Dependence on foreign labor, quality of education and unemployment in the GCC countries: In search of solutions

The focus of this thesis is on the quality of education in the Gulf Cooperation Council countries (Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United Arab Emirates) and the problem of unemployment. Given the non-sustainability of increased public jobs, the GCC governments have looked to the private sector to alleviate the increasing problem of unemployment among nationals. However, because of the lower skills of nationals compared to their foreign counterparts, the private sector has not been willing to dispense with foreign laborers. This thesis contends that the main cause for the lower skill among nationals is a poor quality of education. This is ascertained through the analysis of the available data for the GCC countries and a survey case study for the country of Saudi Arabia. The results will show that students found factors of school quality as ineffective in terms of attaining the required score to enter their first choice of major. In addition, survey results for managers and employees in the private sector as well as managers and senior university students show that there are major obstacles to employment, which are inherent in the educational system for the Saudi case.;Given a rent-seeking setting, which is characteristic of the GCC labor market economies, the unemployment problem can be addressed in the short-term through taxes on foreign laborers, but not the imposition of quota as governments have unsuccessfully attempted in the past. This short-term solution is presented in terms of a General Equilibrium Model that compares the effect of quota vs. tax on social welfare.;In addition, long-term solutions are also discussed in the course of this paper. The outsourcing of education and investments in Qualified Industrialized Zones (QIZ) are discussed as possible examples of long-term solutions for the low quality of skill among national laborers.