Gulf Cooperation Council (GCC) countries are facing major challenges related to their demographic evolution and oil-dependent economic structure, most notably Kuwait and Saudi Arabia, a company said in a report Sunday.

National population in Kuwait and Saudi Arabia is expected to keep growing fast thus putting pressure on their economies to create a vast amount of jobs for newcomers, the report by Asiya Capital Investment Company said.

The traditional reliance on public sector job for Kuwaiti and Saudi nationals might be coming to en end, it said, as government would not be able to absorb growing labor force without threatening fiscal sustainability.

In Saudi Arabia, the national population is expected to increase from 20.7 to 27.5 million in the next 15 years. The working age population will grow at an even stronger rate, leading to a sizeable demand for new jobs.

Saudi authorities are aware of this problem for many years, and developed several "Saudization" initiatives of the labor market, and granting companies with a high percentage of Saudi workers preferences in visa processing, while non-compliant firms are banned from transferring workers and obtaining new visas.

The percentage of Saudi national employees working in the public sector has fallen by 3.5 percentage points in the last five years to 35.8 percent in 2014, suggesting some success of the implemented measures.

Kuwait's situation is similar, where size of the national Kuwaiti labor force will double from now to 2030, due to demographic factors and an improvement in the participation rate, said the report.

However, Kuwait's dependence on public sector jobs is more intense than in Saudi Arabia, with 75.8 percent of Kuwaiti employees working for the government.

The approach that Kuwait took to nationalize its private labor market, establishing minimum levels of Kuwaiti employees in each company. Additionally, restrictions in outstanding amount of visas have been under consideration, although authorities seem to be holding measures back for now, said the report.

The proportion of national workers in the public sector has also evolved positively, since it was as high as 82 percent in 2008.

However, productivity of companies could be under threat, since companies could be deprived from necessary skills, national workforce could be less affordable and legal overprotection of national employees could remove their incentives to become more efficient.

Moreover, the private sector could be unable to match generous retribution and conditions in government jobs, leading to substantially worse labor conditions in the private sector, a potential source of social discontent.

The report said policies to reduce the dependence on public sector jobs must be integral, acting not only on firms but on national employee incentives to perform and trying to prevent the public-private duality in the labor market.