Kuwait’s Public Authority for Manpower (PAM) recently introduced new fees for work permits and sponsorship transfers. The Ministerial Decision (No. 3 of 2024) also removes fees on large companies who recruit beyond their visa allocation. The decision will go into effect on 1 June 2024.
In its public announcement about the new decision, PAM stated that employers will no longer be required to recruit a portion of their migrant workers from the local labour pool. Previously, Kuwait mandated that some companies hire a portion of their workers locally, and larger companies faced additional fees if they recruited more workers than their needs warranted, as determined by their size and capital.
These new fees present additional burdens on Kuwait’s already restrictive job change regulations. Kuwait law only permits migrant workers to change jobs without employer consent after completing three years of service. Such restrictions not only force migrant workers into exploitative situations, but also diminish the quality of the private sector by limiting workers’ ability to move to jobs where their skills could be better utilised.
The objective of reducing migrants’ employment mobility is candidly aimed at reducing workers’ bargaining power and their ability to negotiate for higher wages. In its announcement, PAM stated that these recruitment restrictions had contributed to a rise in migrant workers’ wages in recent years. PAM also noted that the decision aims to limit visa trading and reduce costs in the construction and contracting sector, among other activities, by increasing the labour supply. According to the latest statistics, the average wage for migrant workers in Kuwait’s private sector is KD 317 (US$ 1031).
The artificial suppression of wages seems to take precedence over long-term benefits for the economy, and even other desired policy outcomes that Kuwaiti authorities have previously expressed, including strengthening the private sector and addressing the so-called demographic imbalance. Encouraging recruitment from abroad while neglecting the local labour pool enriches local recruitment firms who profit from the endless cycle of recruitment, but to the detriment of the overall labour market. Coupled with the added barriers to changing jobs, workers lose the opportunity to develop skills that can benefit both themselves and the wider market. Relatedly, the restrictions on sponsorship transfer undermine the objectives of the ongoing amnesty for migrant workers. An estimated 110,000 migrants with irregular status live in Kuwait, many of whom can enter the formal labour force if such restrictions are lifted. Notably, there has been a limited response to the amnesty, which concludes on 17 June 2024, with only 500 workers showing up on the first day on 17 March 2024.
Even before this decision, Kuwait has already witnessed an increase in the number of migrant workers. According to the latest statistics, the influx of migrants into the Kuwaiti labour market surged by 5.3% from the end of 2022 to the end of 2023.
