Racing to the Bottom of the Gulf

From McKinsey today:
–The Gulf states (Bahrain, Qatar, Oman, UAE, Saudi Arabia, Kuwait) are awash in trillions of dollars of oil, and may want to use it to diversify their economies.
–The countries have “one of the world?s youngest and fastest-growing populations: for example, 61 percent of Saudi Arabia?s population is under 25 years old, compared with 50 percent of India?s, 39 percent of China?s, and 30 percent of Europe?s.
–“A young labor force is normally an asset, since it replenishes the private sector and drives economic growth. But young Gulf nationals face a future of underemployment or no employment at all; the educational system has failed to prepare them for the rigors of working in the private sector.”
–“The task of job creation will be a massive one. Over the past ten years, the private sector has created about 55,000 medium- and high-skilled jobs a year. To absorb the number of Gulf nationals with a secondary-school degree or higher, the annual figure must rise fivefold, to almost 300,000. To provide a living wage, these jobs must pay at least twice what private-sector jobs do now.”
–“Immigration policies are flexible, labor markets rigid. Foreigners account for at least 40 percent of the labor force and in some countries hold 90 percent or more of all private-sector jobs. The result is a ‘race to the bottom,’ with businesses searching the world for the cheapest sources of labor rather than investing in building the skills of the national workforce and increasing that country?s labor productivity.”

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