Social Citizenship in the Gulf Monarchies: Beyond the Rentier State Paradigm
The Gulf states (Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman), united since 1981 in the framework of the Gulf Cooperation Council, include the world’s most generous welfare states (Kuwait, Qatar and the United Arab Emirates). In these countries, citizenship has been constructed first and foremost as a set of social rights in a context where civil liberties are restricted and political participation is not always absent but rather limited. Gulf states can be described as authoritarian welfare states because in these countries social protection plays a key role in the regulation of state-society relations and thus in the reproduction of the authoritarian social order.
In this paper I analyse the role of labour policy in social protection, understood as institutional mechanisms that alleviate harsh market dynamics (decommodification). I end with some reflections about how the dominance of the rentier paradigm in the scholarship about the political economy of Gulf states obscures rather than illuminates the working of Gulf social authoritarianism.
The Work-Welfare Nexus: Labour Policy as Social Protection
A specificity of the Gulf welfare state is the way it connects labour and welfare. The Gulf welfare state is premised on a specific labour regime characterised by a rigid labour market segmentation between foreigners and nationals in a context where the overwhelming majority of the workforce is composed of foreign workers. In some countries (Kuwait, Bahrain, Qatar and the United Arab Emirates), they constitute also the majority of the population.
The presence of foreign workers is regulated through the kafala institution, which is also an instrument of labour market regulation in the context of a strong overlap between labour policies and migration policies.1 Often translated as “sponsorship”, the kafala is a guest worker scheme which favours short-term contracts and high turnover, and also limits access to social rights and naturalisation. The kafala also segments the labour market between national and foreign workers by severely limiting the mobility of the latter. This means that while nationals can behave as free agents in the labour market, foreigners enter the labour market through the kafil or “sponsor”. The latter is a national, often the employer, who has unbalanced power over his foreign employees: he makes possible their entry into the country by being the interlocutor of the authorities for the issuance of the work permit; he decides about the renewal of the work contract; and he needs to give his formal consent in case migrant employees wish to shift jobs. Labour market segmentation thus separates a free national labour from an unfree or bonded foreign labour.
Segmentation between national and foreign labour overlaps with a segmentation between public-sector and private-sector workers since the majority of nationals work in government administration or state-owned companies while most foreigners work in the private sector.
Labour market segmentation is the result of the ways in which several policy decisions have combined over time. These decisions pertained to the regulation of foreign labour and capital, and to state-building. Progressively, however, because it plays a key role in the regulation of relations between state, business and labour, labour market segmentation has become a pillar of the social contract. On the one hand, it is premised on a migration regime driven by employers’ demands. This permits business not only to fill its labour needs but also, because of the virtual absence of national wage-earners in the private sector, to benefit from a very pro-employer legislation. Moreover, labour market segmentation has relieved business from the burden of confronting and negotiating with a national labour force, which is the lot of business in mainstream modern economies. On the other hand, an implicit element of the Gulf social contract became that any male citizen, especially if he had a high school or university degree, was entitled to a fairly paid and not too demanding public-sector job to which were attached a number of privileges (job security, social allowances, generous retirement schemes, subsidised housing, etc.). This translated into the practice of “featherbedding” or the correlation between the number of jobs in the public sector with the number of national job-seekers (Herb, 2014): many public jobs amount to sinecures and exist to fulfil the rulers’ duty to provide good jobs to the citizens.
Labour market segmentation has a twofold role in the welfare state: 1) the policy of massively recruiting nationals in the public sector is a major channel of wealth distribution; 2) segmentation is a form of “social protection by other means” in the sense of Francis Castles and Ramesh Mishra (Castles, 1989; Mishra, 2004) who have underlined that some states have historically arranged for a high level of social protection by means others than mere social expenditures. These means all consisted in insulating the countries from the global economy by protectionist economic policies and strict migration control (Australia and New Zealand), and policies of full employment and job security (Japan and the socialist countries).
Similar dynamics have been at work in the Gulf states, which explains why, despite many efforts, migration and labour policies are particularly difficult to reform. Labour market segmentation has indeed insulated nationals from competition by foreign workers by constituting nationals into a protected social category of civil servants and public company employees with generally higher wages and better working conditions than expatriates. Historical works show that segmentation emerged progressively in the late 1930s onward with oil industrialisation, in a context of national worker movements pressuring for policies favouring national labour over foreign workers in terms of access to higher paid jobs, a configuration very similar to labour movements of the early twentieth century in countries with an inflow of low paid migrant workers (well documented for Australia, the United States and South Africa).2
In the contemporary period, the way Gulf states use labour market segmentation as a means for social protection is very comparable to the Chinese hukou policy of segregation that denies rural labour the same rights as the free urban labour (Cheng & Selden, 1994). It is also comparable to guest worker schemes in Western countries which operate a trade-off between openness to migration and the rights of migrants. As shown by Martin Ruhs (2013) among others, policies that are open to migration, in particular to low-skilled migration, go with rights limitations, in particular the free choice of employment, the right to family unification and the right to unemployment coverage.
Labour Market Reforms and Their Consequences on Social Protection and the Social Contract
Since the late 1990s, the emergence and the durability of mass unemployment among nationals in many Gulf states have exposed the limits of the uses of labour and migration policies as means for social protection. Governments are trying to reform these policies, but are facing considerable difficulties in the process.
Across the Gulf states, data show that unemployment results not from a lack of jobs but from a mismatch between the existing labour and migration policies and far-reaching social changes that affect the labour market, and more generally, the national’s relationship to employment. Steady population growth supported by natalist and pro-family policies has increased the number of entrants into the labour market, which has also been fostered by shifting gender norms. Supported by policies promoting women playing an active role in society and more particularly women working, these shifting norms have generated new models of womanhood which among other things result in more young women entering the labour market. Other changes also matter in the rise of unemployment, like the rise in prices and the new needs and consumption habits generated by affluence. A result is that the public sector is now unable to absorb all the new entrants into the labour market. The male civil servant breadwinner model on which the Gulf welfare state was premised is increasingly obsolete.
In these circumstances, the solution is naturally that nationals shift to private-sector employment. However, labour market segmentation is making that particularly difficult both because employers have few reasons to want to employ free national labour when they have access to bonded and cheap foreign labour, and because nationals are reluctant to work in the private sector which offers mediocre wages and working conditions by contrast with public-sector jobs.
Reforms labelled “workforce nationalisation” have the objective of overcoming the constraints of labour market segmentation, by pressuring employers to recruit nationals and by motivating job seekers to apply for private-sector jobs. Quotas of nationals have been imposed by certain sectors. The quotas sometimes include the reservation of specific jobs for nationals. In case of non-compliance, companies are submitted to penalties, mainly in the form of fines and/or visa restrictions for expatriate workers but also in the form of limited access to tenders (for construction companies in particular). Other measures aim at improving the quality of the national workforce through the development of vocational training and the improvement of education overall. Governments have also tried to address the labour cost gap between nationals and expatriates by imposing fees on expatriate workers paid by employers and earmarked to finance vocational training for nationals. All Gulf states have reformed their labour laws, making them more pro-labour than they were. Some countries have imposed minimum wages for nationals working in the private sector, while others have subsidised the latter’s wages. Unemployment insurance schemes have also been introduced in some countries, which are financed by contributions from employers, employees and the state. Finally, governments have also increased social benefits (pension schemes, child allowances, maternity leaves) for nationals working in the private sector so that they have become closer, and even similar, to those offered to civil servants. Thus, a trend towards the universalisation of welfare provisions has emerged.
A stumbling block for reforms is the kafala. Some countries have announced that they have cancelled it or were considering cancelling it but, in each case implementation has not followed suit. This is because of the opposition of employers, who have successfully lobbied by various means to oppose the abolition of the kafala. Some countries have succeeded only to relax the kafala by introducing the possibility for migrants to shift jobs under certain conditions (after the termination of their contract for skilled workers in the UAE, after a year of contract and if the employer agrees in Bahrain). In this context, labour market segmentation has been reframed rather than abolished: the correspondence between the migrants/nationals segmentation and the private-sector workers/public-sector workers segmentation has been attenuated but migrants and nationals are still moving in two different spheres of labour.
At the end of the day, the stated aims of labour policy reforms have been only very partially achieved. Two countries only (Bahrain and Oman) now display higher numbers of nationals working in the private sector than in the public sector, but these official figures need to be taken with caution since the definition of “private sector” includes state-owned companies and companies where the state is the majority shareholder. Unemployment rates are still high in the countries which have been historically the most affected by unemployment (Bahrain, Oman and Saudi Arabia).
Yet, if to date the results are not up to the expectations of policy-makers, these reforms have significantly altered the architecture of the Gulf welfare state, which is now more universal. Reforms have also altered the way the socio-economic order is negotiated. In the countries most affected by unemployment, more or less developed tripartite schemes have been established to govern some welfare institutions (social security, institutions of labour market regulation) or as forums to discuss social and economic regulations on a regular basis. These tripartite schemes depart from previous modes of social and economic governance which were essentially bipartite, including only state and business representatives (organised through the chambers of commerce). Trade unions, which were legalised in the 2000s in Bahrain and Oman, or workers committees which have been authorised in Saudi Arabia in 2005, are now stakeholders. They are actually major allies of the governments in their efforts to nationalise the private-sector workforce, playing a role in pressuring employers to respect nationalisation quotas and the new labour rights that have been granted to private-sector national workers (Louër, 2015).
Conclusion: The Rentier State and the Welfare State
The blatant absence of academic works on the Gulf welfare state is conspicuous in an academic context marked by the domination of the rentier state paradigm in the analysis of wealth distribution in oil rich countries. This paradigm draws a boundary between the redistributive and the distributive state. The redistributive state is the classical welfare state in which the state redistributes the wealth it has previously extracted from the citizenry through an efficient fiscal bureaucracy. The distributive state, by contrast, distributes rents generated by the exploitation of natural resources (mostly oil and gas) by state-owned companies (or eventually by foreign companies that pay fees to the states) that flow directly to state coffers without the mediation of a fiscal bureaucracy. According to mainstream rentier state scholarship, from the particular fiscal structure of rentier states derive a number of characteristics in terms of social stratification and mobilisation: rentier states have neither a capitalist nor a working class and thus no class politics; and the people tend to see distribution not as a social right but as a reward from the leaders for political loyalty. Rentier states are also seen as being authoritarian by nature because the state’s fiscal autonomy from the society prevents the emergence of popular demands for representation.
A major flaw of this rentier state paradigm is the confusion it makes between the fiscal and the distributive dimensions. This scholarship has not demonstrated that there exists a correlation and even less a causal link between the fact that a state does not need to tax its citizens to fill its coffers and the fact that it distributes to them very generously. Distribution choices are shaped by several contextual factors, in particular types of regime, types of coalition dynamics, types of demography, types of circulation of policy models, etc. Moreover, what has been described in the rentier state scholarship as resulting from the state’s rentier nature has been described by scholars interested in the impact of the welfare state on state–society relations in advanced democracies, in particular the never-ending inflation of social expectations and demands, and the conundrum of implementing reforms that curtail acquired rights. This particular point is well illustrated by the “hard time politics” of current labour market reforms in the Gulf. These reforms also involve forms of class politics that contradict approaches that posit the absence of class politics in rentier settings.
References
Beaugé, Gilbert, “La kafala : un système de gestion transitoire de la main-d’œuvre et du capital dans les pays du Golfe”, Revue Européenne des Migrations Internationales, 2 (1), 1986.
Bonacich, Edna, “A Theory of Ethnic Antagonism: The Split Labor Market”, American Sociological Review, 37 (5), October 1972.
Castles, Francis G., “Social Protection by Other Means”, in Francis G. Castles (ed), The Comparative History of Public Policy, New York, Oxford University Press, 1989.
Cheng, Tiejun and Mark Selden, “The Origins and Social Consequences of China’s Hukou System”, The China Quarterly, n° 139, September 1994.
Dito, Mohammed, “Kafala: Foundations of Migrant Exclusion in GCC Labour Markets”, in Abdulhadi Khalaf, Omar AlShehabi and Adam Hanieh (eds), Transit States. Labour, Migration and Citizenship in the Gulf, London, Pluto Press, 2015.
Herb, Michael, The Wages of Oil. Parliaments and Economic Development in Kuwait and the UAE , Ithaca, Cornell University Press, 2014, p. 20.
Hyslop, Jonathan, “The Imperial Working Class Makes Itself ‘White’: White Labourism in Britain, Australia, and South Africa Before the First World War”, Journal of Historical Sociology, 12 (4), 1999.
Louër, Laurence, “The Arab Spring Effect on Labor Politics in Bahrain and Oman”, Arabian Humanities, 4/2015
Mishra, Ramesh, “Social Protection by Other Means: Can it Survive Globalization?”, in Patricia Kennett (ed), A Handbook of Comparative Social Policy, Cheltenham, UK and Northampton, MA, US, Edward Elgar, 2004.
Ruhs, Martin, The Price of Rights. Regulating International Labor Migration, Princeton and Oxford, Princeton University Press, 2013.
Cover image: Dubai, United Arab Emirates - April 2012: Workmen Enjoy A Coffee Break In Dubai. Photo by Mo and Paul for Shutterstock
- 1. There is a vast literature on kafala, but we can mention Gilbert Beaugé, “La kafala : un système de gestion transitoire de la main-d’œuvre et du capital dans les pays du Golfe”, Revue Européenne des Migrations Internationales, 2 (1), 1986; Mohammed Dito, “Kafala: Foundations of Migrant Exclusion in GCC Labour Markets”, in Abdulhadi Khalaf, Omar AlShehabi and Adam Hanieh (eds), Transit States. Labour, Migration and Citizenship in the Gulf, London, Pluto Press, 2015.
- 2. See for example Edna Bonacich, “A Theory of Ethnic Antagonism: The Split Labor Market”, American Sociological Review, 37 (5), October 1972; Jonathan Hyslop, “The Imperial Working Class Makes Itself ‘White’: White Labourism in Britain, Australia, and South Africa Before the First World War”, Journal of Historical Sociology, 12 (4), 1999.
