UAE mulls wage subsidies to bolster Emirati jobs

Shortfall between public and private sector employment is ‘bigger challenge than global crisis’
UAE mulls wage subsidies to bolster Emirati jobs
Unemployment levels in the UAE, the world’s third largest oil exporter, hover around the 14 percent mark
By Joanne Bladd
Tue 27 Sep 2011 10:18 AM

The UAE may look to subsidise the salaries of Emiratis working
in the private sector in a bid to attract more citizens into non-government
jobs, the Minister of Labour said Monday.

The public sector is teetering at saturation point and is
unable to absorb the increasing numbers of young jobseekers entering the market,
Saqr Gobash told a meeting of G20 labour ministers.

 Closing the gap between
the wages and benefits on offer in government and private sector jobs is a
bigger challenge for the UAE than the fallout of the global financial crisis,
he told delegates.

“Our priorities have less to do with dealing with the
fallouts of the 2008-2010 global economic downturn and more to do with longstanding…labour
and unemployment challenges,” he said.

“The overwhelming majority of UAE nationals are employed by
the public sector… [but] the public sector is approaching employment
saturation.”

There was, he told the Paris meeting, a mismatch between the
jobs created in the UAE and the skill of young Emiratis entering the labour
market.

“[Also] most job creation has been concentration in low
skill, labour intensive sectors that are unattractive to national job seekers,
and sustained by the open admission of foreign workers at wages determined by
sending countries’ conditions.”

The UAE, like much of the Gulf region, depends on foreign
workers to fill jobs at all levels of the economy, hampered by a small local
population and lack of qualified candidates.

Foreign workers hold key positions running national
airlines, real estate, financial services and the media industry, as well as
strategic roles within national government.

The Gulf state has made efforts to increase the number of
Emiratis in non-government roles, including enforcing quotas for Emiratisation
for private companies, but employers have struggled to match the wages offered
by public sector firms.

Research by Hay Group this week said the battle to hire UAE
employees had sent average salaries soaring, with Emirati graduates commanding
salaries up to 80 percent higher than expats.

One of the ways to tackle the shortfall would be through
government-subsidised salaries or the overhaul of the public sector, Gobash
said.

“A substantial wage, benefit and other incentive
differential historically made employment in the public sector the preferred
choice of most of our national job-seekers, suggesting that policies to promote
private sector employment must account for this differential through the
introduction of government wage subsidies, or public service reform.”

There are 35,000 unemployed Emiratis in the UAE, and only seven percent of
nationals work in the private sector, according to the Ministry of Economy.

Up to 20,000 Emirati private sector jobs a year need to be
created in the next decade to allow school-leavers to enter the labour market,
Gobash said in May.

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