Kuwait, strategically positioned at the northwestern corner of the Persian Gulf, presents a lucrative economic environment, primarily fueled by its thriving petroleum industry. With a GDP of approximately 120 billion U.S. dollars, the nation boasts remarkable wealth and a high concentration of affluent individuals. As Kuwait navigates through evolving market dynamics, the impending introduction of VAT is poised to further shape its economic landscape. This creates a prime opportunity for businesses looking to leverage a skilled workforce and enter a stable, prosperous market, ensuring a strategic advantage in a region known for its economic resilience.

What you need to know before hiring employees in Kuwait

Job market in Kuwait

• In 2024, Kuwait’s GDP is on a significant upward trend, projected to rise by 14.34% by 2029. This expansion is reflective of strengthening market sectors, notably petroleum, which promises to catalyze broader industry growth and create new business opportunities.
• Despite a slight reduction in the unemployment rate in 2023, historical data indicates elevated levels compared to prior years. This suggests that while there are emerging job opportunities, there remains untapped potential within the workforce, highlighting areas for strategic investment and development.
• IWith a forecasted decrease in the inflation rate reaching 1.76% by 2029, businesses can anticipate more stable operating costs. This economic stability is conducive to strategic planning and sustained investment, enhancing the appeal of long-term initiatives and expansions in the region.
• The converging trends of GDP growth, moderating inflation, and an improving yet underutilized labor market present a unique phase in Kuwait’s economic landscape. Strategic engagement in this market could yield considerable advantages, particularly for initiatives aimed at harnessing local talent and contributing to sectoral diversification.

Kuwait Hiring Trends

Several key developments across various sectors influence Kuwait's hiring trends in 2024:

• Kuwait's GDP is projected to increase by $24.2 billion between 2023 and 2028, reaching a total of $183.9 billion. This substantial growth is underpinned by both public and private sector investments, particularly in infrastructure and development projects.
• Ongoing and upcoming projects, such as the $132 billion Silk City project and a $2 billion development of Kuwait City airport, highlight significant opportunities in construction, engineering, and project management sectors.
• The introduction of favorable foreign direct investment laws, including incentives like minimum taxes and competitive labor costs, aims to attract more international businesses. This legal framework is designed to support the influx of ventures and expansions into Kuwait.
• With over half of Kuwait's GDP traditionally reliant on oil, the country is diversifying into non-oil sectors such as information technology, renewable energy, and healthcare. This shift not only diversifies the job market but also aligns with global sustainability trends, increasing opportunities in green technology and innovative solutions.
• As Kuwait progresses towards becoming a regional and international financial hub by 2035, there is a growing need for expertise in financial services and commercial industries. This development is expected to generate numerous high-skilled job opportunities in finance, banking, and related sectors.

How to hire employees from Kuwait

1. Set up an entity in the country

Establishing a legal entity in Kuwait is crucial for businesses seeking a robust foothold and long-term growth within the region. This structure facilitates direct oversight of operations and provides substantial benefits in managing local talent effectively.

The procedure involves choosing an appropriate business form, such as a Kuwaiti Shareholding Company (K.S.C.) or a With Limited Liability Company (W.L.L.), and registering with the Kuwaiti Ministry of Commerce and Industry. Securing a Commercial License and a Tax Identification Number (TIN) is also essential for operational and tax compliance within the country.

However, the process of setting up an entity in Kuwait can be intricate and resource-intensive, demanding a comprehensive understanding of local corporate regulations and tax laws. Strategic planning and the engagement of local expertise are imperative to successfully establish and manage an entity, ensuring compliance with Kuwaiti legal and business practices.

2. Hire independent contractors

In Kuwait, hiring contractors involves negotiating agreements with individuals or companies to execute specific tasks or projects. This approach is highly flexible, making it ideal for temporary assignments or specialized project demands. However, accurately classifying workers is critical to avoid legal challenges and potential penalties under Kuwaiti employment laws.

It's also important to consider that contractors may not share the same level of commitment or loyalty as full-time, permanent employees. This distinction is crucial in Kuwait, where team cohesion and consistent project delivery are highly valued. Understanding this dynamic can help ensure that the contractor hiring model aligns with your business objectives and cultural expectations.

3. Partner with an EOR in the country

Utilizing an Employer of Record (EOR) service in Kuwait offers a straightforward path to market entry, eliminating the complexities of establishing a legal entity. This approach minimizes liabilities and enhances cost efficiency. Collaborating with an EOR ensures adherence to Kuwaiti labor laws, tax requirements, and regulatory standards, reducing legal risks and facilitating seamless business operations. This method not only simplifies the administrative processes but also accelerates the time to market, making it an attractive option for businesses looking to expand into Kuwait.

Employment Laws You Must Know Before Hiring in Kuwait

Compliance risk while hiring in Kuwait

Navigating compliance risks is essential when hiring in Kuwait, where complex labor laws and regulations prevail. Careful management of worker classification, contract agreements, and tax obligations is crucial to sidestep legal pitfalls and penalties. Ensuring adherence to Kuwaiti employment standards is vital for maintaining smooth operations and legal compliance, safeguarding your business's interests in the region.

Key Aspects of Kuwait Labor Law:

Employment Contract: In Kuwait, the labour law mandates that a written employment contract be signed before the commencement of any job. 

This contract outlines: 

• the terms of service, 
• job description, 
• appointment date, 
• service duration (if fixed for a term not exceeding five years), and 
• remuneration details. 

While contracts are required to be drafted in Arabic, translations into other languages can be provided for clarity. However, in legal disputes, only the Arabic version of the contract is recognised by the courts. This ensures a clear understanding and adherence to the specified employment terms, safeguarding both employer and employee interests under Kuwaiti labour regulations.

Working Hours: In Kuwait, the standard workweek ranges from 40 to 48 hours, typically starting around 8:30 or 9:00 am and ending by 5:30 or 6:00 pm. During Ramadan, workdays are legally shortened to six hours for all employees, though this is often applied only to Muslims. Friday serves as a weekly rest day, with most companies opting for Saturday as the additional day off.

Overtime: 

Minimum Wage: In Kuwait, the baseline salary is determined by the job sector. Specifically, employees in both the private and oil industries are guaranteed a starting monthly wage of 75 KWD. This standard ensures a uniform minimum income for individuals working within these sectors, providing financial stability and adherence to labor laws that regulate minimum earnings.

Payroll laws in Kuwait

Wage payments can be calculated hourly, daily, weekly, monthly, or by project, and must be distributed on official working days at the workplace, in the legally recognized currency. Monthly salaried staff should receive their pay at least once per month, while those earning hourly wages or those paid weekly or by project should be compensated at least bi-weekly. This ensures consistent and lawful remuneration practices.

Employment benefits in Kuwait

Leave Policies in Kuwait 

Paid Time Off:

After completing one year of service, employees are entitled to 30 working days of paid leave annually. Additionally, employees working for the same employer for two consecutive years can take 21 days of paid leave to perform Al-Hajj, which is a one-time opportunity in their lifetime.

Public Holidays:

There are 10 national holidays in Kuwait.

Sick Days:

Employees with a minimum of one month's employment tenure are eligible for sick pay, structured as follows: 15 days at full salary, followed by ten days at ¾ pay, another ten days at half pay, and ten days at ¼ pay, with the subsequent 30 days being unpaid. It is compulsory for employers to furnish all employees with government medical insurance coverage.

Maternity Leave:

Expectant employees receive a total of 70 days of compensated maternity leave, divided into 30 days before their expected due date and 40 days following childbirth. Additionally, workers have the option to seek up to four extra months of unpaid leave once their maternity leave concludes.

Paternity Leave:

Kuwait does not have any legally mandated paternity leave for fathers.

Public Health Insurance 

In Kuwait, the national healthcare system provides extensive medical coverage through a state-funded public health insurance program. This system ensures that all citizens, along with the majority of expatriates, receive a broad spectrum of healthcare services at minimal to no personal cost. Managed by the Ministry of Health, Kuwait's healthcare infrastructure includes a network of public hospitals and clinics equipped with advanced medical technologies and staffed by trained professionals.

Additionally, expatriates benefit from a compulsory health insurance scheme that demands an affordable annual contribution. This scheme facilitates access to quality medical care for them and their families, mirroring the services available to Kuwaiti nationals. This robust public health insurance framework supports the overall health and productivity of the resident population, playing a crucial role in sustaining the country’s workforce and community wellbeing. 

Filing tax in Kuwait

Income Tax:

Kuwait does not impose a personal income tax. For a comprehensive view of kuwait tax structure, please refer to our detailed guide.

Other Tax and Social Security Contributions:

In Kuwait, both employers and employees are required to make specific contributions towards social security and other statutory funds. Employers contribute a total of 12% towards pensions and unemployment benefits, ensuring a robust support system for their workforce. On the employee side, contributions total between 8.5% and 11%, covering social security, pensions, and unemployment. These mandatory contributions help secure financial stability for employees, facilitating pension savings and providing unemployment support. Such structured contributions are essential for maintaining a safeguarded, productive working environment. For a comprehensive view of kuwait tax structure, please refer to our detailed guide.

Business culture in Kuwait

• Business culture in Kuwait is distinctly hierarchical, with decision-making typically concentrated at the top levels of management. Respect for seniority and authority is paramount, and subordinates often defer to their superiors for final decisions.
• Establishing strong personal relationships is crucial in Kuwaiti business culture. Trust and mutual respect form the foundation of business dealings, and it's common for business relationships to develop through face-to-face meetings and extended discussions.
• In Kuwait, business interactions are formal. This includes dress code, greeting rituals, and communication style. It is customary to address individuals with their professional titles and maintain a polite and reserved demeanor during meetings.
• Negotiations in Kuwait may proceed at a slower pace compared to Western standards. Patience is a virtue in the Kuwaiti business environment, where rushing through decisions is often seen as disrespectful. Emphasis is placed on long-term benefits and building lasting partnerships.
• The culture in Kuwait is conservative, influenced by Islamic traditions. Business practices and interactions are conducted with a high level of respect for these traditions. For instance, during the holy month of Ramadan, working hours are shortened and business activities are adjusted to accommodate fasting periods. It is important for expatriates and foreign businesses to be aware of and respect these cultural nuances to foster successful business relations.

Top sectors to hire from in Kuwait

1. Service Sector

With a commanding 72.73% share in employment and contributing 69.06% to Kuwait’s GDP in 2020, the service sector is the dominant force in the economy. This expansive sector includes roles in finance, retail, healthcare, and hospitality, making it rich with opportunities for hiring diverse roles from financial analysts to healthcare professionals. The sector's significant size and contribution to the economy suggest robust demand and growth, positioning it as a top choice for recruitment.

2. Industrial Sector

Accounting for 25.29% of employment and 45.43% of GDP in 2020, the industrial sector in Kuwait is heavily influenced by oil and gas but also includes manufacturing and construction. This sector offers a wealth of opportunities, particularly for engineers, project managers, and skilled labor, crucial for driving forward Kuwait’s infrastructural and industrial ambitions.

3. Agricultural Sector

Although smaller, with 1.98% of the employment and a minimal GDP contribution of 0.46%, the agricultural sector in Kuwait provides unique opportunities in areas like agritech and sustainable farming practices. Specialized roles in agricultural management and technological innovation in farming are emerging as niche areas with potential for growth and development.

Top cities to hire from Kuwait

1. Kuwait City

As the capital and largest city, Kuwait City is the central hub for finance, commerce, and government. It offers a diverse talent pool, especially in sectors like banking, IT, and public administration.

2. Al Ahmadi

Known for its extensive oil refineries and industrial base, Al Ahmadi is ideal for recruiting professionals in the oil and gas industry, engineering, and industrial project management.

3. Hawally

This city is a residential and commercial area with a significant number of businesses in retail and service industries. It's a great location for hiring in IT, customer service, and retail management.

4. Farwaniya

With a mix of residential and commercial areas, Farwaniya is home to diverse sectors including aviation, as it encompasses Kuwait International Airport, making it a prime spot for hiring in logistics, aviation services, and hospitality.

5. Al Jahra

Situated to the northwest of Kuwait City, Al Jahra is important for agriculture, making it suitable for recruitment in agricultural technologies, farm management, and environmental sciences.

Hire in Kuwait  compliantly with Gloroots

Gloroots, as an Employer of Record (EOR) in Kuwait, provides an efficient gateway for businesses looking to enter and thrive in the Kuwaitian market. Our EOR platform offers swift candidate onboarding, ensuring a quick operational setup while adhering strictly to both local and international compliance standards. Designed to accommodate businesses of all sizes, Gloroots simplifies the complexities of payroll management, benefits administration, and tax handling, thus eliminating the necessity for establishing a local entity. This service allows companies to effectively build and manage a remote team in Kuwait. For more information on how Gloroots can support your hiring needs in Kuwait, please contact us.

Frequently Asked Questions 

What is the standard workweek in Kuwait?

The standard workweek in Kuwait typically ranges from 40 to 48 hours, depending on the company policy. Office hours are usually from 8:30 or 9:00 am to 5:30 or 6:00 pm. During Ramadan, workdays are reduced to six hours. Friday is the customary rest day, and many businesses also close on Saturday.

Are there specific labor laws in Kuwait that foreign businesses need to comply with when hiring?

Yes, foreign businesses must comply with Kuwaiti labor laws, which cover all aspects of employment including work hours, compensation, overtime, end of service benefits, and termination. It is also mandatory for employers to subscribe to social security schemes for their employees. Understanding and adhering to these laws is crucial for operating legally in Kuwait.

How can a foreign company legally hire employees in Kuwait?

Foreign companies can hire directly if they have established a legal entity in Kuwait. Alternatively, they can use an Employer of Record (EOR) service to legally employ staff on their behalf without setting up a local entity. This is a flexible and fast option for companies looking to enter the Kuwaiti market.

What is required for employment contracts in Kuwait?

Employment contracts in Kuwait must be written and are ideally drafted in Arabic, though an English version can also be attached. The contract should detail the job description, salary, benefits, work hours, and other terms of employment. It is important that both parties fully understand and agree to the terms before signing to ensure compliance with Kuwaiti labor laws.