By Tamer Amer
Tamer Amer debates the policies needed to make nationalisation a success
Nationalisation is the interventionist approach taken by governments to reduce the reliance on expatriate labour and increase the utilisation of nationals. These days, nationalisation is a central topic in Gulf Cooperation Council (GCC) countries due to the heavy reliance on the expatriate workforce and the growing number of unemployed nationals.
Local private companies are interested in participating in nationalisation; however, they are looking for governments to provide them with incentives.
The transformation of the GCC countries into a global energy hub in the 1970’s has forced many GCC states to rely heavily on foreign, rather than national, knowledge and human resources.
In fact, the financial rewards from the oil and gas sector were high enough that the governments were able to sustain the welfare of the unemployed local workforce for years. However, with 42% of the current population in the Gulf being below the age of 15 and the continued increase in the utilisation of foreign workers, national unemployment rates dramatically increased and nationalisation became a necessity.
In fact, nationalisation is especially crucial in the national private sectors. It is only fair to expect the national private companies to play a bigger role in the workforce nationalisation strategy, especially since these companies are owned by local nationals.
In order for nationalisation to succeed, national private sector companies have to make jobs much more lucrative for unemployed nationals. In addition, governments need to introduce nationalisation strategies that offer higher rewards for the national private sector.
A brief list of strategies that would encourage private industry in reaching the ultimate goal of nationalisation could include several simple policies.
The first policy would simply be the introduction of a quota system, which would be directly tied to financial incentives. In short, the company that is in compliance would be offered reduced transaction fees associated with the labour ministry. In addition, the government could offer financial discounts on raw materials or subsidisation programmes for private companies exceeding quotas.
Of course, the government has to increase its compliance monitoring programme, which would also mean that companies not complying would have to be fined.
The second strategy would be to restrict the number of foreigners in the workforce. This could be done through a payroll tax, imposed on private companies for all the expatriates hired. Another strategy would be to limit the number of foreign work visas issued by the Ministry of Labour. This will deter international companies from employing as many foreigners and force them to share the burden of developing the national workforce.
The third policy would be for the government to subsidise some of the national workforce salaries. In this scenario, the government would provide compensation for the private national companies, in lieu of the higher salaries and allowances that are expected by many nationals.
The biggest part of this equation is for the government to also introduce programmes to educate the national employees on how to manage their financial expectations when they enter the workforce.
In conclusion, it is evident that the increase in oil revenues has enabled GCC governments to sustain the welfare of the national population and increased the dependence on the foreign workforce. Nationalising the local workforce is inevitable; however, the success of nationalisation will depend heavily on the presence and gradual implementation of well researched strategies and procedures.
In addition, GCC governments should initially concentrate on gaining the support of the local private companies in embracing the nationalisation initiatives.
The success of nationalisation is heavily dependent on all three parties – the government, the local candidate and the private company – coming together as one unit and striving toward an increased national presence in the GCC workforce.
Tamer Amer is HR manager at Qatar-based Black Cat Engineering & Construction.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
i kind of agree yet disagree as well with you Tamer. We got to remember the same highly educated, highly disciplined, and extremely skillful "foreign workers" are the ones who gave the GCC countries many of the current competitive advantages they enjoy in the industry.
Now, that being said, I think, that GCC countries should have started the process of "knowledge transfer" a long time ago whereby locals would have started to acquire the skills of their "foreign workers".
Never too late, i think instead of imposing taxes and quotas, i think HR departments in the forementioned Multi nationals should spearhead change, organizing good externship programs and mentorship programs, where a new local graduate is paired with a skilled " foreign worker", hiring him /her, with an enticing pay package that would encourage more locals to do the same.
You tackled a very challeging subject, and i wish you the best of luck tackling it. It is after all right in your ball park!
Company owners understand one language, it is the "international language of money". Profit is the bottom line, companies will adapt to increase their profit margin. Enforcement is the second language they are all fluent in. So I agree with the writer in the sense that any evolution towards an increased Local National workforce is dependant both on incentives as well as serious enforcement.