Why Gulf private sector quotas aren't the answer

Courtney Trenwith argues that Gulf nationals are missing out on career opportunities
By Courtney Trenwith
Thu 21 Nov 2013 01:23 PM

Demanding private companies hire local citizens is a phenomenon across the Gulf, but several years since quotas were introduced there has been little impact and unemployment rates among nationals remain high.

Top UAE lawyer Habib Al Mulla – who has worked on countless pieces of UAE and emirate-level legislation – put it bluntly and succinctly at the Arabian Business Forum on Tuesday.

“Imposing quotas is an easy solution to the problem of unemployment. However, it's temporary, impractical, and a deceiving solution,” he said.

“It does not deal with the roots of the problem. Rather it provides for a cosmetic touch.

“In my view, the worst result of imposing quotas is that it leads to disguised employment.”

Al Mulla went on to explain how companies are circumventing the quotas by hiring university students at a low rate without expecting them to turn up to work, and tactically dividing their companies into off-shoots that can use the same employees towards their quotas.

But, to me, the main concern is that Gulf nationals are missing out on opportunities.

The public sector has soaked up most working nationals in the Gulf, creating two problems: bloated and inefficient public sectors that weigh down government purse strings, and an unspoken guarantee of a job that discourages nationals from seeking further education.

In Kuwait, for example, 94 percent of the national workforce is employed by the government.

In April, Kuwait Banking Association secretary general Hamad Al Hasawi told me the public sector demanded little accountability, and benchmarking against key performance indicators was well below best practice.

He said 30-40 percent of public employees should be made redundant.

“It’s an easy access. If [a person] doesn’t finish his education… don’t give him access to a job where he will actually do nothing and basically just... get stamped [to say] I attended a job. At the end of the day this is the salary for doing nothing,” he said.

Sheikh Mohamed AJ Al Thani, a former economy minister in Qatar, also believes governments need to foster greater entrepreneurship among nationals – as well as expats – and strengthen local education systems to ensure citizens are well qualified to compete in the private sector, taking the strain off the public sector.

But all of this is likely to take some time – perhaps even a generation or two – to really gain traction, not least because of a culture among Gulf citizens that there are certain jobs in the private sector that they would never voluntarily do.

Saudi Arabia’s recent crackdown on illegal workers, which has seen more 1m leave the country under an amnesty, has highlighted the problem of nationals refusing to do menial jobs such as cleaning, construction and some retail services.

But why would they when they can receive a government pension worth the same or more.

Further evidence of the private sector-stigma is contained in a survey quoted by Al Mulla. It found 58 percent of Emirati workers believed the private sector provided low salaries, 53 percent said working hours were long and 13 percent were concerned about attracting a bad reputation for working in the private sector.

Meanwhile, 28 percent of Emirati youth are unemployed, he said.

At the end of the day, I don’t believe improving unemployment levels should be the focus anyway.

Citizens the world over ought to have enough pride in themselves to naturally seek meaningful work and a career they are proud of. Simply clocking on and off, collecting a pension or lying idle in a office is nothing to be proud of and does little to energise the next generation of leaders and inspirational thinkers the region is so well known for producing.

Governments need to help foster this by creating enticing education opportunities, while making life in the public sector or on a pension less attractive.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.