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Thu 21 Nov 2013 01:23 PM

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Why Gulf private sector quotas aren't the answer

Courtney Trenwith argues that Gulf nationals are missing out on career opportunities

Why Gulf private sector quotas aren't the answer

Demanding private companies hire local citizens is a phenomenon across the Gulf, but several years since quotas were introduced there has been little impact and unemployment rates among nationals remain high.

Top UAE lawyer Habib Al Mulla – who has worked on countless pieces of UAE and emirate-level legislation – put it bluntly and succinctly at the Arabian Business Forum on Tuesday.

“Imposing quotas is an easy solution to the problem of unemployment. However, it's temporary, impractical, and a deceiving solution,” he said.

“It does not deal with the roots of the problem. Rather it provides for a cosmetic touch.

“In my view, the worst result of imposing quotas is that it leads to disguised employment.”

Al Mulla went on to explain how companies are circumventing the quotas by hiring university students at a low rate without expecting them to turn up to work, and tactically dividing their companies into off-shoots that can use the same employees towards their quotas.

But, to me, the main concern is that Gulf nationals are missing out on opportunities.

The public sector has soaked up most working nationals in the Gulf, creating two problems: bloated and inefficient public sectors that weigh down government purse strings, and an unspoken guarantee of a job that discourages nationals from seeking further education.

In Kuwait, for example, 94 percent of the national workforce is employed by the government.

In April, Kuwait Banking Association secretary general Hamad Al Hasawi told me the public sector demanded little accountability, and benchmarking against key performance indicators was well below best practice.

He said 30-40 percent of public employees should be made redundant.

“It’s an easy access. If [a person] doesn’t finish his education… don’t give him access to a job where he will actually do nothing and basically just... get stamped [to say] I attended a job. At the end of the day this is the salary for doing nothing,” he said.

Sheikh Mohamed AJ Al Thani, a former economy minister in Qatar, also believes governments need to foster greater entrepreneurship among nationals – as well as expats – and strengthen local education systems to ensure citizens are well qualified to compete in the private sector, taking the strain off the public sector.

But all of this is likely to take some time – perhaps even a generation or two – to really gain traction, not least because of a culture among Gulf citizens that there are certain jobs in the private sector that they would never voluntarily do.

Saudi Arabia’s recent crackdown on illegal workers, which has seen more 1m leave the country under an amnesty, has highlighted the problem of nationals refusing to do menial jobs such as cleaning, construction and some retail services.

But why would they when they can receive a government pension worth the same or more.

Further evidence of the private sector-stigma is contained in a survey quoted by Al Mulla. It found 58 percent of Emirati workers believed the private sector provided low salaries, 53 percent said working hours were long and 13 percent were concerned about attracting a bad reputation for working in the private sector.

Meanwhile, 28 percent of Emirati youth are unemployed, he said.

At the end of the day, I don’t believe improving unemployment levels should be the focus anyway.

Citizens the world over ought to have enough pride in themselves to naturally seek meaningful work and a career they are proud of. Simply clocking on and off, collecting a pension or lying idle in a office is nothing to be proud of and does little to energise the next generation of leaders and inspirational thinkers the region is so well known for producing.

Governments need to help foster this by creating enticing education opportunities, while making life in the public sector or on a pension less attractive.

RAH 6 years ago

Quotas are necessary because many Gulf nationals find that a certain Asian nationality (wont name them here) have a hold onto employment decision and try their best to employ people from their own region/country rather than nationals for fear of loosing their jobs.

Should a national submit his CV for a job opening in the private sector and this nationality is in charge of HR, you can forget that CV every moving from the inbox to the printer but rather goes straight to trash.

With such practices in place, how can governments not place a quota?

More often than not, nationals are more than willing to work and prove themselves, it is what certain nationalities do to limit their employment that is causing a problem for some of us here here in our own countries.

I am NOT saying this is the sole problem but I am saying this is one of the problems present and articles need to shed light on this unfair practice by some nationalities hogging open positions for people of their own kind.

khalid 6 years ago

i agree with RAH companies tend to hire more of their countrymen than nationals but quotas as the author points out does do nothing. the quickest way to change the unemployment in the gulf is by reducing the pay of public workers, if the salary of a government worker is the national average that person will start to look into the private sector for a higher wage.
the problem for the rulers is that they want to keep their citizens happy by hiring under qualified workers, giving them high incomes and etc, because as long as the citizen is happy than there won't be any political dissent.
but many ksa citizens have began to accept jobs that they otherwise wouldn't have a few years ago. i seen footage of Saudi's selling vegetables in the streets because of a lack of work. thats why i don't weep for the expats that got kicked out in fact they need to expand it.
the governments sole responsibility is to its people not foreigners.

Ahsan 6 years ago

A very well thoughtful written article. I see writeups of this nature are surfacing too much now a days.

Gulf governments are worried about there nationals being left out on good opportunities but this is the view of governments. They think that they have good skilled, motivated and energized local human capital but in reality its not like that.

You rightly said, sitting idle, being lazy and just waiting for monthly salaries the government is paying them.

The problem of quota is so much that I know of a very well known group of Kuwait, who just to comply to government quota system, hired 100% locals for a sister company they opened just for this purpose. Gave them minimum salaries as pocket money and asked all of them not to come to office as it ruins the purpose of office ethics.

And there are many examples of such. So then how can you put the locals on write job? Simple, give them basic life living competitive trainings based on the concept "Survival of the fittest".

Rjadvano 6 years ago

When you hand someone a job on a silver platter and guarantee they will never lose that job, solely on the basis of their nationality, they see it as an entitlement.
The only way to stop this this division between "are and are nots" is to put everyone, regardless of race, creed or ethnic background on a level playing field.
Judge and hire on the basis of experience and merit. It will force the young into introspection and the cream will rise to the top.

Mick 6 years ago

For that Kuwaiti company you mentioned Ahsan, I wonder how it feels (after some time) to realise that you have been rendered "useless" no matter if you are salaried or not. I wonder how long it takes for locals of any nation to let it sink in that, while they are living the high life with a strong salary and little expecation....that there is almost NO professional life fulfillment with resulting lack of any experience. Maybe they don't require any fulfillment of profession and it just becomes indifferent and numb for them, as long as they are getting salaries for little, if any, work. I'd feel like a bottom feeder. I'd be depressed if I went to work with no purpose or expectations. What a horrible existence to not have any expect anything from you. I see some of these ladies in the airport that are meant to monitor screens of baggage and they are half asleep, not caring and looking at their phones. Same with many gov services offices. Not all, but many. So sad :-(

Mick 6 years ago

How about a quota to hire educated and experienced expats for government roles to increase efficiency, innovation and client servicing? That might turn things around and make locals really work for the opportunity. This, in addition, to promoting and fostering, not mandating and forcing, local citizens to take roles within the private sector.
I don't understand the "cart before the horse" concept where it is up to the employer to maintain quotas rather than put it on the local workforce to move on this and see the value in working in a non-public service.
There has got to be a thousand easy ways to make this work. I'm not sure why the government hasn't found the key to this yet.

antipak 6 years ago

Yes Indeed take reservations (dont call them quotas !), but you will soon find yourself uncompetitive. What will the next step be then , to FORCE people to buy your services / goods ? Please for heavens sake understand that all the Gulf nations that are rich are due to OIL and not one has any entrepreneurial skill !!!!

Mack 6 years ago

The solution is simple:
1- Remove the immunity from getting fired from government jobs if the employee is a useless heavy weight.
2- Unify the labour law for government and private sectors. For example, in most of the GCC government gets a normal 2 day weekend while private gets 1. As for Mick's comment, we all know for a fact that where he comes from, his government wouldn't allow private, let alone government entities, to hire foreigners unless they are some sort of rocket scientists. Just take a brief look at the requirments for an H1B visa in the US or a work permit in the UK, Canada or Australia.

Mick 6 years ago

antipak is kind of right (regardless of having a very offensive name). There is very little entrepreneurial spirit or innovative spirit here, unfortunately. What they may call a new entrepreneurial idea is almost always a copy and paste of an established idea from another country and then we all applaud it and say "oh, good for you....we are so proud". A gentleman that runs an innovation centre in Dubai calls it the "Falafal Syndrome". One business does well and then someone else wants in on it and opens the same business next door and then another and another until oversaturation. Happens with pita places, happens with coffee shops or pizza restaurants. There is little innovative or entrepreneurial mindsets, although there is a strong push by the government to foster the spirit of this. I hope they do. I know that many government groups are working hard to achieve this and I"m sure that they will, in time. Would like to see more of it from the local population. It'll come.

Mick 6 years ago

Research the number of foreigners working for the Canadian government. When I was living there (and I'm certain it is the same or more than it was 6 years ago when I lived there) the immigrant (newly landed or "zero generation") demographic working for the Canadian government was massive. Rarely did you hear an accent that was indigenous to Canada. Mostly Pan-Asian and Pan-Arab employees. Some European and South American as well. To work for the government in Canada isn't really that difficult. I often thought that they preferred non-Canadians. Even the embassy and consulate here are non-Canadians (and I don't mean just getting their citizenship last week). I realise that Canada has become a "turnstile" country with immigrants coming in to do their mandatory time to get their passport and leave. My family has been in Canada since Confederation and I'm pretty protective, sorry. UAE should have the employees earn this right to work for the public sector. Not gift it.