If the late 2014 decline in oil prices and subsequent hit to GCC fiscal revenues is any guide to the current oil glut, the signal now to Gulf labor markets is a siren. When oil revenues declined sharply in late 2014, the structural fundamentals were similar to what OPEC+ members thought they saw in early March 2020. They saw declining demand in China and persistent supply from US producers. OPEC, with new partners like Russia and Mexico (the "plus"), responded in late 2016 with production cuts that held prices steady in the range of $50-70 per barrel until the agreement fell apart on March 5.

Since then, oil prices have been in free fall, reaching under $20 per barrel, as Saudi Arabia committed to expand production and flood markets with product. Barring some unlikely cooperation that would require private firms across the United States and Europe to agree to trust Russian oil producers and the Saudi government, oil producers are bracing for impact. What is profoundly different from the price volatility five years ago, and what the Saudis and Russians surely could not have fully foreseen, is the demand destruction from the novel coronavirus pandemic that has wreaked havoc on the largest economies in the world.

The siren is blaring for labor markets because the last oil market downturn spurred a series of policy shifts with "nationalization" of jobs in certain sectors, more flexible visas, new taxes and fees on the backs of foreign workers and vast purges of low wage workers in construction. New nationalization policies across the GCC are meant to encourage and safeguard certain jobs for citizens. Oman blocked foreigners from working in more than 80 job categories. Saudi Arabia reserved employment to nationals in a number of retail and hospitality sectors, from mobile phone shops to eyeglass stores. The decline in government contracting, a cyclical normality to GCC economies when oil revenues drop, was especially sharp between 2015 and 2018. Expatriate workers felt that pain as low wage construction workers found themselves stranded and unemployed. As many as 700,000 foreign low wage workers were laid off in Saudi Arabia and went home to poor communities in the Middle East and South Asia unable to support their families.

For Gulf economies with a disproportionate number of foreigners to citizens, governments enacted taxes and fees that would turn foreigners into new sources of revenue, including the institution of road tolls, visa renewal fees and excise taxes on alcohol, tobacco and sugary drinks. In all, the last downturn spurred some diversification measures that did less to wean governments from oil revenue than to encourage governments to pull back on some generous social spending and ending the normalization of government subsidies of electricity and water as well as expected public sector jobs for citizens.