Blog Article

Business in the UAE is booming, so why is national unemployment so high?

Posted by Jan Marsli

Jan Marsli

As the business center of the Middle East, and thanks to a strong economy, the United Arab Emirates (UAE) continues to attract hordes of expatriates looking to earn a tax-free salary and fast track their careers. However what comes as a surprise to those new arrivals is that unemployment amongst citizens in the UAE is running high.

UAE nationals represent just 16.5 per cent of the population and as such, it is unrealistic to expect the nation to be able to create a fully nationalized workforce, at least within the foreseeable future. Instead, industry will continue to rely on significant numbers of expatriate workers at least over the medium term.

What’s worrying however, is that unemployment amongst nationals is alarmingly high at 14 per cent. Part of the government’s response is the ‘Emiratisation’ program which aims to increase nationalization within the workforce by incentivising employers to reach a target number of UAE nationals within their companies. Those of us here in the UAE can see the system has been successful in some sectors such as banking but there is still a long way to go for other industries.

While there has been a marked increase in efforts across the board to drive forward nationalization, there is a clear gap between the successes of the nationalization efforts in the public versus private sectors. In the public sector, nationalization efforts have seen some strong results but it’s a different story in the private sector. Reports show that UAE nationals make up a meagre 2.4 per cent of the private sector workforce.

Unlike most other markets, there are several areas in which the UAE public sector is at an advantage; larger reward packages, shorter working hours and the prestige associated with serving the country within UAE society. Add the fact that we consistently see nationals employed in the private sector tending to be less engaged and enabled than their expatriate counterparts, and you are left with a significant challenge for businesses.

However, there are companies that prove that it is possible to get nationalization right within private industry. When we work with these organizations we see UAE nationals who are thriving. They are much more positive about their company and the work that they are doing. In fact there are very few issues about which they are less positive than their expatriate colleagues.

What really stood out whilst working with these organizations getting it right was that nationalization was not just ‘for Emiratis by Emiratis’ – it was a clear strategic objective for the organization and was integrated into performance management and both development and training schedules.

In these companies, integrating nationalization into performance management is inherent and ensures that knowledge transfer and developing others is rewarded. It makes it easier for line managers and collective contributors to focus on the longer term performance of the organization through developing others rather than putting all effort and energy into ‘here and now’ business requirements.

On the other hand are the organizations with low national workforce engagement. In these companies, nationalization seems to be a taboo subject typically handled by a smaller committee that includes only Emiratis. Because of this, and despite their best intentions, the nationalization strategy wasn’t aligned with day-to-day business. Expatriates in these organizations often hold their own concerns about what will happen to them if they succeed in developing nationals. Primarily these concerns focus on their visa status, their ability to find new work and the potential need to take children out of school, up-root their lives and move back home – concerns we can all relate to, expatriate or not.

The organizations getting it right have some things in common:

  • They formally integrate nationalization into their day-to-day business and encourage knowledge transfer between line managers and employees. This creates a more open culture in which all staff feel that they are able to discuss nationalization and work together toward achieving it.
  • The expatriates they hire are able to transfer their knowledge and expertise, they also make sure that expatriates are assured that this is valued by the organization, and succeeding won’t lead to their own redundancy – rather the opposite.

In short, these organizations are succeeding not just because they attract nationals in the first place but because they focus on giving them the chance to succeed.

Seeing the headline ‘14 per cent of UAE nationals are unemployed’ somewhat disguises the fact that this is not due to a shortage of jobs, but rather the type of jobs that are available. What it does highlight is that although we have come some way along the road, there is still a long way to go until Emiratisation can be deemed the success that the government is aiming for.

If you’re interested in finding out more about Emiratisation, our new report is a great place to start.

 

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