Gulf oil producers have made substantial progress in economic development because of their massive crude resources but they will always remain reliant on foreign labour, a United Nations official said yesterday.

Adel Abdul Lateef, Director of Regional Programmes at the Regional UN Development Programme Office, said the six Gulf Co-operation Council (GCC) countries still face the challenge of human resources development despite their remarkable economic achievements over the last 50 years.

One of the problems he cited was that GCC nationals still account for a low percentage of the workforce in most member states as they prefer the public sector in the absence of attractive incentives in the private sector.

"The GCC economies will always surpass the production capacity of the native population and this will make these economies permanently reliant on expatriate labour from all sides," he told a human resources conference in Abu Dhabi.

"The GCC's long-term strategies must take into account the rapid demographic consequences resulting from this steady development whether in terms of rights and duties for expatriates or the number of nationals and their contribution to all economic aspects and values."

Abdul Lateef said the large expatriate presence in the GCC has become a permanent phenomenon, which has "not only offset a sharp labour shortage during the oil boom but also largely contributed to the expansion of the GCC market in terms of commodities and services".

"There is no doubt this large foreign presence has become a controversial topic of discussion and has raised economic, political, cultural and strategic issues over the past period due to a steady increase in this presence."

Abdul Lateef said GCC states have been generous with their citizens but noted that the nationals have failed to reciprocate.

"Some see many GCC nationals lack the motivation to study or take up a job that involves work for long hours… there is also a general belief the GCC citizens always shun work in the private sector and prefer the public sector, which they feel is at the vanguard of economic development," he said.

"This explains the concentration of GCC citizens in the public sector and the high rate of unemployment among the national youth… while general unemployment rates in the GCC are as low as 1.7-3.4 per cent, the rate among local youth is as high as 26 per cent in Bahrain and Saudi Arabia, 23 per cent in Kuwait, around 20 per cent in Oman and 17 per cent in Qatar."

According to Abdul Lateef, the GCC public sector has become saturated while the private sector is recording steady growth.

"But the problem is that the local manpower is not matching growth in the private sector… this of course is not due to the absence of ideas but lack of initiatives by the private sector, which is set to remain the main solution to this problem."

He said the GCC countries, which control 45 per cent of the world's proven oil wealth, have pumped massive funds into development but stressed human resources development remains their long-term challenge.

"The GCC countries have set an example in development for the world although they are developing nations… they have made substantial achievements in economic development but the main challenge now is human resources…

"It has to be mentioned that the ranks of the GCC countries in the global indices of human resources development do not match their GDP rank… their huge financial capabilities enable them to achieve a better rank in human resources development on the global level… yet I believe the GCC nations are getting ready and are determined to face these challenges."