The GCC’s 60-year policy is the AI playbook the world is missing
While the world debates AI’s economic threat, the Gulf has been solving it since 1962, says Hiba Hassan, AI Competitive Advantage Strategist | Doctoral Researcher, University of Michigan
11 May, 2026
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In 1962, Qatar passed a labor law that stipulated the minimum percentage of Qatari national workers by industry. This minor administrative task and the initial spark of GCC nationalisation have turned out to be the foundation of the world’s first AI labor policy, sixty years later.
The GCC’s nationalisation policy is the most tested in the world to deal with one of the most treacherous side effects of AI in the economy. The GCC has been dealing with this problem for half a century. They called it the expat economy. An expatriate worker in Dubai or Riyadh is a producer. He builds the building, he writes the code, he manages the account. However, 60 to 70 percent of that expat worker’s salary leaves the country immediately. He sends it back home as remittances to India, Pakistan, the Philippines, etc. He spends what he must to live in the country. He spends it locally. But everything else goes back home. We get the output of the expat worker but don’t get the multiplier effect of that expat worker’s salary. “Remittance leakage” in the GCC is $131.5bn annually, which is the total GDP of a mid-sized country in Europe, leaving the Gulf economies.
Now, replace this expat worker with an AI worker. The AI worker also produces output. It writes the code, writes the contract, answers the query. It does not receive wages, and it does not spend money. The economic value goes entirely to the technology company that built it, most likely based in San Francisco or Seattle. The domestic economy gets the output, and the consumer economy gets nothing.
The GCC expat worker is the old version of the AI zero-multiplier problem. With lower intensity, slower onset, and geographic visibility. The GCC has been monitoring and mitigating the impacts of “workers who don’t spend locally” and “cheaper workforce”. Over the last 60 years, they have developed a policy that can be described with five architectural elements to solve this problem. First, setting mandatory quotas and minimum percentage of nationals required per company/sector. Saudi Arabia has the most developed version of this, through its Nitaqat policy, with its Platinum, Green, Yellow, and Red Zones. The UAE has its 2 per cent annual growth targets, and Qatar has its 50 per cent targets for the energy sector. Second, enforcing financial penalties as a form of visa restrictions, monthly fines, contract non-renewals and restrictions on new expat worker hires for non-compliant companies. UAE has fines of Dhs96,000 to Dhs108,000 annually per unfilled position on companies that do not meet Emiratisation targets, Kuwait has the most passive version of this with attrition through non-renewal of expats on non-compliant companies. Third, executing wage subsidy programs like HADAF in Saudi Arabia and Nafis in the UAE, where the government subsidises part of the salary of the national worker, so that the company does not face the choice between economics and employment. Fourth, knowledge transfer that builds capabilities within the country by mandating local national trainings by expats. Fifth, using compliance as competitive advantage, Saudi Arabia’s Platinum-rated Nitaqat companies get better government contract access and lower costs for work permits.
This five-part architecture has been refined for sixty years. It is the most empirically tested labor market framework for zero-multiplier workforce displacement that exists to date. Applied to AI, each element translates directly. Identify which sectors are most vulnerable to zero-multiplier displacement and legislate human employment floors before the crisis arrives. Set a direct levy on AI agent deployment above a defined sectoral threshold, with proceeds ring-fenced to fund human employment in the same industry. Subsidise part of the human worker’s cost so firms are not forced into replacing people simply because the math is cheaper. Invest in domestic AI infrastructure and data privacy laws that decrease dependence on AI hosted in other countries; creating a local multiplier through establishing AI companies inside the GCC. And turn human employment into a procurement advantage: companies that meet defined staffing thresholds get preferential access to public contracts, making the business case for keeping humans in the loop appealing rather than relying on regulatory pressure alone.
What is impressive, and almost unreported, is that the GCC is not waiting for the AI displacement crisis to arrive. It is already applying this framework in real time. Saudi Arabia’s HUMAIN, backed by the Public Investment Fund and capitalised with $1.2bn in January 2026, is building 250 megawatts of domestic AI data center capacity. Saudi Arabia’s PDPL and the UAE’s data protection frameworks require AI companies seeking Gulf market access to store and compute data locally. When Saudi Arabia announced in January 2024 that government contracts worth an estimated $175bn would flow exclusively to companies headquartered in the Kingdom, hundreds of international companies relocated to Riyadh within twelve months. Microsoft built three availability zones of physical AI infrastructure on Saudi soil. EY moved its entire MENA headquarters, including AI advisory, to King Abdullah Financial District. These investments are initial phases of the five-part framework adaptation: sovereign compute & data residency replacing Knowledge transfer, and procurement leverage requiring global firms to build here, hire here, and leave capability here. The remaining three are the policy tools the GCC will require next.
While GCC sovereign wealth funds might appear to be accelerating AI and its challenges, the framework suggests they fundamentally serve as the foundations for their own economic response. The GCC has lived this structural challenge for sixty years. It has the framework, the data, and the institutional memory to act before the crisis, and has already started. The rest of the world will eventually face the same question the Gulf answered decades ago: what happens when your economy produces but doesn’t distribute? When that moment arrives, the Gulf will already be leading the answer.
References:
- Qatar Labour Law (1962): https://www.almeezan.qa/LawPage.aspx?id=2592&language=en
- Saudi MHRSD: https://hrsd.gov.sa
- MoHRE: https://www.mohre.gov.ae
- HADAF: https://www.hrdf.org.sa
- Nafis: https://nafis.gov.ae
- World Bank Migration & Remittances: https://www.worldbank.org/en/topic/migrationremittancesdiasporaissues
- HUMAIN Reuters: https://www.reuters.com/world/middle-east/saudis-humain-secures-up-12-bln-expand-ai-infrastructure-2026-01-21/
- Saudi PDPL, SDAIA: https://sdaia.gov.sa
- UAE data protection framework: https://u.ae/en/about-the-uae/digital-uae/data/data-protection
- Saudi Investment Ministry (MISA): https://www.misa.gov.sa
- Microsoft Saudi Arabia East data centre (Q4 2026 launch): https://news.microsoft.com/source/emea/2026/02/microsoft-confirms-saudi-arabia-datacenter-region-available-for-customers-to-run-cloud-workloads-from-q4-2026/
- EY MENA HQ move to KAFD Riyadh (Sep 2025): https://www.ey.com/en_ae/newsroom/2025/09/ey-mena-completes-its-move-to-the-new-regional-headquarters-at-king-abdullah-financial-district-in-riyadh
