KUWAIT: Robust economic growth in Kuwait resulted in yet another year of high population growth in 2004 and the first half of 2005 as per predictions in our last Economic Report. Statistics available from the Public Authority for Civil Information (PACI) revealed that Kuwait's total population swelled to 2.753mn in 2004, growth of 8.1% over the previous year. This is higher than our previous estimates of 7.7% for the year, as well as a 5.3% growth rate in 2003. Moreover, according to PACI, the latest available data for 1H2005 revealed a rise in total population to 2.867mn, representing 4.14% growth over the end of previous year. We expect growth to continue at its current tempo for 2005 as a whole, to result in an annualised growth of 8.27%, slightly higher than the growth rate of 8.09% observed in 2004.
INFLUX
By and large, the influx of expatriates into Kuwait has been driving record growth rates since 2001. In 1H2005, the number of non-Kuwaiti residents surged to 1.893mn individuals, representing 5.38% growth rate over last year. When annualised expatriates' growth rate is to reach 10.75% that is slightly lower than the 11% growth in 2004. As a result of this disproportionate growth, proportion of expatriates in total population increased to 66.05% in 1H2005 from 65.3% in the previous year. As for expatriates' composition, it reveals a sharp skew towards the male gender, with 1.31mn males (69.4%), implying a large number of unskilled expatriate workers in construction and other industrial sectors. About 74.95% of expatriate population is between the age group of 20 - 50 years. The age groups of 20-30 witnessed the highest growth rates among expatriates during 2004 and 1H2005 growing at 18.9% and 7.8% respectively, illustrating that the majority of the non-Kuwaiti population is a part of the local labor market. Furthermore, the profile and growth of the expatriate population in the country elucidates the huge number of jobs generated in recent times. This is the result of petrodollars flowing into a number of construction related projects such as that in Failaka and Bubiyan islands.
As far as the local Kuwaiti population is concerned, we continue to witness a deceleration in its growth rate through 2004. It grew at a rate of 3.1%, which is lower than the CAGR of 3.4% during the period 1997-2003. However, we anticipate that the growth of 1.8% in the first six months of 2005 would push the number of Kuwaitis slightly below the 1mn mark by the end of year to reach 990,572. In terms of gender, females dominate the Kuwaiti population, outnumbering males. Even though the population profile of Kuwaiti nationals has not significantly altered, the number of nationals under the age of 19 has steadily fallen from 52.6% in 2002 to 51.05% by the end of 1H2005. We foresee that the number of individuals below 19 will fall below the 50% mark by the year 2006. However, the still high proportion of young population raises the demand for healthcare and education. On the other hand, a steady decline in their proportion signals a major increase in the number of people entering the job market now, in turn boosting the housing demand too.
CENSUS
This year, Kuwait performed its ninth official National Census report. This endeavour essentially comprised taking the count of people living in the country and their housing units and establishments. It also contained vital information about buildings and their residents, housing units and their renting value, their facilities, and the methods of transportation and communication of regular families residing in the state. The census commenced on 26th of January 2005 and preliminary results revealed the total number of families reached 330,622 family, total buildings at 165,099 building and housing units at 368,396 units. Previously, the census was undertaken in 1995 and the new census would unveil changes in the demographical structure of the country as well as alterations in the economic and social structure.
LABOUR SECTOR
By the end of 1H2005, the total employed labour force in the state of Kuwait reached 1.701mn, 5.6% higher than that in the previous year. When annualised, labor force growth rate is to reach 11.2%, the highest achieved since 2001. This can mainly be attributed to the increase in the non-Kuwaiti labour force, which increased at 11.9% compared to 7.7% growth of the Kuwaiti labour force. The Kuwaiti population in the labour force continues to represent a declining percentage falling to 17.6% of the total at the end of 1H2005.
As far as creating new jobs goes, 2004 witnessed the creation of 163,000 jobs, much higher than 102,252 in 2003. The private sector accounted for 91% of these newly created jobs. Growth of new jobs created by private sector at 72% was much higher compared to corresponding growth of 13.5% in the public sector. This has been the trend, with the number of new jobs created by the public sector declining since the end of 2001 with the exception of 2004. We expect this phenomenon to continue, as the public sector already seems over-staffed. Therefore, the emphasis is on the private sector to hire Kuwaitis, especially with the number of job entrants expected to balloon in the coming years. The activation of the national labour quotas has been a catalyst for hiring in the last 2 years.
Private-public sector distribution of new jobs added was entirely different when the job creation for Kuwaitis alone was considered. The public sector was responsible for 11,000 jobs compared to 7,000 jobs created for Kuwaitis by the private sector. On the other hand, almost all the non-Kuwaiti jobs created were in the private sector. This was backed by the continued trend of improving fortunes in the local economy which increased hiring expatriates especially in the private sector. As a result, the expatriate component of the labor force continued to grow at an rapid pace, expanding by a rate of 12.3% during 2004.
JOB CONCERN
There are also concerns on the growing number of unemployed Kuwaitis. Official figures showed the rate of unemployment among Kuwaitis at 4.42% at the end of 1H2005. But unofficial figures show that the unemployment rate among Kuwaitis is much higher. Statistics point to the existence of 21,000 unemployed nationals (around 7.2%) by the end of 2003 and the number is expected to grow to 35,000 by the end of 2005. Even the official figures cause concern, as Kuwaitis only amounted to 17.5% of the labour force at the end of 1H2005. Although, the government has launched quotas for private sector companies, reports show that Kuwaitis are still shying away from the private sector due to a number of reasons. These reasons could be varied such as the lack of salary floors, no protection from layoffs and non-existence of established systems for the scope of promotions, according to a law professor at Kuwait University. Furthermore, the recently announced increases in public sector salaries would be an additional incentive for Kuwaitis not to hunt for alternate pastures.
© Kuwait Times 2006
