FINALLY, the government is beginning to realize the hard fact that it cannot secure jobs for its citizens from 2035. This is in accordance with the study provided by the planning council, and published recently in the local press. This will be the result of growth in local population from 1.1 million currently to 2.3 million in the year 2035. This will result in a hard challenge in securing jobs for the young Kuwaitis coming to the labor market, the rate of which is currently more than 25,000 per annum.
According to a governmental report, the population growth rate is three percent. With the ongoing deficit in our annual budget since 2014, and the low oil prices, it will be impossible to recruit Kuwaitis in various state departments and institutions.
The time has come for Kuwait to face such a challenge after years of keeping things under the carpet and not talking about it in an open statement without any ambiguity.
This is a serious matter; however, the timing is right even though it came late. The signs are on the wall with the weakening of the oil prices and the ongoing deficit in our annual budget since 2014, reaching currently about 50 percent shortage of cash. This trend will most likely continue in the coming years.
It just might be the rime to share the wealth of the state with its citizens in lieu of secure employment and granting our citizens fixed salary or bonus or profit from every barrel that the state produced. This way, the government can satisfy the people and ensure the sharing of the wealth and benefits to them. This profit-sharing scheme is being practiced in some oil-producing countries such as Alberta Province in Canada and the State of Alaska in the USA.
We can do the same here in Kuwait by giving each citizen a share from every barrel of oil produced per day. The production rate today is two million barrels per day, and if we divide this with the total number of Kuwaitis, which is 1.1 million, the share per individual is 1.8 barrels per day or 657 barrels per annum. With Kuwait’s crude oil price being $40 per barrel, this will result in an annual income or profit of $ 26,000 or KD 7,878, which is about KD 656 per month.
Of course, this number must be calculated on a yearly basis to check against any changes in the volume of crude oil production, and any increase or decrease in the international oil prices. Such figures are transparent and readily available globally. The remaining benefits of free education, health service, provision of housing and others must not be touched.
This will definitely release our governments from its long-term commitments and set them free from any other obligations. However, whether its new reforms will be acceptable or not is yet to be seen. It could perhaps be a new start. The fact remains that the government of Kuwait can no longer hire people, and can no longer continue facing shortage and budget deficit. Borrowing and perhaps using our sovereign wealth funds is not sustainable on a long-term basis.
By Kamel Al-Harami
Independent Oil Analyst