For more than a quarter-century, Gulf Arab states have pursued nationalization policies to lessen reliance on expatriate labor and to diversify economically. While such drives have increased citizen employment, they have not eliminated the demand for migrant labor. A two-tiered labor market exists among the Gulf Arab states: a relatively protected market for citizens, and a more flexible, lower-cost market for expatriates who perform most jobs that sustain the economy.
In Saudi Arabia, in the fourth quarter of 2025, nationals represented about 22 percent of total employment, although expatriates still dominate the workforce. Riyadh has succeeded in moving many citizens into the private sector.
A two-tiered labor market exists among the Gulf Arab states: a relatively protected market for citizens, and a more flexible, lower-cost market for expatriates.
In Kuwait, nationals accounted for about 19 percent of the workforce at the end of 2025, with roughly 80 percent employed in government and only about 3.7 percent of private-sector workers being Kuwaiti nationals. In Qatar, nationals accounted for about 6 percent of employment in 2024, while 82 percent of Qataris work in the public sector. In the United Arab Emirates, Emiratization has significantly expanded Emirati participation in the private sector, yet expatriates continue to dominate the private-sector labor market. In Oman, expatriates represent 68 percent of employed workers and 86 percent of private-sector jobs. In Bahrain, expatriates represent most private-sector employment, while Bahrainis remain far more represented in the government sector.
Across the Gulf Cooperation Council, the International Monetary Fund finds that expatriates account for between three-quarters to 99 percent of private-sector employment, underscoring the persistence of labor-market segmentation. These patterns suggest that nationalization has expanded citizen participation in public and private employment without eliminating the demand for expatriate labor.
A major reason for this segmentation is that citizens have traditionally received higher wages, significant state benefits, shorter working hours, and greater job security in public sectors. The wage gap propels nationals to seek government employment, while private employers often prefer to employ expatriate workers at lower salaries, especially in lower- and medium-skilled occupations. When a citizen costs substantially more than an expatriate to perform the same job, a quota does not make the two workers economically interchangeable. Employers may respond by raising prices, restructuring jobs, investing in automation, accepting lower margins, or retaining expatriate workers in sectors that are less affected by nationalization rules.
Governments increasingly subsidize private-sector employment to encourage citizens to enter the private sector and narrow the wage and benefits gap. Saudi Arabia, through the Human Resource Development Fund, covers part of the wages of eligible Saudi workers for up to two years, while Oman provides approximately 200 Omani rials [$520] per month for new Omani private-sector workers. Nafis is a federal program in the United Arab Emirates that seeks to increase employment and long-term retention of Emiratis in the private sector through salary support, pensions, child allowances, and training benefits. Kuwait also supplements the salaries of citizens working in the private sector through the Da’am al-Amala program. While such measures accelerate the hiring of citizens, persistent subsidies increase fiscal costs, encourage firms to optimize quotas, and make private-sector employment dependent on state support.
Two parallel labor markets operate in the Gulf Arab states. The first is a citizen labor market, supported by quotas, wage subsidies, skill development, training programs, government employment, and preferential access to selected occupations. The second is an expatriate labor market characterized by greater flexibility and lower labor costs. Often, companies pay additional fees to the government when expatriate employment exceeds prescribed ratios to access migrant workers they still need.
Nationalization policies are changing rules on who gets access to employment, but they have yet to fundamentally change who works and how they work.
The underlying problem is that internal hiring of citizens becomes only a numerical exercise. The real measures should be productivity per worker; wages linked to skills and expertise, rather than nationality; competitiveness between public- and private-sector employment, investment in technology; and training and genuine career progression. Employment quotas cannot be an end goal. Governments should make citizen employment market-based and competitive, improve labor mobility for expatriates, and ensure better migrant protections against exploitative practices. Nationalization policies are changing rules on who gets access to employment, but they have yet to fundamentally change who works and how they work.
The Gulf Arab states attract substantial U.S. investment and serve as major energy and logistics hubs. Millions of workers are employed in construction, hospitality, transportation, manufacturing, retail, health care, and domestic services. When labor markets get distorted, they affect productivity, competitiveness, investment costs, inflation, and economic resilience. This matters particularly in a region critical to energy security and global oil markets, supply-chain stability, financial stability, and broader U.S. interests.
