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Abstract
Policymakers in the GCC countries have correctly identified labor market issues as one of the key policy challenges—not only in those countries where unemployment is more of an immediate economic and social concern, but also in countries where there is presently no apparent unemployment but where strains are emerging. Also important has been the recognition by GCC policymakers that labor market issues are closely linked to other structural policies related to economic efficiency and the division of responsibility between the public and private sectors. As such, policies to increase the flexibility of the labor market are being defined in the context of a broader framework also including fiscal consolidation and structural budget reforms, deregulation, and privatization. In the context of an uncertain oil market outlook, these policies are intended to increase the resilience of the GCC economies and help sustain non-oil sector growth based on private sector initiative. Indeed, the considerable downside risk in oil prices and the long gestation period for most structural reforms call for an early start at reforms.
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