The impact of global economic imbalance on migrant workers and economies of the Gulf Cooperation Council

The GCC countries are characterized by a high incidence of foreigners in both the overall population and the labour force as well as by deep inequalities in social and economic terms. These features have influenced the labour market and fuelled mutual tensions and grievances between nationals and foreigners. Consequently, these countries need to reconcile the demands of economic growth with those of social stability. The latter requires more stable economic dynamics, which prevent the redistributive effects of inflation. The experience of the new millennium has shown that the dollar peg, which characterizes the exchange rate regime of the GCC countries, has been a major vehicle of inflation for the Gulf economies and suggests that it should be amended. The alternative proposed in this paper is to anchor the national currencies to a basket of strong currencies that mirror the direction and intensity of commercial and financial flows on the international market and in which there is also the euro.