Kuwait's aging population shapes unique economic character
In the heart of the Gulf, Kuwait stands out as a country with a unique combination of considerable economic wealth and a predominantly young demographic structure. However, recent reports from the International Monetary Fund (IMF) and the World Bank highlight several challenges that Kuwait faces in ensuring its financial sustainability and transforming its demographic advantages into economic growth.
One of the key issues is the reliance on migrant workers, who form the majority of the labor force in the Gulf. This reliance reduces the benefits of earlier educational investments in citizens and limits the accumulation of human capital through work experience.
The World Bank's report emphasizes the need for Kuwait and its neighbors to focus on raising overall employment, especially among women and youth. To address this, the World Bank urges countries in the Middle East and North Africa to adopt a broad reform agenda aimed at updating human development policies, strengthening institutions, and bridging financial gaps to protect and enhance human capital in the face of demographic change, climate change, and technological transformation.
The average effective retirement age in Kuwait stands at 54, which, given an aging population, could create serious challenges for pension schemes and social welfare systems. The World Bank projects that by 2050, the elderly dependency ratio in Kuwait could rise significantly, potentially leading to a situation where elderly citizens outnumber younger workers. To counteract this, the World Bank suggests that governments must take stronger steps to encourage older workers to remain in employment.
The World Bank also points out that by 2030, between three and ten percent of the population in seven regional countries will require long-term care services. This underscores the importance of extending working years to support financial sustainability, a recommendation echoed by the IMF in its most recently announced report for Kuwait.
Despite these challenges, Kuwait records high labor market participation rates among those aged 15 and above compared to societies already experiencing advanced aging. However, the employment rates in the Gulf region, particularly among youth and women, remain lower than those in aging European nations.
Satisfaction with the education system in Kuwait stands at just 24 percent, which is a concerning figure considering that a well-educated workforce is essential for economic growth. On a positive note, around 61 percent of Kuwaiti citizens expressed satisfaction with the healthcare system, the highest rate in the region.
The World Bank's report does not mention any specific instructions to follow on social media platforms like website, Instagram, or Facebook. Nevertheless, it is clear that meaningful reforms are needed to address the challenges facing Kuwait and to transform its demographic advantages into sustainable economic growth.
By 2024, Gulf Cooperation Council (GCC) states together hosted around 28 million migrant workers, including 10 million in Saudi Arabia, many from the Levant region. This high reliance on migrant workers is a double-edged sword, providing a source of labour but also limiting the benefits of earlier educational investments in citizens and the accumulation of human capital through work experience.
In conclusion, Kuwait, like many other countries, is grappling with the challenges posed by an aging population and the need to extend working years to ensure financial sustainability. The World Bank and the IMF have offered guidance on these issues, emphasizing the importance of focusing on employment, particularly among women and youth, and encouraging older workers to remain in employment. The road ahead may be challenging, but with the right reforms, Kuwait has the potential to transform its demographic advantages into sustainable economic growth.
