Abstract

The study aims to shed light on the challenges of human capital utilization in Kuwait and the labor market
reform approaches used to address them. Using secondary data and interviews with 28 subject matter experts, the
findings revealed that the most salient challenges were the acute underutilization of the scarce native workforce
accruing from absence of coherent and consistent workforce policies particularly impaired by overgenerous
wages and working conditions. These policies led to concentration and underemployment of nationals in the
public sector and heavy reliance on non-nationals in the private sector, deficit in the labor budget and a risk of
un-sustainability of the present extravagant approach. Among the more effective labor market reform approaches
are strict restriction of employment in the public sector and establishment of an agency to oversee several reform
initiatives such as, enforcing quotas of natives in the private sector and directing natives - through incentives,
training and employment support - towards the private sector. However, the approaches are still piecemeal and a
more comprehensive reform system in which, among other things, the private sector transformation from rent
seeking to economic leader is yet to be seen. The findings are discussed within the economic and socio-political
contexts.

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