contributed to segmentation, because it led to increased labour migration for specific types of occupation and economic sectors during their development. During the 1970s, labour demand was mainly for skilled manual workers, like carpenters, mechanics, drivers and skilled construction workers and unskilled manual labour, and for professional workers including medical practitioners and people with technical expertise. Since the mid-1980s and especially after the Gulf War, labour demand stemmed from the need to restore the maintenance and consolidation of services (Skeldon, 1992). Thus the nature of labour demand, combined with differences in the skill spectrum between nationals and non-nationals, meant that the sectoral distribution has become highly segmented. Non-nationals continue to dominate the construction, manufacturing and

public utilities though their occupational distribution has been changing. With development, demand for non-nationals has shifted from unskilled and semi-skilled workers especially in construction, towards professional, technical and skilled office workers. Since the early 1980s, the fastest growing non-national labour demand came from the service sector (Birks, Seccombe and Sinclair, 1988).

Overall, not only have changes in the labour demand created by development strategies and mismatches in the labour demand and supply in the NICs, ASEAN and the Gulf Countries caused segmentation of labour market and employment structure, changes in the nature of labour supply in these countries have also produced similar effects, which are examined in the next section.

2.4.2 Changes in the nature of labour supply

This section examines labour supply as one of the underlying problems in the effort to diversify the economies of NICs, ASEAN countries and Gulf States. The aim is to demonstrate that as with changes in demand, changes in the supply of labour also create segmentation in labour markets and employment structures. The main factors responsible are the dynamism of demographic factor, characteristics of local labour supply, availability of manpower of different skill qualities, urbanisation processes and attraction of higher wages overseas. It is argued here that the shortage of local labour supply leads to the recruitment of a different skill spectrum of foreign labour, ultimately creating segmentation by occupations and industrial sectors. This sub­ section identifies and explains how the import of foreign labour supply creates such segmentation during the development process of the countries examined. This exercise is also useful for examining the emergence and causes of segmentation from the supply side for Brunei, as it also depends heavily on different skills of foreign labour (Chapter Three).