Labor Trends that are Transforming the Middle East

Labor markets in Middle Eastern countries such as Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) represent crucial sectors mirroring and adapting to global and regional economic fluctuations, labor regulations, and migration policies. These markets are notably influenced by various socio-economic factors, government policies, and especially by the distinct characteristics of the kafala system, which predominantly governs labor migration and employment practices in these nations.

Amid ongoing reforms, the kafala system — a decades-long sponsorship practice that legally ties migrant workers to their employers, affecting their mobility and rights — continues to shape the labor environment in the Middle East. Saudi Arabia, for example, has been at the forefront of recent labor reform initiatives to improve the kafala system. These reforms have a direct impact on more than 10 million foreign workers. Similarly, Qatar has also implemented significant reforms to its labor laws, particularly before the 2022 FIFA World Cup. These reforms included the introduction of a minimum wage and eliminating the requirement for migrant workers to obtain exit permits, marking a significant shift in the labor market.

The economic contribution of expatriate workers in Gulf Cooperation Council (GCC) states is substantial and pivotal to the functioning of these economies. In 2024, for example, nearly 11 million expatriates in the UAE account for more than 88% of the country's entire population. Meanwhile, nearly 3 million expatriates also make up more than 88% of the population in Qatar, signifying a large dependency on migrants for labor.

Furthermore, these countries’ labor participation rates and unemployment figures reflect varied economic dynamics. Saudi Arabia aims to lower its unemployment rate, which stood at 7.1% in 2024, by implementing various initiatives under its Vision 2030 program aimed at economic diversification and job creation for nationals. Meanwhile, countries like the UAE maintain relatively lower unemployment rates, buoyed by robust economic diversification strategies and a significant influx of foreign labor.

These dynamics underscore the complex interplay between labor market forces and regulatory frameworks in the Middle East. But what does that mean for employers looking to invest in regional workforces?

Here's a closer look at the regional labor market across leading industries.

Industries in the Middle East

An analysis of the labor market in the GCC region shows diverse dynamics in different sectors.

The private sector’s dependence on cheap migrant labor — particularly in the construction, hospitality, and transport industries — has established certain expectations among citizens and employers for acceptable migrant jobs.

While oil and gas remain significant, there is an emphasis on building a competitive technology ecosystem and boosting sectors such as Islamic banking and tourism, especially in Oman, Saudi Arabia, and the UAE.

In a more specific sector, Saudi Arabia plans to create up to 250,000 new jobs by 2030, focusing on developing its tourism sector to significantly increase its GDP contribution. This move indicates a strategic shift toward diversifying the economy, reducing its dependence on oil, and creating new jobs for citizens.

Energy and oil

These industries continue to play a key role in the Middle East and globally. Targets set by Abu Dhabi National Oil Company to increase crude oil production capacity, for example, indicate ongoing investment in the energy sector. Similarly, agreements between Weatherford International and Saudi Aramco underscore the importance of the oil and gas industry in the region, reflecting an active market with ongoing demand for oilfield services.

In the context of broader economic strategies, Saudi Arabia, in line with its Vision 2030 plan, seeks to diversify its economy to avoid oil dependence. It includes stimulating non-oil sectors of the economy, such as tourism and hospitality, through investments in infrastructure and local industries. Saudi Arabia’s financial strategies include emphasizing domestic growth and supporting non-oil sectors of GDP despite fluctuating oil revenues.

The Middle East’s strategic shift toward sustainable energy development, resulting from the COP28, clearly illustrates the region’s growing commitment to environmental responsibility. Countries including the UAE, Saudi Arabia, Oman, and Bahrain have set ambitious net-zero carbon targets. These initiatives impact the energy sector and potentially influence labor markets as they pave the way for new skills and job opportunities in renewable energy and sustainable practices.

Construction

The Middle East’s construction industry is not just experiencing substantial growth and transformation — it’s also grappling with unique challenges that vary across different countries.

Saudi Arabia strives to adopt sustainable construction practices and attract international expertise to fuel its growth. Adopting new technology, including building information modeling (BIM), is rising, boosting efficiency and planning. However, the industry is not without its share of common hurdles:

• Skilled labor shortage: There’s a critical demand for skilled professionals in engineering, architecture, and construction trades across the region.
• Infrastructure needs: Many countries require substantial investments in basic infrastructure, such as roads and utilities, to support further development.
• Financing: Securing funding for large-scale construction projects is challenging, necessitating innovative approaches like public-private partnerships (PPPs).

Despite its smaller size, Jordan’s construction sector is a powerhouse for its economy, making significant contributions to the GDP and employment. The country boasts a robust domestic construction scene and exports materials globally, showcasing its competitive edge. The Jordan Build exhibition in Amman is a game-changer for the Middle East’s construction industry, serving as a hub for innovation, investment, and collaboration. It exhibits the latest construction technology, fosters partnerships, attracts investment, and facilitates knowledge sharing, playing a key role in the region’s construction industry and economic advancement.

Aviation

The aviation sector in the Middle East has undergone significant transformation, with major players like Airbus, Boeing, and Lockheed Martin making their mark. Moreover, the resilience of the airfreight industry and cargo airlines underscores the region’s increasing focus on logistics and connectivity between Asia and the Middle East.

The Middle East aviation market is projected to grow from nearly $28 billion in 2025 to more than $35 billion by 2030 at a 4.4% CAGR.

While the commercial aviation sector faces challenges and transformations, the industry’s diversification — spanning full-service airlines, budget carriers, and general and military aviation — presents varied implications for the workforce. Adaptation to new market realities, evolving skill requirements, and the potential for sector-specific growth will shape the employment situation in the Middle East aviation industry.

Despite each country and industry having unique prospects and challenges, the Middle East is witnessing a general trend toward diversification and growth across key sectors. Policymakers and businesses strategically focus on sustainable development, expanding beyond traditional sectors to embrace technology, tourism, and advanced manufacturing. This shift aims to create a more resilient and diversified economic industry, underscoring the region’s adaptability and resilience.

Chemical industry

The chemical industry in the Middle East is undergoing substantial transformation and expansion, driven by various factors and trends. One such trend is the industry’s heightened emphasis on digitization and artificial intelligence (AI). The sector views investments in digital technology and AI as critical to its future, enhancing productivity, fostering innovation, refining decision-making, and strengthening customer relationships.

Kuwait, Saudi Arabia, and the UAE are leading the way with the top petrochemical complexes in the region, increasing the region’s capacity and capabilities in chemical production and positioning it for the world market.

Furthermore, the Middle East chemical industry is set for a faster growth trajectory than other regional sectors. This is attributed to strategic investments and the expansion in China and other key markets. Technological advancements and the shift towards higher-value chemical production further fuel this growth, positioning the industry for global competitiveness.

While the Middle East chemical industry is poised for growth and transformation, thanks to technological advancements and significant investment, 2024 is predicted to be a challenging year for the chemical industry in the Middle East as it navigates potential challenges and changing market dynamics.

Hospitality and tourism

Today's hospitality and tourism industry in the Middle East is booming with significant growth and innovation. The scale of these developments is staggering, with new resorts like the Four Seasons at Triple Bay AMAALA and unique projects like NEOM’s Gidori featuring 200 exclusive villas.

Saudi Arabia’s $11.2 billion tourism initiative alone is creating 120,000 jobs, and the country's second-largest city, Al Balad, is also set to open heritage hotels in Jeddah’s Historic District.

The UAE, with its Dubai International Airport recently ranking the second busiest in the world, aimed to welcome 140 million passengers through its airports in 2024. Egypt, which reported a 6% increase in tourist arrivals in the first 50 days of 2024, has also set a goal to increase its share of global tourism to 1.7% to reach 30 million tourists by 2028. And Oman's plan for a $2.4 billion mountain destination indicates robust regional investment in tourism infrastructure.

These efforts are instrumental in enhancing the region’s appeal as a premier travel destination and contributing significantly to its economic diversification and employment generation, positioning the Middle East at the forefront of global tourism.

Workforce Planning for Middle Eastern Labor Trends

TalentNeuron's global labor market intelligence and solutions transform how organizations anticipate and manage future workforce challenges in the Middle East and beyond. Our real-time data and actionable insights can help in a few key ways:

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For Jabil, TalentNeuron’s global labor market data was key in driving critical sourcing and location strategy decisions. Jabil identified talent availability for niche skills and determined where to set up new sites or adapt recruitment strategies based on supply and demand. The insights included detailed competition analysis, salary benchmarks, and even employee value propositions (EVPs), enabling more strategic workforce planning globally.

• Strategic workforce planning and transformation: Develop long-term strategies to adapt to market changes, reduce dependency on expatriate labor, and cultivate local talent.

For Qualcomm, TalentNeuron provided predictive modeling solutions to tackle challenges in a rapidly evolving tech landscape. Qualcomm developed a geo-strategy by identifying the best locations for R&D centers, comparing costs, and forecasting long-term talent supply. This ensured Qualcomm could stay competitive by adapting its workforce strategy to emerging AI and machine learning skill demands.

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At JM Family Enterprises, TalentNeuron transformed the recruitment workflow by providing data on market insights, competitor benchmarks, and salary trends. This enabled JM Family to shift its hiring strategy, focusing more on skills and potential rather than years of experience. Additionally, JM Family built internal skills through rotational programs and future-proofed its workforce with long-term talent pipelining strategies.

• Competitor insights: Discover competitors' targeted roles, skills, and locations to calibrate your organization's strategy and gain an advantage in hyper-competitive industries like technology and renewable energy.

TalentNeuron played a pivotal role in understanding labor market competition at Southwest Airlines. By identifying competitors’ hiring trends and shared skill sets, Southwest could strategically plan its talent acquisition efforts and strengthen proactive workforce planning.