Quotas no answer to spike in Emirati joblessness

Gov't policies should focus on pay disparities, preparing graduates for private sector, say experts
Quotas no answer to spike in Emirati joblessness
Around 13 percent of Emiratis are unemployed, federal data shows
By Karen Leigh
Wed 12 Jan 2011 06:21 PM

Spiking unemployment rates among Emiratis will not be solved by creating more public sector jobs or raising quotas in private sector firms, top national businessman Mishal Kanoo has said.

Addressing the gulf between private and government sector salaries and job perks will do more to tempt nationals to the private sector than Emiratisation policies, he told Arabian Business.

“I don’t like idea of any nationality getting identified or separated,” Kanoo, deputy chairman of the Kanoo Group said. “A person should be hired on merit.

“The very simple thing is most private entities will not or cannot compete with the public or even the pseudo public sector because the public sector makes a lot more money. A few years ago when the government was giving out jobs worth up to AED200,000 a month, how was the private sector supposed to compete with that?”

Instead, policies should focus on preparing young Emiratis for the workplace, he said.

“When you have that compared with foreign nationals who will work extra time and take less pay… you need to go back and re-educate the [Emirati] employee and say, ‘this is a time when you have to understand that in order to get a job you need to adjust your expectation and put in your time so that your employer looks at you like an invaluable asset.’ Rather than an expectation that ‘because I’m from a certain race you’ll give me a particular job,’” he said.

A report released on Wednesday by a unit of the UAE Federal National Council found the unemployment rate among Emiratis had hit 13 percent. For young nationals between 15 and 24, joblessness was estimated at 23.1 percent.

The report urged the federal government to increase its percentage of national employees, after finding Emiratis held just 60.9 percent of federal roles.

Dr Ingo Forstenlacher, an assistant business and economics professor at UAE University, said more public sector jobs were not the answer to youth unemployment.

“More employment in the public sector is the answer that has been used for decades now, and if you look at Saudi they have created more and more public sector jobs due to employment pressures,” Forstenlacher said. “But it’s not an efficient use of human resources and there’s other ways to still spend money on people and give them a share of the wealth without putting them into unproductive jobs.”

For example, federal funds could be used to make private sector salaries more competitive with those on offer in the government sector, he said.

“Creating more public jobs will just add to the already problematic sense of entitlement to such jobs. There are other sectors that add more to economy but are underpaid,” said Forstenlacher. “Just to create jobs in public sector [for the sake of] creating jobs is a waste of money. They could top up salaries for citizens working in the private sector, like Kuwait has done, which is much more productive.”

The UAE has long backed Emiratisation policies aimed at ramping up the number of private sector jobs held by nationals. Fresh graduates, however, still overwhelmingly favour the public sector. Part of the problem may be a mismatch between school curriculums and market needs, said Kanoo.

“Requirement is on the employer and the employee – Emiratization can be positive if the people using it can show their worth to the employer,” said Mishal Kanoo, CEO of the Kanoo Group. “But how can I do that if there’s no one there to guide me? They’ll have to make improvements, especially the educational level – are we providing the right qualifications for people who are graduating?”

The private sector also needs to communicate its opportunities more clearly to young nationals, said Forstenlacher.

“There needs to be much more education about what kinds of jobs are available, what fields are out there… even basic knowledge of other career options increases their willingness to work in the private sector,” he said.

Many say the private sector has been mistakenly seen as a quick fix to national unemployment. A law passed last month that said 15 percent of private companies’ workforces had to be made up of national employees, however, such quotas can be difficult to police.

 “The enforcement of [quotas] is the issue. The bureaucracy needed to enforce it will be the most problematic part. This whole region and country has history of the private sector exploiting the loopholes,” Forstenlacker said. “Based on skills and nationality it requires a lot of checking. In Saudi when they started to nationalize managerial positions, they hired them on all sorts of visas, they imported executives on camel herder visas yet employed them as executives.

“So either the fees are raised across board for expat visas like Bahrain is doing – a very sensible approach – or you find other incentives.”

 

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