MEED Employment Survey: Unlocking potential

14 September 2007

As governments in the region try to increase local participation in the Gulf jobs market, a MEED survey reveals that most employers believe young nationals lack the necessary skills.

Inadequate skills and a lack of qualifications are the principal obstacles to hiring Gulf nationals, say 72 per cent of respondents to MEED’s employment survey. And despite their lack of skills, local citizens seem to have unrealistic views of what they have to offer - 50 per cent of firms say high wage expectations among locals are a problem. And 40 per cent say that local nationals have an unprofessional approach to their work.

“There is a proportion of the local population in some countries who believe they are entitled to a senior position just because they are a national of the country, as opposed to earning it on merit,” says one Gulf-based survey respondent. “They make ridiculous demands compared to their experience and skills.”

Booming economies

These opinions from private sector firms based in the region throw into stark relief government efforts to increase national participation in the Gulf job markets.Words such as ‘saudisation’, ‘omanisation’ and ‘emiratisation’ have become part of everyday business language in the GCC, as governments seek ways to encourage companies to hire more local workers. Currently the Gulf economies rely on large numbers of expatriate workers, but the long-term stability of many Gulf states depends on providing employment for the growing numbers of young nationals. About 70 per cent of the population of the Arab world is under 25 years old, and 45 per cent are under 15 years old. Employing them requires the creation of 80 million new jobs by 2020, according to the World Bank.

Not everyone can be a manager and drive a Land Cruiser

The key to meeting this challenge lies in education and training, giving skills to locals and fostering a stronger work ethic.

Governments cannot continue to provide public sector jobs to the same proportion of their populations as they currently do.

The private sector holds the key. Locals will have to either create their own businesses or find other private sector employment.

But changing local attitudes to work could prove the biggest obstacle. “Citizens in the new oil-rich countries do not understand that not everyone can be a manager and drive a Land Cruiser,” according to one Gulf-based respondent.

“Some nationals are unwilling to work in sectors that they perceive as less glamorous - they all want to be bankers,” says another.

Most respondents say the root of the problem lies in the schooling system. As one businessman describes it: “There is a poor education system that concentrates on rote learning rather than equipping students with a breadth of thinking; a burgeoning civil service that has not provided the local workforce with the work ethic required for business; and a hydrocarbons curse that has created an over-reliance on state subsidies and reduced the imperative to strive.”

Quota system

Since the early 1990s, government efforts to get locals into jobs have involved some form of quota system, where the private sector is required to employ a certain number of nationals. For many, this top-down approach is a failure, both for employees and employers.

“If there is any other way to avoid quotas we do recommend it,” says Ahsan Mansur, division chief for the GCC in the Middle East & North Africa Department at the IMF. “If unavoidable, our advice is to do it with maximum flexibility, which is what GCC states are doing, using a phased approach that takes into account labour market conditions.”

However, the region’s business community has mixed views on the way governments have been pursuing their localisation policies, including quotas on the hiring of local nationals. Although 47 per cent are in favour of quotas, 53 per cent say they are a bad idea.

Aware of the challenge, many Gulf states are looking for a new approach to skills training and education. Abu Dhabi looks set to take the lead with a new initiative called Tawteen, or ‘localisation’.

Led by the Emirates Foundation, the programme is seeking to address social and cultural obstacles facing nationals looking for jobs in the UAE by brining together government, business and academia to create a series of training programmes.

Tawteen is the first initiative in a wider regional scheme - the Middle East & North Africa Learning & Leadership Programme - launched by two London-based organisations, the Middle East Association and Compass Rose International. Several large local and international firms are working with the foundation on the Tawteen scheme, including global law firm DLA Piper, the Abu Dhabi-based Etihad Airways, International Power and BP, both of the UK, and the UK/Dutch Shell Group. The UK government is also backing the scheme.

According to Laura Heseltine, programme manager for Tawteen, there will be eight projects running for about 12 months each in the UAE. The first four to be launched will focus on career counselling, youth leadership, entrepreneurship, and innovation and vocational awareness.

“the way we have set it up is to allow the private sector to take responsibility for the projects themselves.”

In Qatar, the government is also dealing with the problem of trying to provide skills through the Qatar Foundation. At its Education City on the outskirts of Doha, similar programmes are already under way and more are being considered. Carnegie Mellon Qatar, a branch of the Pittsburgh-based university, and the Qatar Science & Technology Park have launched a training programme focused on developing entrepreneurial skills. The course, which started in September, will try to teach students how to start a technology-based business.

“Whether you can actually teach entrepreneurship is another question,” says Eulian Roberts, chief executive officer of the Qatar Science & Technology Park. “But the programme will make sure people have the right tools to build on.

“Qataris have a rich history focused on trading, but what you do not see is the knowledge of how to develop products. The mentoring programme looks to bring in the expertise of local, regional and international businessmen to help local start-ups on products development and project management.”

They [the state] have to create jobs otherwise there will be masses of young disaffected nationals

Rob Lynes, British Council in Dubai

The park aims to attract 50 firms over the next five years, most of which will be technology start-ups. With one of the smallest populations of the Gulf states,Doha is focusing on developing a more hi-tech economy for the future, but it will take time.

“According to Qatari planning statistics, 98 per cent of Qataris are employees, while only 2 per cent are employers,” says Roberts. “So this is a generational thing and not something that can be delivered over the next five years. The skills needed now are different from those in the past. All states in the GCC are keen to see economic diversification.”

The need to move away from enforcing quotas towards skills training schemes using private sector input and funding appears to be slowly gaining acceptance regionally.

“[Schemes such as Tawteen] have to work,” says Rob Lynes, regional director for the Middle East at the British Council in Dubai and a partner with Tawteen. “States have to find a solution because in 10 or 20 years’ time, the alternative doe snot bear thinking about. they have to create jobs otherwise there will be masses of young disaffected nationals, which could affect the political stability of the region. With about 27 million young Saudis, you cannot afford not to have some form of meaningful employment.”

Developing links

However, the quota system may have its day. “Governments trying to encourage firms to take locals have taken a carrot-and-stick approach, with restrictions placed on the hiring of expatriate workers,” says Lynes. “But the problem with that approach is it is not market led. Many firms would like to take on locals but they do not have the relevant skills and qualifications.

“The approach has to be education - developing close links between academia, the private sector and the government. Changes at the primary and secondary level will determine if young people will take up the opportunities in this region.”

Dubai is often cited as an example for other GCC states to follow. Without large oil and gas reserves, it has forged ahead in attracting foreign direct investment and creating a more diversified economy.

But whereas the other emirates and smaller states such as Qatar, Bahrain and Oman might be able to pursue a similar approach, large states with huge populations such as Saudi Arabia, will need to find other solutions.

Social barriers

“The most desirable solution is to develop nationals’ skills and create the conditions for high-paid jobs,” says the IMF’s Mansur. “In the meantime, since there is a huge income differential between foreign and local workers, the private sector needs government support for hiring nationals.

“You can aim to get nationals highly paid jobs in the banking and finance and petrochemicals sectors, and develop entrepreneurship, but while this strategy can work for smaller GCC countries, it is different for Saudi Arabia, which has a large and growing population. It has to create jobs in the productive sectors, enhance nationals’ skills and address social barriers.”

An additional challenge for Riyadh is removing the barriers to employing women in the kingdom. Faced with high costs of providing separate facilities, private firms often have littles incentive to act.

“The private sector may not be willing to cover the costs of employing women when it means they may not only have to set up separate offices but even a separate office building,” says Mansur. “In the UAE, Kuwait, and Oman it is less of a problem.”

Attitudes to the type of work on offer are changing. Vocational qualifications for carpentry, plumbing and engineering jobs are growing in popularity as people realise not everyone can be a manager. Oman has made more progress than most on this issue.

“The Omanis have invested heavily in vocational education,” says Lynes. “Cultural attitudes to service industries are changing. Saudi Arabia has changed markedly from 10 years ago. The Saudis are now investing heavily in vocational qualifications.”

While infrastructure appears to be the focus of most government investment at present, education and skills are being given far more attention. Public-private initiatives aimed at creating jobs for nationals are an increasing trend in the region. Tawteen and other mentoring programmes will soon be common.

However, these programmes are aimed at creating a long-term solution. In the short-to-medium term, the Gulf states remain entirely dependent on expatriate workers to make the most of their economic potential.

Who completed the survey?

MEED’s employment survey was completed by 101 senior-level executives from the business world and government. The largest single group to take part in the survey came from the construction industry, although other sectors represented included the finance, oil and gas, and power industries.

Most worked for companies with headquarters in the region, with the UAE being the best represented, with 23 per cent. The vast majority (87 per cent) worked for firms operating in more than one country and almost half (49 per cent) worked for companies that operated globally.


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