Middle East economy: Overview of worker remittances

COUNTRY BRIEFING
FROM THE ECONOMIST INTELLIGENCE UNIT

Labour flows are an important element of the economies in the MENA region. The Gulf states are prime examples of labour importers—the Economist Intelligence Unit estimates that 80% of the UAE population is expatriate, while in Qatar, foreigners constitute 70% of the population and in Kuwait, the figure is about two-thirds.
Social implications aside, most of these workers send at least some of their earnings home, which has an important impact on current account balances. Estimates for outward worker remittances from most labour importing countries are not available, but current transfers debits provide an indication of the size of remittance payments. Such information is available from the Economist Intelligence Unit’s CountryData service. This service reports that Saudi Arabia’s current transfers debits were the highest in the region in 2007, reaching US$17bn. The UAE has the second-largest bill in the region, at US$9bn that year. Kuwait and Qatar both recorded debits of US$4bn, with Oman’s debits put at US$3bn and Bahrain at US$2bn. For the wealthier Gulf states, recent oil earnings give them a comfortable margin to offset these debits on the current account. But for those who see oil reserves dwindling, such high debits argue for faster localisation of jobs.
The Gulf states are not, however, the only labour importers in the region. EIU figures also suggest that about 15% of Libya’s population is expatriate workers. The country depends on expatriates not just for unskilled construction labour, but also for skilled workers to man the oil sector. The debit on the current transfers account in 2007 was consequently a substantial US$5bn for the year, the third-largest bill in the region.
In contrast to the situation in these states, other countries in the region are labour exporters. For historical reasons, Morocco has a substantial diaspora living in Europe. The EIU estimated that inward worker remittances to Morocco totalled some US$7bn in 2007, the highest absolute figure for any of the MENA states. Other North African countries have strong ties with Europe—the bulk of the estimated 700,000 Tunisians that live abroad make their homes in Europe. The Gulf also draws some expatriate Tunisians, and together remittances from these groups totalled about US$2bn in 2007, about double the figure recorded for 2006. Turkey is another source of workers for Europe, with Germany one of the main markets. Total remittances for 2007 were about US$2bn, or double the 2006 estimate.
Syria, where unemployment is unofficially put at about 20%, is another labour exporter, with workers going to the Gulf and, to a lesser extent than in the past, to Lebanon. In 2007, worker remittances back to Syria amounted to US$1bn, according to the EIU. Likewise, Yemen’s unemployment rate of 35% encourages workers to go abroad. In 2007, Yemeni expatriates sent an estimated US$1bn home, a figure equal to about 14% of the value of the country’s goods exports.
Unemployment is also an issue in Jordan, where independent observers put the rate as high as 25%. Jordanians working abroad sent home US$3bn in 2007, equal to half the value of goods exports. The Gulf in general and Saudi Arabia in particular provide jobs for this relatively skilled labour force which has the advantage of speaking Arabic. Egypt’s situation is similar, and that government estimated that nearly 4m Egyptians lived abroad in 2006, sending home about US$5bn in 2007.
Likewise, in Lebanon, the EIU estimates inward worker remittances from Lebanon’s large diaspora at US$6bn in 2007—a significant contributor to the country’s economy at twice the value of goods exports. But the country also imports labour, and the current transfers debit for the same year was US$4bn, reflecting in part outward payments of workers from Syria and the sub-continent.