Impact of Fluctuating Oil Prices on Employment in Qatar: 1995-2015
Oil accounts for more than 70% of Qatar’s GDP and therefore has a great impact on the country’s economy. The country has the third largest oil reserves in the world, coming behind Russia and Iran respectively. In this respect, a big percentage of the country’s population relies on oil for employment. Despite the falling world oil prices, Qatar is still planning to increase its production by 20% to hit 854,000 billion barrels per day from the current production of 714,000 billion barrels per day. In recent years, the country has witnessed fluctuations in oil prices, resulting in job losses in Iraq and other oil-producing countries. This paper seeks to look at how the dwindling oil prices in the world have led to unemployment in Qatar, and the mitigations the government is taking to stem out this problem. The paper will cover unemployment history from 1995 to 2015 brought about by the fluctuations in oil prices.
Oil exports form a big percentage of Qatar’s revenue. Considering that the central government employ more than a half of the country’s working population, paying pensions and salaries forms a big chunk of the government’s expenditure (World Politics Review, 2016). Since the fluctuation in oil prices began, the country has struggled to pay retirees and employees. This has resulted in a sharp decline in government expenditure. A recent report by the IMF warns that if the price of oil continues to drop further, most oil producing countries like Qatar will lose up to $300 billion in revenue.
Of all the Gulf Cooperation Council (GCC) member states, Qatar has managed to weather the storm of reduced global demand for crude oil (Cafiero, 2016, para 2). After 15 years of surpluses, the country is currently running a budget deficit of $12.8 billion Qatar’s deficit may actually increase that the country’s budget planners calculated the price of oil $48, which is above the current world market price. In order to finance these shortfalls, the government recently started implementing measures such as doubling fines for water wastage, increasing the cost of the country’s postal services, and hiking utility rates among other things. This has only worsened the already dire situation of unemployment in the country.
Outlook of Qatari Economy: 1995-2015
In January 2015, one of Qatar’s state-owned fuel companies, Woqod, announced that it had hiked gas prices by 30%, sending shockwaves and fear among locals (World Politics Review, 2016). A few hours later, the announcement went into effect, with angry residents forming long queues at gas stations a few hours leading to the hike. The last time the country made such a move was in 2011. This surprise price rise came only a few months after Oman, Bahrain, and Saudi Arabia cut gas subsidies (Stratfore, 2015 para 10). With more austerities expected to come, the Qataris are bracing for even more difficult economic times, and more job losses are expected come especially in the oil and natural gas sector. …