Simplistic nationalisation quotas don’t work

Courtney Trenwith argues employment quota systems simply encourage lethargy among locals
By Courtney Trenwith
Wed 10 Jul 2013 11:13 AM

Upon my first reading of Bahrain’s proposal this week to overhaul its nationalisation programme I was pleased that finally a GCC country was taking a less simplistic approach to reducing unemployment among citizens. But, it seems, the change could end up producing the same result: locals filling a quota with no real incentive to work.

The island kingdom is planning to scrap numeric quotas dictating how many nationals private companies must hire and instead introducing a more qualitative approach that rewards businesses according to the skill level of a national employee.

On the surface it seems such a move would encourage nationals to boost their qualifications, but in reality I doubt that will be the case. Instead, I predict it will force some companies to hire locals at a higher skill level than they really are to avoid the government penalties.

Nationalisation programmes exist across the region. While their purpose – to reduce local unemployment – seems commendable, they typically cause lethargy among nationals and impact on businesses productivity.

Private sector bosses across the GCC have told me the problem is that some nationals – and I emphasise ‘some’ – are barely productive because they know their positions are safe: the company needs them on the books to avoid penalties for not fulfilling their quotas.

But I’m not just critical of the GCC. In my home country, Australia, there is a very similar situation. A mining boom has seen tens of thousands of foreigners flock to northern Western Australia where they can earn astronomical wages for not just mining jobs but anything from being a cook to a hairdresser.

East Coast Australians, who typically live in prosperous cities, want the federal government to cut the number of expat workers. But they ignore the fact that Australia, a country of merely 22m people, does not have the skills needed to reap the most out of the mining boom.

Similarly, in the GCC, countries such as Saudi Arabia and Kuwait are actively cutting expat numbers without putting the same amount of effort into training nationals to fill the void.

The solution is the same wherever you are in the world: the focus needs to be on training. Governments need to encourage citizens to gain the skills required to make the most of their country’s opportunities and reduce their reliance on expats.

But it’s not just qualifications, attitudes also need to change. It would be easy to argue that everyone should take pride in their jobs and strive to achieve at work, but when you’ve got a government either effectively prohibiting your employer from sacking you, or handing out lump sums simply for being a citizen, who would work?

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