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Tue 27 Sep 2011 10:18 AM

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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

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.

Peter Johnston 8 years ago

why not, as a start, employ more Emiratis in the Immigration Department at the airports ? Every time I visit Dubai, the passport / immigration counters are impressive-looking with loads of physical counters, but only one-third of them staffed ... whether in T1 or T3 ... and then hour long queues of people waiting to be served.

Dan Slabbert 8 years ago

The norm is a fair days pay for a fair days work. It would seem to me that expectations are too high. It is not the norm for public sector to be paying more than private. Instead of introducing a subsidy in the private sector, freeze ALL public sector salaries for the next 5 yrs. This would allow private sector to catch up with & overtake public sector salaries, which are unproductive anyway, that is why they normally lag private sector. Currently the converse is true - public sector jobs are subsidised.

sandpiper 8 years ago

That will cause a lot of resentment in private sector organisations which will damage the individuals and results. A far better solution would be assist them in setting up their own businesses, or train them for specific higher paying roles, and then restrict visas for these roles.

salim shaikh 8 years ago

Believe it or not whenever this ratio comes into the picture...trouble times are ahead for the public as well as private sector...eventually the unemployed youth of the country will have qualify at an international level, and even seek employment abroad, like we all did when we worked in UAE.

Mrs T 8 years ago

Maybe one solution would be:stop paying untrained uneducated semi illiterate Western Expatriates overinflated salaries. Consider this average wage for say English,Dutch,German workers etc,simply pulling these people out of the hat as I am ethnically from all three countries, is somewhere in the region of aed 15.000 a month after tax.In 17 years here I have not met one single Western Expat who had their children in private school at home, they do not see private doctors, they certainly do not drive the cars they have here, and the houses they dwell in at home are generally the size of their housekeepers room here oh and they clean their own houses and toilets. They get salaries here in excess of aed 60.000 a month. For that they tend to work 30 hours a week want a 2 day weekend,constantly on sick leave,want local and expatriate holiday's.And not one speaks Arabic.Not saying all of us from the West are like this but sadly most are.For those salaries one could put a lot of locals to work.

Doug 8 years ago

It's a double-edged sword. On the one hand, there is certainly overhiring of Western expats to do managerial jobs, which would be appropriate for Emirati graduates.

But on the other hand, what is telling is the report identifies that most of the jobs that have been created are 'low-skill' and not attractive to Emiratis. That's as maybe, but those jobs have been created for a specific purpose. Those are the jobs that are needed. You cannot expect private business to create unnecessary jobs - they will go out of business as a result.

Subsidising Emirati wages is one strategy but it is not sustainable. A far simpler and more long-term solution would be for the Government to make the process of hiring an Emirati easier than an expat, and to also reduce the benefits Emiratis receive as these are removing the incentive for them to work.

mr A 8 years ago

@Mrs T

i absolutely agree!!! well said! too many western rejects exploiting the UAE! send them home...now.

Mark Renton 8 years ago

Speak for yourself Mrs. T.

Let's ignore the inflammatory nonsense about not working hard, because we both know that's not how it is.

For a family with two children, the fees at a western-curriculum school could easily work out to about AED 6,000/month. A modest 3-bed townhouse is about AED 10,000/month. So we're well over your hypothetical AED 15,000/ month salary comparison before the family has even tried to eat.

Notwithstanding the above, your figure of AED 60,000 for a "typical" Western salary is way too high, and the relatively few that do get that kind of salary tend to be very well qualified. Employers here are not stupid and expect to get value for money from their employees. An expensive employee will not last long if they are not performing, regardless of nationality.

Expats use private doctors and schools here because they have no choice, it's not a snobbery thing!

And btw, there are plenty of westerners who speak at least a bit of Arabic, myself included.

besensible 8 years ago

Here's a crazy, outlandish idea: what about level the playing field across the board and LOWER public sector salaries to remain competitive with the private sector?

If the long-term goal is to have globally competitive nationals - in skills, talent, and leadership - subsidizing local salaries for them to transfer to the private sector would not solve one of the root causes which is a lack of a drive combined with a realistic, global idea and outlook of how a competitive marketplace functions and what driven individuals do to contribute to it.

In effect, you are giving poeple free money to hold positions that they did not find attractive, challenging, or they aspired to in the first place. And when they DO work in the private sector - would they have the desire to integrate and compete?

I think we know what happens to organizations whose employees have no ambition, are not challenged, and do not contribute. Shame if it happens to the UAE - we are founded by ambitious people

Mary M 8 years ago

In addition to Peter's comment, why not employ only Emiritis in the typing centers in the Immigration Department? Why are there foreigners working in government establishments. I enjoy the professionalism of the Emiritis at the government ministries, my problem at the ministries is dealing with the foreigners.