Abstract

Since the implementation of the first welfare state measures in Kuwait in the 1960s, government employment has been one of the important means of wealth distribution, as it is coming with significant financial incentives, and is in general less demanding compared to the private sector. As such, it has long ceased to be seen as a privilege, but is rather considered an inherent right and a part of the social contract. This policy has led to the bulging of the government sector and the subsequent fast increase of budget spending on wages, which has become a serious economic burden expected to result in budget deficit and fiscal crisis in the not so distant future. Shifting the part of the burden of employment to the private sector is generally seen as a solution recipe for the problem. The patterns of reaching this goal have been more or less uniform in all GCC states and have been based around labour nationalisation, supporting entrepreneurship and widening the scope of private sector operation. Although various policies have been implemented in Kuwait to promote all three aspects, so far the success of those policies has been quite limited. The blame for the failure of labour reforms is often put on the national population itself, which is deemed neither qualified enough, nor willing to work in the private sector. The present paper, however, looks at the other angle of the problem, that is – the role of Kuwait’s existing private sector and its prominent business players in the progress of labour reform policies. We argue that the unwillingness of the established business community to support national labour force, and more importantly, its ability to dodge the meaningful fulfillment of the labour policies’ requirements, is one of the major stumbling blocks for the progress of those policies. We illustrate our argument with two policy case studies – the national labour quotas requirement and the support of small and medium enterprises. We will show that in the first case, the private sector companies utilise various means to avoid the genuine implementation of quotas, while in case of the SMEs development, they are not willing to contribute to the government’s efforts in promoting new businesses, not least because they do not want any significant competitors to emerge.