ShareKUWAIT: Kuwait’s population increased in 2022, reversing the decline seen in the last three years and almost reaching near its 2019-peak. The rise was predominantly driven by the return of some expatriate workers as economic activities recover from the pandemic.
Employment also recorded decent gains (+8.1 percent in the six months to December 2022), as non-Kuwaiti jobs in key labor-intensive sectors rebounded strongly, which has helped both alleviate labor shortages and the non-oil economy recover some of the ground lost since2019. Nonetheless, expatriate employment (excluding domestic workers) remains10 percent below its peak in 2019. Meanwhile, the public sector was the driver of new jobs among Kuwaiti nationals, with private sector employment declining in 2H22. Continued momentum in job creation through sustained economic growth remains imperative in order to absorb the new Kuwaiti entrants to the workforce.
Overall population growth picks up
According to the latest demographic data from the Public Authority for Civil Information (PACI), Kuwait’s population growth trend reversed course during 2022, rising by 8 percent y/y, the fastest annual growth rate in 17 years. The population is now just 0.8 percent below its 2019-peak.The growth rate of Kuwaiti nationals further easedto1.9 percent y/y in 2022, while the rate of non-Kuwaiti growth accelerated sharply to 11.1 percent, after two consecutive years of decline. Expatriate numbers, however, were still down 3.7 percent (-125k) from their peak in 2019.
Accordingly, Indians’ share in the total population rose to 20.4 percent from 19.1 percent in 2021, but the share of Egyptians slightly dropped to 13.8 percent from 13.9 percent.
Working and old-age Kuwaiti population is rising
The working-age population (15-64 years) among Kuwaiti nationals has been expanding rapidly (CAGR of 2.6 percent over the last five years), and now stands at 63 percent of the total Kuwaiti population. This has underlined the imperative for an acceleration in job creation. Moreover, the proportion of Kuwaitis above 64 years has also been increasing (albeit still quite small at 4.8 percent of total), implying rising demand for social and pension support for retirees. However, these trends are typically in line with population trends in Western developed countries.
Overall employment increased by 8.1 percent in the six months to December 2022, largely driven by an influx of non-Kuwaiti workers (+9.5 percent). Meanwhile, jobs among Kuwaiti nationals were up 1.4 percent or +6K to 455K. The increase in Kuwaiti jobs was driven by the public sector, which added 7.6K new jobs compared to a decline of 1.5K in the private sector.
Meanwhile, the number of unemployed Kuwaitis edged up by 7 percent from June 2022 to 26K by December, with an implied unemployment rate of 5.4 percent (up from 5.2 percent in June). Despite the slight increase in the last six months, the unemployment rate is much improved compared to the 7.2 percent recorded at the end of June 2021; the number of unemployed Kuwaitis has fallen by 21 percent since then.
Female participation grows
Among Kuwaitis, the female share in employment has been increasing, with the trend continuing in 2022; females now comprise more than 51 percent of total employment from 48 percent in 2017. Moreover, the number of Kuwaiti homemakers declined by 27 percent since 2018 (-15K to 39K).
In addition, there has been a robust rise in the Kuwaiti female workforce, boosted by an increase in their participation rate (the share of the female working-age population that is in the female labor force). By December 2022, the female labor participation rate had risen to 50.2 percent from 49.8 percent at the end of June 2022 (and a cumulative rise of 4.7 percent points since 2017), while the male participation rate dropped from 50.8 percent to 50.6 percent in 2H22. Since the labor force participation rate among females is now very close to that of males, scope for continued growth may be more limited. Nevertheless, the rise will have boosted females’ purchasing power, and likely their consumption.
Meanwhile, 2022 was the fourth consecutive year of decline in the male participation rate (a cumulative drop of 1.9 percent points since 2018), with the rate falling to 50.6 percent. This could possibly be explained by a 23 percent increase in number of students among working-age males, relative to just 10 percent rise in female students over the same period. Also, male students as a proportion of the male working-age population rose from 27.6 percent in 2018 to 30.3 percent by December 2022. Ideally, this could mean a more educated and qualified male workforce will be available in future.
Non-Kuwaiti jobs return but still below pre-COVID era
As COVID-related restrictions were lifted and economic activities normalized, non-Kuwaiti jobs also made a strong comeback in 2022. Although the relevant data is not available for the end of 2021, in the last six months to December 2022, non-Kuwaiti employment grew 9 percent to 1.6 million (excluding domestic workers). However, this level is still a good 10 percent below the pre-COVID peak. Most new jobs were concentrated in low-end profiles, in labor-intensive sectors such as real estate &construction, manufacturing, trade, and hospitality. This rise in workers should help alleviate ongoing labor shortages caused by the pandemic and support economic activity, though in some sectors – especially construction – employment is still well below pre-pandemic levels. In contrast, the number of private household (domestic) workers increased to a record high.
Share of domestic workers in population rises further
The number of domestic workers in the expatriate population has been increasing, reaching 773K at end-2022. Generally, 4,000-5,000 marriages occur annually among Kuwaiti nationals, implying the need for a similar number of new housing units. Moreover, given the usual cultural norms in Kuwaiti society, it also means the requirement to hire domestic helpers in these new households. Therefore, domestic workers’ share of the Kuwait’s total population stood at 16.3 percent at end-2022, up from 13.9 percent in 2016.
Looking at the trend in expatriate numbers excluding domestic workers, a better underlying guide to business activity trends in the economy and potentially the authorities’ objective of rebalancing the country’s demographics, shows that as of December 2022, foreigners comprised 51.7 percent of the total population, down from 55.8 percent in 2016.
During the last six months of 2022, the proportion of expatriate workers with secondary and below educational qualifications increased further (from 90.5 percent to 91.4 percent). Now only 8.6 percent of foreign workers are diploma and above qualified; by contrast, the same category jumps to 52 percent for Kuwaiti workers. This implies that more than 91 percent of expatriates are not highly educated and possibly working at lower-end jobs. Although this potentially points to a relatively smaller contribution to the economy, replacing these workers with Kuwaiti nationals is not feasible from a qualification and aspiration point of view. Meanwhile, the effect of Kuwaitization is more visible in the public sector: the share of expatriate workers in the public sector steadily fell to 23 percent in 2022 from 30 percent in 2016.
The growth rate of the Kuwaiti population may continue to ease further over the coming years as the birth rate continues its softening trend. Yet, with an expanding working-age population, with 15-20K new entrants annually to the workforce, creating more jobs is a key challenge for authorities. We believe continued strong growth in the non-oil economy through robust capital investment and policy reforms would help create a more dynamic and developed economic environment, generating additional employment opportunities for Kuwaitis.
