By Joanne Bladd
The UAE has made great strides in its 40 years, but its biggest challenge remains Emirati employment
Never mind the global financial crisis: the UAE has bigger problems. That was the message from the Gulf state’s Saqr Ghobash during a G20 summit of labour ministers in September.
While ministers from the US and Europe mewed over the impact of a looming second credit crunch on their already floundering economies, Ghobash was eyeing a crisis closer to home.
“Our priorities have less to do with dealing with the fallout of the global economic downturn and more to do with labour and unemployment challenges,” he told the Paris meeting.
“The overwhelming majority of UAE nationals are employed by the public sector [and] it is approaching saturation.”
The numbers don’t lie. Emiratisation or, more plainly, the UAE’s bid to push more nationals into the private sector, is facing challenges. Less than eight percent of Emiratis are employed by private companies, while joblessness among citizens hovers at an estimated 14 percent.
The Gulf state must generate 20,000 jobs a year over the next decade to soak up its young people, or risk creating a ticking timebomb of youth unemployment.
“High unemployment among Emiratis is not good for the stability of this country, in light of what is happening in the region,” says Abdulkhaleq Abdulla, professor of political science at UAE University. “[Fixing this] is in the best interests of everybody – government and the private sector; whoever is concerned about the stability of this place.”
So what is behind this failure to launch? As with most political hot potatoes, the root cause depends on who you ask. One recruitment consultant, who counts a mix of private and state-linked firms among her clients, says companies struggle to compete with the cushy jobs offered by the government. Bankrolled by the UAE’s petrodollars, the public sector often offers a tempting mix of bigger salaries, shorter worker hours and longer holidays to staff.
The UAE has tried to level the playing field by rolling out quotas for Emirati employees, and offering visa perks and other incentives to private-sector firms that hire nationals. A number have resorting to fixing their books to fall in line with government quotas.
“They create ghost jobs, where Emiratis are employed on paper only,” the consultant says. “They are paid a salary but don’t come into work. It’s not that the companies don’t want to hire nationals, it’s just that they can’t pay enough to match the government salaries.”
Companies are also fighting against the clutch of subsidies netted by Emiratis in the form of housing grants, free healthcare and utilities. These benefits, used by the UAE to distribute its oil wealth, can strip away the economic need to work – a conundrum Ghobash alluded to in May when he said that unemployment, for Emiratis, was “optional”.
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“One of the reasons the culture is as it is, is because of the numerous subsidies that Emiratis receive,” says Ayesha Sabavala, UAE economist with the Economist Intelligence Unit.
“They are very well-cared for by the government, which is very good at distributing its oil income by subsidising houses, electricity, education. And this has developed this sense of laziness among some Emiratis – it has proved a disincentive [to private sector employment].”
But the view from the UAE’s classrooms is quite different. For Abdulla, a university lecturer for more than 20 years, the blame lies squarely with foreign companies that buy into the myth that nationals are lazy and spoilt and refuse to hire them.
‘They don’t have trust in Emirati labour, in Emirati skills – in Emiratis period,” he says frankly. “They look at them as inferior, that they are spoiled, that our graduates are not fit for the job. There is a fundamental bias against Emiratis in the private sector.”
This bias has seen ranks of qualified Emiratis graduates left on the fringes of the UAE’s job market as a beauty parade of expatriates pick off the choicest jobs, he says.
“[The private sector] is tilted against them, and favours foreigners. If they go there, they are intimidated because the boss is suspicious about their capabilities - it’s very intimidating.
‘The private sector is just too strong and it is stronger than the government in deciding on the fate of nationalisation in the private sector. The government must develop some teeth.”
It’s a difficult situation that threatens to alienate the UAE’s next generation. A report by Aon Hewitt this month found half of Gulf nationals admit to being disengaged in the workplace, or unwilling to contribute more than necessary to their job. Of the poll of citizens in five GCC states, Emiratis reported the lowest level of engagement.
But Abdulla doesn’t deny the next wave of Emirati talent has specific requests – namely, good wages, and working hours and holidays that match those in the government. While critics argue the onus is on young nationals to get in step with working practices that dominate the rest of the world, Abdulla says it’s the foreign companies growing fat on their tax-free profits that must bend.
“[Emiratis] cost more, they have needs, legitimate needs and these have to be taken into consideration,” he says. “In terms of leave, in terms of their work hours – these have to be taken into consideration.
“Every country has its own culture that must be accommodated. This is true in America, in Britain – everywhere. And we have to adjust to others rather than others adjust to us? The private companies that come here and make profits without paying tax on them, they have to adjust to our culture, our rules and regulations – and to the needs of the people of the UAE. And they are not. And we are allowing them to get away with it. The obligation is on them.”
The flaw in the argument is that it is rarely Emirati graduates that struggle for job offers. Indeed, skilled local talent is a prized commodity. Recruitment consultancy Hay Group in September said UAE graduates pocketed salaries up to 80 percent higher than their expat rivals, as firms bolstered wage packets in a bid to attract talent.
Even non-graduates netted an astonishing 33 percent premium over the general market, the firm said.
Instead, the real battle is finding work for the non-skilled nationals in a market that has built its foundations on dirt-cheap, blue-collar labour. With unskilled Indian expats earning as little as AED600 a month, according to the Indian Embassy, Abu Dhabi, it’s an impossible task to then expect to tempt nationals from the charmed circle of subsidies or the public sector.
There is, says Aon Hewitt, an urgent need to “professionalise blue-collar work and afford it the status it receives elsewhere as a craft” to avoid a job spectrum split between high-paying jobs that many Emiratis aren't qualified for and low-paying jobs that most don’t want.
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“The government also has to pay attention… to changing the mindset of Emiratis so they take the jobs that are available,” says Sabavala. “Not just the high-profile jobs. In spite of having all this [oil wealth], they need to be able to participate in their country’s diversification, no matter in what industry or sector.”
Moves such as setting a minimum wage, or upgrading the salary and status of bluecollar jobs demands a cash injection that – in the thorny economic climate – private sector firms are reluctant to give. Equally, the UAE dare not press too hard for fear of hurting businesses and curbing its push to diversify its petrodollar-led economy.
So what is the answer? For the government, it is closing the gap between the public and private sector. The Gulf state is toying with the idea of subsidising the wages of Emiratis in private sector roles, in a bid to bolster take-up. Perhaps counterintuitively, Abu Dhabi is also trimming back the expat fat in government bodies and state-linked entities, to clear jobs for its citizens. The oil-rich emirate saw a wave of job cuts this year at bodies such as the Department of Transport, Abu Dhabi Culture and Heritage and Masdar.
But Sabavala warns that wage subsidies are no magic bullet for the Emiratisation crisis.
“If you subsidise wages you are essentially saying that the government should pay private sector companies money to take on Emiratis,” she says. “And that is just as much a box-ticking exercise as an Emiratisation quota is – it’s not a long-term solution.”
It’s also at odds with Abu Dhabi’s apparent efforts to shave down its spending. As economic woes in the US and Europe threaten, the oil-rich emirate has delayed billions of dollars-worth of projects including
its planned Louvre and Guggenheim museums, and Masdar’s cutting-edge headquarters building.
“[Increasing subsidies] isn’t sustainable for the government,” says Sabavala. “We’re expecting oil prices to stay for the next five years, on our estimates, at about $100 a barrel, but if it drops to $70, the UAE will find it hard going. Oil exports may not be as high. “Worldwide, governments are trying to control spending. You can’t subsidise everything.”
A partial answer may involve a closer look at the mismatch between the UAE’s education sector and its job industry. As hard lessons in Iran and Egypt have shown, churning out newly-minted graduates is no help if their skills don’t match those needed in the workplace.
Morphing the education system into a diploma mill is not always the right answer, says Sabavala.
“You have tons of Emiratis in the banking sector, in investment houses. But you talk about nursing, for example, or the hotel industry, and you won’t find many there,” she says.
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“You have the UAE’s efforts to diversify into aeronautics, the semi-conductor industry, but where are the Emiratis graduating with technical degrees? This is a situation that needs to change.”
Another fix may be the rollout of privatesector apprentice- or internships, to help grease the transition from learning to doing. Many Emiratis have limited workplace experience at school-leaving age, thanks to shortage of the part-time jobs popular among students in other markets.
There is no surefire cure for the UAE’s Emiratisation woes. The answer is likely a complicated mix of government and private-sector reforms and education overhauls.
But for Prof. Abdulla, the only clear-cut solution is a tough line on private companies, to force recruiters past the stereotypes and into hiring the UAE’s youth – regardless of the cost.
“Take Emiratis seriously and pay the price for it,” he says. “When the private sector has a need for jobs, the first thing the government should do is go to locals first and exhaust that, and then look to expat labour.
“I cannot be any more candid. I have an Emirati right now who could take your job.”
When it comes to any issue that may even remotely put pressure on the social net that their citizens enjoy the GCC leadership "stand frozen like deer in the headlights". The only way to encourage Emiratis into private sector employment is to make working in the private sector as attractive as working in the public sector. As an Emirati why should I work in the private sector if conditions in the public sector as so attractive?
You can lead a horse to water, but you cannot make him drink, unless the horse is thirsty!"
Where to begin...I guess I will start with Omar's comment that "The only way to encourage Emiratis into private sector employment is to make working in the private sector as attractive as working in the public sector". This will never, never, never happen. I am not being negative, it is just a reality.
The problem is the government has made employment in the public sector too attractive, too easy, where Emiratis are over paid and receive too many benefits, most of which are not applicable in the private sector where the goal is to make a profit.
The goal in the private sector is to make a PROFIT. Let's think about this. A basic P&L starts with the top line of Sales, then you have the expenses (like salaries), and hopefully at the end there is profit. If an employer can hire someone at AED 10,000, a foreigner, why should they be forced to over pay an Emirati at 15,000 to 20,000? This is not logical. This is not the way Capitalism works. Subsidies to hire Emiratis will not work.
To continue my previous comment, public sector employment should never be more lucrative than private sector employment. That makes no sense. The UAE government has made the public sector too attractive when the reality is no one in the real world (the private sector) starts out with the big desk, the big salary, the easy hours and extra holidays. My first job out of university was at $19,500 per year 21 years ago. I worked 60 hours a week and was happy to do it. I worked really hard for that money. After taxes I could not afford my own apartment so I rented a room from a nice family. Throughout my career, through hard work and some luck, I have progressed in my career and now I have reached upper management with a healthy income, but I earned it! It was not handed to me! At times there were set backs but that is life in the private sector...no guarantees! Salary increases were EARNED, not handed to me like they seem to be with the UAE's public employees.
The first thing expats must remember is that they are here because they were unable to find similar opportunities or lifestyle in their home countries. Sure, some people are sent here specifically by their employers for a set period of time, and others 'escape' their wor-torn countries to live in the UAE in peace without harrassment. But the rest of us expats, we are here because the UAE offers us something our own countries could not offer.
And yet, here we are again on AB, reading comments by expats who demand that the UAE treat its citizens the way our countries treat us. Why? We made the conscious choice to take the flight to the UAE and work, no one forced us, no one threatened us if we did not. We made a CHOICE to live in the UAE, the least we can do is to appreciate the opportunity that the state has presented to our employers in creating a business environment that allows profitability.
Having said that, we should also remember the social responsibilities of employers. That's right: social responsibility. Obligation. Requirement. It should NOT be a mere gesture, it should indeed be something meaningfull.
I am an HR professional, I have worked with plenty of companies and have witness with my own eyes the discrimination against locals that were more than willing to work for the salaries that expats work for. Why is it that there are unexperienced, uneducated expats working for ridiculously high salaries without anyone making a big fuss about it, yet when it comes to locals, all sorts of complaints are heard??
We are in their country. We made the choice to come here. We should not force them to speak our language or adhere to our standards of life nor our expectations of 'work'.
The government has indeed made it hard for locals to 'chose' private sector employment; but today is not 1980, and the public sector jobs are not as plentiful as before. Contrary to common belief, not all public jobs pay the same: Local governments pay higher than federal governments (until yesterday!) and many federal entities actually pay less than the private sector. The fact is that the VAST majority of expats have no idea what locals go through except for seeing the big homes and the luxury 4x4s. Has anyone gone out of their way to learn more about the people whose land we live on? Whose laws we have to abide by? Whose government we have to respect for providing us with the opportunity to be prosperous?
Ultimately, the onus is on the ignorant expats, not the UAE government and not the UAE citizens, to decide on whether to continue living here, or take their 'skills' (and poisonous attitude) elsewhere.
BILL GATES' SPEECH TO MT. WHITNEY HIGH SCHOOL in Visalia, California.
Love him or hate him, he sure hits the nail on the head with this!
To anyone with kids of any age, here's some advice. Bill Gates recently gave a speech at a High School about 11 things they did not and will not learn in school. He talks about how feel-good, politically correct teachings created a generation of kids with no concept of reality and how this concept set them up for failure in the real world.
Rule 1: Life is not fair -- get used to it!
Rule 2: The world won't care about your self-esteem. The world will expect you to accomplish something BEFORE you feel good about yourself.
Rule 3: You will NOT make $60,000 a year right out of high school. You won't be a vice-president with a car phone until you earn both.
Rule 4: If you think your teacher is tough, wait till you get a boss.
Rule 5: Flipping burgers is not beneath your dignity. Your Grandparents had a different word for burger flipping -- they call
Common belief? Not my common belief and no one I know...must be people you know? You have mentioned pay but not the easy working hours, many benefits, lack of expectation in the work place, etc....please be more thorough in your attempts at analyzing what is a real problem!!
And finally, the "onus" is not on expats, those who are ignorant or not. If the UAE government has offered an alternative to private employment, which they have in the form of comfortable public employment, then yes the government needs to address the issue. And please, it is businesses and owners, not the rest of us expat employees who will need to address these hiring decisions. I am in the restaurant business and despite my efforts Emiratis do not want to wait tables, cook, be hosts or even be managers in restaurants working 6 days a week at AED 12,000 per month. They don't...just go into any restaurant, Chili's, Japengo, PF Changs, TGI Fridays, McDonalds, etc. and tell me who you see working there...
Social responsibility? What are you on about? I assume you are being honest about your accounts and experiences as an HR manager. Why are under educated expats in high paying jobs? Because someone hired them...is that you Mr. HR Professional? And if they are still in their jobs and not doing the job then that's another issue for your HR guys. Let me understand this...."we should not force them to speak our language"...but if everyone in the office is speaking English then what's the answer? You seem to be ranting about non issues. I don't recall any articles mentioning a lack of English skills as a reason Emiratis do not choose the private sector opportunities?
@ Original Joe I get what you trying to say but for a wealthy country like UAE it is bit early to ask Emirati college graduate to work in restaurants or wait on tables so sorry to say this you just being ridiculous for even suggesting that. There are plenty of jobs that could easily accomodate the minority locals. There is not point for the goverment to spend a fortune on education and then you ask them to wait on table in a restaurant. Nothing against this profession just imagine you have a son and you did all you can do to get him a college degree would you want him to work in a restaurant, unless it is his own business then that is another argument.