Crisis will see fewer nationals working in private sector

STATE JOBS: GCC nationals are likely to opt for more secure jobs in the public sector as a result of global crisis, says NBK.

Job cuts and economic uncertainty will make young GCC nationals even more reluctant to pursue a career in the private sector, National Bank of Kuwait has warned.

While the private sector is downsizing and trying to cut costs, it is unlikely that there will be a broad reduction in salaries in the Gulf’s public sector, or in the number of people it employs.

This is likely to deter young GCC nationals, most of whom are already pursuing a career in the public sector, to enter the private sector.

“With the ongoing discharge of workers taking place in the GCC private sector, it is feared that the existing preference of nationals for public sector employment will gain momentum, putting recent gains at risk,” economist Mohammed Zaher said in a note to investors.

Nationals working in the public sector was estimated to account for 58 percent of the total number of GCC nationals employed in 2007.

This ratio ranged between 50 percent in Saudi Arabia to 84 percent in Kuwait, and almost 90 percent in Qatar.

“The public sector is still the preferred place of employment for nationals because of the biased incentive structure, and the severe competition with expatriates in the private sector,” Zaher said.

NBK said government measures to tackle the issue had been insufficient and urged governments to speed up the privatization of publicly owned companies that operate commercially.

Other reforms that are needed include implementing a more productivity enhancing incentive structure and closing the skills gap in the labour market, the bank said.

Bahrain is the only GCC country to have said it will limit the number of new hires in the public sector this year, as a result of the anticipated deficit in its 2009 budget.

The Bahraini government said in December that the country may stop paying a monthly BD50 ($133) cost of living allowance that it has provided to the families of public sector employees with less than BD1500 ($3,980) in income.

“The enlargement of the public sector in Gulf countries is not consistent with global trends, or with the idea of promoting the role of private sector in economic activity,” Zaher said.

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READERS' COMMENTS

To Faiza
Posted by Skeptical, Dubai on Monday 6 April 2009 at 09:32 UAE time


Unions are becoming a thing of the past, at least in the United States. In the 1930's, 40's and 50's Unions were necessary to protect workers rights but now Unions have gotten off track (my opinion of course). Something is wrong when an employee is paid $15 to $20 an hour for a menial job because Unions have strong-armed the company into paying such wages. A good example is what has been happening with the U.S. auto industry during the past 6 months. The Bush administration and now the Obama administration have told the auto workers Union that they must agree to more concessions, thus a reduction in benefits, salaries, etc. otherwise if the auto companies declare bankrumptcy the contracts between the Unions and auto companies will be useless and meaningless.

Whether an employee is in a Union or not, the situation in the States regarding employment has been pretty bad in recent months. In the first 3 months of 2009 the U.S. has lost around 2 million jobs. "Job security" is a thing of the past for most of the world.

Most people in the States do NOT want to work for the government. The government may provide more stability (even though California terminated many government employees earlier this year to save money) but anyone who is motivated to achieve and make money will find more opportunities in the private sector than with the government.

As a percentage of overall employment, the Federal, State and Local governments in the United States do not employ anywhere near the same percentage of the work force as the GCC governments. As far as job applications, they are up for any government entity or private company who has a job opening. The job fairs throughout the United States used to bring hundreds of potential employees, now thousands show up.

Faiza, GCC labor laws are pro-locals if anything. The recent uproar when the Al-Futtaim Group terminated some of their Emirati staff is the perfect example. I believe the UAE government has now passed laws further protecting locals so they cannot be terminated without cause. As far as I know ex-pats do not have the same protection.

Work ethic is not something anyone is born with (my opinion again). It is developed. Why don't locals go get part-time jobs waiting tables in a restaurant or working in stores in shopping malls when they are 18 or 19 years old, before they go to University? This is what many Americans do to earn some spending money. This is what I did. This is where work ethic starts, when you are young. But locals for the most part will not do this kind of work for whatever reason.

There are Exceptions...
Posted by Sq8, Kuwait, Kuwait on Sunday 5 April 2009 at 18:55 UAE time


Working in a private company in Kuwait, I can very well say that there are exceptions to the view on Government jobs, at least amoungst a hand full of the locals here. I have for instance, two young Kuwaities working with me, one of whom has given up a job in the govt. sector to work in the private sector and the other who simply did not want to go to take up a govt. job. Though the perks and pay are much better in the govt. sector, both these youngsters rightly claim that they would be spoiling their future working for the govt. as there is nothing for them to learn there. According to them, a typical day is full fo tea breaks, sandwiches and gossip with practically nothing to do. They decided to work in the private sector simply because they wanted to learn something new, thought the pay is very much less. I salute those youngsters for their keenness and they sure work hard. There are a lot of such youngsters, with a positive look out.

Nationals being employed in the private sector
Posted by MansooR, Dubai, United Arab Emirates on Sunday 5 April 2009 at 16:57 UAE time


I totally agree with Skeptical, since I am residing in the UAE i can for sure say that with no fear of losing the job, not working at all and above all being provided by all sorts of perks I believe they they have no other coice but to look at the public sector. But I wonder till when will their governments take care of them and I am sure one fine day we will be facing a big problem when there will be huge queue of Nationals for one vacancy. And that day is not far away.

It's only natural
Posted by Faiza, Dubai, UAE on Sunday 5 April 2009 at 14:42 UAE time


While I agree with the points made above on competition and motivation, in the West you have unions for instance to ensure job protection, and most people would rather work for the government if they could for stability and continuity ... look at North Americas stats regarding rise in job applications to government sector and unionized jobs. So GCC nationals are no different, and frankly as an expat who sees how company biased the labor laws are, I cannot blame GCC nationals for running in the opposite direction.

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