Emiratisation: the UAE Government and Private Sector

Introduction

Emiratization is an affirmative action policy of the United Arab Emirates Government that gives preferential hiring status to Emiratis over expatriates in order to preserve national identity, economic sustainability, and political stability. The initiative has been exercised for more than ten years. However, the unemployment challenge for nationals continues in both sectors. Records from UAE NHRD and Employment Authority indicate that joblessness among nationals reached twelve percent in 2010. This increase in joblessness originates from an enormous dependence on expatriates labor pool in the Gulf region (Modarress, Ansari & Lockwood, 2013).

The UAE government is resolute in doing Emiratization work. In fact, Emiratization is on top of the government’s agenda. However, the private sector does not regard Emiratis in high esteem when it comes to performance. The private sector considers Emiratis a liability due to the lack of skills, inability to deliver, and general incompetence as they lack experience, yet they expect salaries higher than what expatriates receive. Consequently, there is a clash of views about Emiratization between private companies and the government (Ali, 2013). There must be coordination and collaboration between the private sector and the UAE government if Emiratization is to succeed.

Main Body

Political leaders in the entire Middle East region view the nationalization of the human resource as a desirable and articulate policy for the countries that form the Gulf Cooperation Council (GCC). As a matter of fact, the Emiratization policy has been surrounded by multiple difficulties in implementing it since its inception. The policy faces challenging hurdles, including demographic disparity arising from a high proportion of expatriates in the region. Other hurdles include the dependence on expatriates’ skills in performing specific roles and rising rates of unemployment among poorly skilled Emiratis. A major hurdle is a cumulative need for sustainable development alongside the efficient governance of human capital. In view of these problems of Emiratization, the government opted to deal with the problems of Emiratization as a countrywide effort (Randeree, 2009).

From the research studies literature, the phrase Emiratization entails any countrywide commitments intended to prepare and train the nationals so that they can be well acquainted with workplaces. It also involves safeguarding the available employment chances for them. The UAE citizens are very youthful individuals, with approximately 45.0% of them being under the age of fifteen years. Besides, according to the Emirates Environmental Group 2008 report, 9.0% of men and 20.0% of women are in employment. Despite the facts, it is worth noting that the Emiratis usually lack the incentives for taking up the available employment opportunities since most of them come from the wealthy and elite families. Moreover, Emiratis are short of the abilities that are required to compete with the relatively cheap and skilled expatriate workforce adequately.

The idea of Emiratization emerged in the 1990s. However, in the beginning, the government was slack at implementing the initiative. The increase in the unemployment of Emiratis forced the government to face Emiratization more seriously. Subsequently, Emiratization became a priority for the government. The number of Emiratis in the private sector was extremely low, considering the skills and competencies private companies require from the employees. Few Emiratis would meet these thresholds. The failure by the government to implement Emiratization supplemented to the stereotype that Emiratis were less resourceful and unmotivated. The Emiratis themselves, as well as the foreigners, began perceiving that they were incompetent. The government was somehow successful in executing Emiratization in banking and insurance. However, the initial target was hard to achieve, and the authorities somewhat became lax again.

Many people regard the Gulf countries as having economies of restricted attractiveness from a worldwide perspective. The circumstance is essentially due to political, social, monetary, and ecological challenges the countries face. The UAE is no exception. It faces multiple challenges such as contemporary and future demographics considering the high number of skilled expatriates moving into the country due to local skilled workforce deficit.

The educational concern is also a challenge for UAE. The nationals do not receive world-class training prior to entering the employment market. The stereotyping of women in the country is also a major hurdle for the country as women are deemed to perform domestic chores such as raising children competently. The diversity of the country is also a problem making the balancing of the workforce between the Emiratis and expatriates a challenge. In view of these challenges, the UAE government initiated a well-planned nationalization process. Objectively, the policy aims at decreasing the demand for expatriate employees. The nationalization process of the job market is what the policymakers named Emiratization. It seeks to encourage the energetic participation of Emiratis with particular attention given to women to enter the mainstream commercial labor community.

The Emiratization process largely focuses on the private sector. The policies developed in recent years seek to encourage the private sector to adopt the initial policy of ensuring that the job opportunities in the country are given to Emiratis as a priority. However, the rise in the number of expatriates has increased economic and social challenges for the UAE job market (Metcalfe, 2007). By the end of 2012, expatriates constituted 91 percent of the UAE labor market, largely in the private sector. It is this reality that influenced the UAE political leadership in collaboration with the GCC countries to establish a variety of economic policies.

The instruments devised affected the national employment market in promoting employment for the nationals. The policies included salary subsidies and salary limitations fees. The authorities implemented quotas to improve the value of the education system complemented by the training of Emiratis. The government sought to discourage expatriates from seeking employment in the UAE hence started charging foreign labor.

Despite all the efforts the government makes towards Emiratization, studies indicate that UAE nationals prefer employment in the public sector. There is better compensation in the public sector as well as job security. The low rate of employment in both the public and private sectors for UAE nationals is attributed to the nationals’ inability to complete a task; an aspect regarded highly in the private sector (Freek, 2004).

The perception effectively pushes Emiratis to the public sector or unemployment. Regardless of the Emiratization efforts by the government, most private employers are unwilling to employ workers who lack the vigor to complete their tasks. Obviously, this makes the job environment for Emiratis less than desirable. Consequently, even fewer Emiratis seek employment in the private sector, particularly when the employer is a non-national. The phenomena make Emiratis possess only general and often unclear impressions of the job market as they possess little or no first-hand experience and knowledge.

In essence, corporate social responsibility undertakings associated with Emiratization are both obligatory and charitable. In the United Arab Emirates, voluntary activities are deemed to be educational to aptly prepare the Emiratis to equip with workplace skills and knowledge. For instance, an establishment half-private venture corporation dubbed Mubadala undertakes the responsibilities of managing various collections of activities. This corporation generously donates to three renowned foundations which it had initially assisted in setting up. Amongst them is the famous Tawteen, which works to spearhead and foster career guidance and education (Khan, 2009).

Conversely, in the Emirates Environmental Group 2008 report, the DIFC claims that its main focus in the area of corporate social responsibility appertains to empowerment and educating individuals and groups with exceptional requirements. The main aim is to put up sustainable workforces that are skilled based within the UAE environs. Similarly, multinational corporations such as ABB Company and Shell Company significantly facilitate Emiratization.

Shell Corporation, for instance, instituted a program known as Intilaaqah with the intention of promoting business skills and entrepreneurship. ABB Company, on the other hand, established mentorship and educational program that was meant to nurture talents as well as build capacities (Emirates Environment Group, 2008). Ibrahim and Sherif (2009) claim that the Emiratization correlates to the issue of corporate philanthropy. Most donations (Zakat) sponsor the work or employment training programs. All these illustrations constitute deliberate efforts, examples that are intended to link up the organizations’ needs with Emiratis skills development.

Nevertheless, there are equally considerable obligatory perspectives to the issue of Emiratization that relates to safeguarding employment openings for the nationals. The government normally issue Emiratization thresholds for various corporations. The targets necessitate the employment of the nationals by the companies. The thresholds in the trade sector are just pertinent to organizations employing more than fifty workers. From Ibrahim and Sherif’s (2009) claims, it is clear that in the insurance industry, the government laid target for employing the UAE nationals is 15.0%. In the trading and banking industries, the target is to augment the proportion of nationals employed by about 2.0% and 4.0% annually, respectively.

Any corporation found in the UAE but fails to meet such employment targets are bound to be penalized. The penalties include the imposition of fines on the corporations that violate the instituted Emiratization issue. Nonetheless, the efficiency and success of the allocation system raise debate among stakeholders. For instance, there are corporations in the UAE that hire ghost workers who are UAE nationals simply to accomplish the obligatory quota (Cone, 2003). These corporations hardly require such workers to show up for the works or necessarily do any real jobs in the companies.

A major challenge to Emiratization is the UAE’s demographics. There is a diversity of cultural groups inhabiting the country. Besides the Emiratis, there are numerous Arab groups as well as Asians, Europeans, Africans, and Americans. Forty-five percent of the Emirate population is under 15 years. About 2 percent of the Emirati population is over 65 years. The country is expected to have 3.5 million people by the year 2015. Data from survey figures in 2009 indicated an extraordinary ratio of non-nationals living in the country compared to the citizens. A larger percentage of the citizens composed of highly skilled workers.

Conversely, the nationals will not be able to meet the labor market requirements of the country, considering the steady expansion of the country’s economy and employment opportunities. The situation is aggravated by the fact that most of the UAE nationals are from wealthy family backgrounds facilitated by the sale of oil and coupled with the fact that the majority of the population do not receive competitive education and training compared to the expatriates, their chances for employment even when they are willing decreases significantly.

An examination of the demographics of Dubai offers several hints regarding the issues emanating to the availability of a workforce that UAE as a country faces. The city is unique in terms of demographics, even from a world perspective. It ranks first globally in terms of male to female ratio (2.6:1). The labor-force to inhabitants’ ratio is 68.33%. The expatriates out-do the nationals at 82 percent. Fundamental concerns of gender and parity emerge, considering that women are only twenty-seven percent of the population. The inflow of male foreigners contributes to high population expansion. Subsequently, the issues of sustainability and Emiratization dominate government policy issues. The dependence on expatriate workers infers that issues of workplace conditions, briefness, continuity, and stability of the provision of labor arise. These demographics indicate that the effort to emiratize may fail in the long run.

There has been an increase in the number of Emiratis with university BA, MBA, and Ph.D. degrees in recent years. However, these graduates do not have real workplace acquaintance and any skills or proficiency. The outcome of these academic qualifications is that the graduates expect to receive highly competitive remuneration packages. On the other hand, the private sector views Emiratis as less fruitful, less enthused, and incompetent compared to expatriates.

They also believe that Emiratis lack the abilities essential for good performance, and their proficiency in English is poor. The private sector hence considers Emirati workforce a liability because they have to pay them higher salaries compared to expatriates with even better skills. When employed in the private sector for the companies to meet Emiratization requirements as opposed to the competence of the employee, the companies are perceived not to treat them well. The companies that do not receive government incentives to embrace Emiratization are not eager to create a good work environment for Emiratis. The Emiratis get frustrated and quit.

Considering that the UAE and specifically Dubai has in recent years gradually emerged as an economic hub of the Gulf region, many multinational corporations are investing in the country. The GCC authorities are not willing to alienate these corporations by compelling them to employ Emiratis not competent enough to fill the available job opportunities (Ali, 2013). However, the UAE government remains adamant that the Emiratization policy must function as initially intended. The Ministry of Labor receives considerable support from other arms of government, including the legislature, judiciary, and the executive in implementing the Emiratization policy.

The government realized in the early stage of implementation of the policy that penalties for non-compliance only resulted in a declining economy as companies pulled out of the country to invest in neighboring countries where conditions are better. Consequently, the government devised other strategies such as strategic alliances with the government and business networking for companies that complied with the program (Hodgson & Hanson, 2014).

Recently, the UAE government realized that penalizing companies for non-compliance is detrimental to its economy. It proved problematic because of the foundation of a quota-based system aimed at increasing the ratio of Emiratis in the private sector while decreasing the proportion of foreigners in the labor market. The uncommon aspect of the UAE demographics forced the government to take a bold position in changing the approach to Emiratization. The government slowly abandoned the GCC’s quota-based approach for the foreseeable future. Instead, the government makes alliances with companies in training the Emirate to take up the available job vacancies to guard against the labor force crisis.

The approach opened a new frontier for the country as the world views the country as a new model for prosperity and sustainability in the Middle East. Seeds of economic development are budding as Emiratization no longer finds its base on the quota system but knowledge-based. There are training programs initiated by the government to train Emirati so that they can effectively compete with expatriates on different competence fronts. The approach seems to work for the private companies, Emiratis, as well as for the Emiratization agenda.

There are several long-term advantages that companies in UAE’s private sector will enjoy as Emiratization takes root. Through privatized Emiratization training programs, the Emirati employees will remain longer with the employer, as opposed to expatriates who leave after around three years. The companies will not require hiring new employees; hence will have regulated employee turnover. The move helps in minimizing frequent training expenses in terms of capital resources and time.

Conclusion and recommendations

The issue of enforcing Emiratization policy strategies and applying them effectively into the private sector in UAE to afford more job openings for Emiratis always create different challenges and problems in the Gulf region’s economic and tourism hub. The requirement by the UAE government for multinational corporations to comply with Emiratization efforts creates difficulties for the company to comply and, at the same time, sustain existing levels of efficiency. Instead, these companies wish to control their employee recruitment and selection processes. Gradually, the country experienced a significant change in resistance to the effort as the government has employed a different approach to the issue of employing the compulsory 20 percent Emiratis, yet they do not possess skills, experience, and qualifications. The government engages companies in strategic alliances that facilitate the companies in training the Emirati workforce. The move significantly benefits these companies as employee turnover is reduced.

With the number of job opportunities in the private sector increasing, there is a dire need for the government to secure recruitment by making the Emirate workers more attractive to the private companies through comprehensive work skills training programs. The government should ensure that graduates get job placement in the public sector to gain experience before transiting to the private sector. The efforts alter the workforce to fit UAE job market requirements. To encourage the private sector to absorb the Emiratis into the job market, the government should offer motivational inducements such as foreign partnerships with the government as well as fast-tracking trade license processes for companies that comply with the laid down quotas.

The government should also launch fresh academic and economic policies restructuring and human resource management of job skills training programs for Emiratis to prepare them for the private sector job openings better. Consequently, the government should allow the dismissal of Emiratis – just like the expatriates- if their performance does not meet the private sector performance expectations.

References

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