The Essential Role Of Remittances In Mitigating Economic Collapse

Scarce opportunities to earn a viable livelihood in Yemen have, for decades, driven hundreds of thousands of Yemenis abroad in search of work. Given chronically poor access to education in Yemen, the majority of these have been unskilled or semi-skilled laborers. The proximity of Saudi Arabia and the robustness of its oil-driven economy has made it a natural destination for most of Yemen’s expatriate labor force. The economic boom in Gulf Cooperation Council (GCC) states in the 1970s and 1980s, with the corresponding demand for labor, also drew many Yemenis to work in the GCC, with Saudi Arabia opening its borders to Yemenis without visa requirements.

Following the 1990 Gulf War – and the Yemeni government’s decision not to support the United Nations Security Council resolutions against Iraq’s invasion of Kuwait – Yemeni workers were forcibly deported en masse from GCC countries. Close to one million returned home from Saudi Arabia alone. The loss of remittances from these workers, along with the increased demands on public services and pressure on the labor market, caused rapid economic decline and social instability in Yemen. This in turn is regarded as a contributing factor to the country’s 1994 civil war and today’s economic crisis.

In 1990 Riyadh also initiated a program to increase the share of its nationals in the labor force, however, it was not implemented at the time. Thus, over the subsequent two decades the number of Yemenis working in the kingdom returned to pre-1990 levels. Following the 2011 Arab Spring uprisings around the region and in Yemen, GCC monarchies’ security fears increased, as did their desire to increase employment for their nationals. Thus, in 2011 Saudi Arabia’s campaign to nationalize its labor market was reactivated, with this becoming part of Riyadh’s larger Vision 2030 economic plan in 2013.

The impact of these policies has become more pronounced in recent years, with greater restrictions on the number of job categories open to expatriate workers, fees to live and work in Saudi Arabia increasing for legally documented workers and their families, and undocumented laborers facing an evermore precarious existence and exploitation. This, along with Saudi campaigns to arrest and forcibly expel illegal workers, has resulted in tens of thousands of Yemenis being forced to return to their home country