Harnessing the Full Potential of Emirati Human Capital_January 2012

7/22/2019 Harnessing the Full Potential of Emirati Human Capital_January 2012

http://slidepdf.com/reader/full/harnessing-the-full-potential-of-emirati-human-capitaljanuary-2012 1/8



“Our priorities have less to

do with dealing with the

fallouts of the 2008-10

global economic downturn,

and more to do with

longstanding, structural

labor and employment

challenges that have

emerged and accumulated

over the past three

decades.”

-UAE Minister of Labour,

H.E. . Saqr Ghobash

Despite phenomenal economic

growth, Emirati participation levels

in the private sector remain

extremely low

The UAE has witnessed significant growth over

the past 2 decades, with GDP increasing 7 fold

over that periodi. Sustained efforts have led to

a diversified economy, with the oil and gas

sector now accounting for only 33% of GDP (as

opposed to 43% in 2001ii). This growth has not

come without its challenges and main among

these is the lack of integration of the Emirati

workforce into the private sector. Despitevarious Emiratisation initiatives introduced by

federal and local

governments, the

bridge linking the

Emirati workforce

with private

sector businesses

remains narrow.

On the one hand,

Emiratis generallyfavour a career in

the stable and

comfortable

public sector, and on the other, the private

sector overwhelmingly perceives higher

economical value in foreign resources.

Emiratis currently occupy only 43,000 of the 2.2

Million (Figure 1) jobs in the private sector. The

public sector, traditionally the largest employerof Emiratis, employs 495,000 Emiratis. Recent

economic challenges have curtailed the public

sector’s ability to recruit, contributing to a 14%iii

unemployment rate among Emiratis today3.

The severity of the issue increases significantly

due to the fact approximately 210,000 Emiratis

are expected to join the workforce by 2019,

representing a 34.3%iv

cumulative increase

(Figure 2).

Figure 2: Projected growth of Emirati workforce

In this paper, we explore the causes behind the

extremely weak participation of Emiratis in the

private sector. Our analysis is based on

secondary research, internal forecasts, focus

groups and interviews with students,

823,700

722,614

613,320

34.3%

17.8%

201920152011

6.0%

1.7%

Expatriates

14.9%

3.8%

64.6%

16.7%

Emiratis

84.9%

7.4%

Public Sector

Quasi-government

Private Sector

Other

Figure 1: Employment rates segmented by sector



“Most companies are just

filling numbers to avoid

government fines”

-Emirates National

Development Program

“For Emiratization to

succeed, it must come

from the heart. It should

be inherent at the

essence of the

organization”

- Al-Futtaim Group

employees and employers in various disciplines

and industries.

Emiratization lost in translation

The majority of private sector companies

misinterpret Emiratization, treating it as a

percentage based performance target.

Emiratisation is rarely recognized as a credible

talent strategy, with even fewer companies

offering long term career progression schemes

tailored for Emiratis.

Whilst we could not

access quantitative

data for this, it was

clearly reflected in

our focus groups

and interviews with leading private sector

organizations in the UAE.

We found that most companies (especially

those bound by quotas- banks, insurance

providers and commercial companies with 50 or

more employees) employ Emiratis to meet

quotas and avoid penalties. Other

organizations, while

acting in good faith,

lack the necessary

capabilities and

expertise for sound

career planning. This

results in private

sector companies dealing with Emiratization as

a “cost” for doing business in the UAE. It also

leads to high attrition rates among Emirati

employees who feel isolated “special cases” in

such a private sector environment.

The private sector job market is

smaller than it appears

Social prestige, cultural tradition and religious

beliefs create substantial barriers for certain

types of jobs among Emiratis. Our analysis

reflects that while the nominal size of the job

market in the private sector is an estimated 2.2

million, 56.3% of jobs lie in industries that are

not favored by Emiratis. For instance, being

associated with a hotel or restaurant that

serves alcohol places any job in that

establishment off limits for Emiratis. The real

number of opportunities free from such issues

open to Emiratis closer to 1.2 million onlyv

(Figure 3).

Industry% of Total

Jobs

% of

Employed

Emiratis

Agriculture,

Hunting, Forestryand Fishing

3.8 0.6

Activities of Private

Households as

Employers and

Undifferentiated

Production

Activities of Private

Households

13.1 0.8

Manufacturing 7.7 1.7

Construction 12.3 1.0

Wholesale and

Retail Trade; Repair

of Motor Vehicles,

Motorcycles and

Personal and

Household Goods

15.4 1.9

Hotels and

Restaurants4.0 0.0

Total Jobs56.3%

(1,238,600)

6%

(32,280)

Figure 3: Emirati participation rates in least favored

industries

False expectations

Our research reflects that generous

compensation packages and lesser working



“Cultural and social

barriers exist when

selecting a job” - Dubai

Events and Promotions

Establishment

“Quite a few Emiratis walk in

with unrealistic demands

expecting similar pay to what

the public sector offers” - Du

“Emiratis are just

not willing to work

in shifts” - DUBAL

hours in the public sector had contributed to

creating an expectation gaps between the

Emiratis exploring

opportunities in the

private sector and

potential employers.

This is especially true

at the entry level positions, with

undergraduates expecting AED 17,000 to AED

20,000 monthly pay, compared to the AED

4,000 to AED 10,000 most private sector

entities are prepared to offer prospective

employees of similar qualifications (Figure 4)vi.

Figure 4: Wage distribution across sectors

Furthermore, the averagenumber of working hours

in the private

sector is up to

30% more than

those required

in the public sector (Figure 5)vii

, discouraging

interest in the private sector.

We expect that as the number of Emiratis

joining the workforce increases over the

medium term, pressure on the supply side willforce employee expectations downwards and

narrowing of this gap.

Figure 5: Distribution of actual hours worked, across

sectors

Skills mismatch

Despite policy makers steering the country

towards a knowledge-based economy, as

evident in Vision 2021’s “United in Knowledge”

theme, published figures suggest that (in 2011)

only 24.6% of Emirati students are enrolled in

science and technology majors that are

considered critical to support a drive towards a

knowledge based economy (Figure 6)viii.

The mismatch between the type of jobs that

will be created and the type of skills Emirati

students are pursuing today could increase the

Emirati unemployment levels further. This is

reinforced by the high unemployment rates

among the young Emirati age groups (Figure

7)ix. In addition, as government initiatives

towards building a knowledge-based economy

bear fruit, the reliance on an expatriate

workforce will ironically increase.

16.4%

29.9%27.4%

19.3%

A E D 3 , 0 0 0

-

A E D 7 , 9 9 9

29.9%

23.0%

11.5%

2.3%

A E D 1 , 3 0 0

- A E D 2

9 9 9

27.4%

23.8%

27.6%

1.6%

A E D <

1 , 3 0 0

19.3%

15.9%

3.9%1.8%

A E D 1

8 , 0 0 0

+

6.8%

26.0%

22.7%

41.3%

A E D 8 , 0

0 0

-

A E D 1

7 , 9 9 9

Private

Quasi-government

Local government

Federal government

M o n t h l y W a g e s

52.8

45.6

44.0

40.8

Private

Quasi-government

Federal Government

Local Government

Hours Worked (Actual)



4.4%

8.5%

16.5%

5.3%

11.1%

27.4%

1.5%Media and Communications0.7%Agriculture and Food

Education

Human and Social Sciences

Others

Basic Education

Sharia and Law

Business and Econimics

11.0%

Information Technology

8.6%

Engineering

3.8%Medicine and Health Services

1.2%Sciences

Knowledge-Based

Economy Areas

(24.6%)

Age Group

15 - 19 36.1%

20 - 24 11.3%

25 - 34 3.9%

35 - 44 2.0%

45 - 5 4 1.5%

55 - 64 2.3%

65 + 4.1%

Unemployment is highest among

the younger age groups

Most Emiratis

graduate with a

degree in support

function; hence they

work in the support

departments” - Du

Support jobs and the Public Sector

Irony

While the public sector does employ most

Emiratis, it is not doing the Emirati workforce a

favor by staffing most in support jobs. A case

study we executed at a representative

government entity (name is withheld due to

confidentiality requirements) underscores thisfinding. We found that only 42.8% of Emirati

employees at the entity

took on core functions,

out of which over one-

third occupy technical

jobs not requiring

higher education. In

addition, while only 1

in 5 core jobs was occupied by an Emirati, the

figure stood closer to 9 in 10 for support jobs.We also found that support jobs represented

23% of total jobs at the entity, a deviation from

the general standards of 5% to 10% (Figure 8)x

for the sector.

Figure 6: Distribution of Emirati students by Major area of study

Figure 7: Unemployment of Emiratis by age group



Figure 8: Job distribution between Emiratis and Expats

This trend is likely to have two negative

implications. First, Emiratis lose out on an

opportunity to develop the skills and

competencies relevant to core jobs, denying

them a meaningful opportunity to participate in

the planned knowledge-based economy and

limiting the realization of their true potential.

Second, the knowledge and expertise created in

the UAE remains largely in the hands of expats

and is prone to being lost as expats relocate to

home countries or elsewhere.

Conclusion and recommendations

As the Emirati workforce is set to grow, a

significant shift in thinking is urgently required.

First, it is important for policy makers to define

and communicate the fundamentals of

Emiratization to stakeholders at all levels. This

should serve to provide a uniform

interpretation of what Emiratization really

means and what it is really supposed to achieve.

In the absence of a common language among

policy makers, the public sector and the private

sector, the progress of Emiratization related

initiatives will continue to suffer.

Second, government incentives and other

interventions should nudge the private sector

to revamp their talent strategies to include

Emiratis and focus on the development of

Emiratis, rather than merely the hiring of

Emiratis. A recent initiative by the Sheikh

Khalifa Fund supported the development and

induction of Emiratis into the private sector by

sharing the financial investments associated

with employee development. In addition, the

National Human Resource Development and

Employment Authority (Tanmia) has been

successfully contributing to Emiratization by

fostering the development of Emiratis

specialized trainings and facilitating job

placements. These are steps in the right

direction and should act as an incentive for both

large businesses and SMEs to hire and nurture

Emiratis.

Third, the real job market size can be expandedto make more jobs socially acceptable for

Emiratis without overstepping cultural and

religious sensitivities. This can be achieved by

building awareness on what certain jobs entail

and by encouraging supportive environments in

sectors currently not favored by Emiratis. The

Private sector should be engaged as a partner

to create an attitudinal shift by holding

informative programs and showcasing Emirati

role models.

Fourth, career orientation programs need be

adopted at schools to make students aware

regarding the opportunities presented by a

progressively knowledge-based economy. Such

initiatives can help direct students to pursue

the knowledge and skill requirements for a

career in such an economy from a young age.

Finally, government scholarship programs

should be tailored to encourage enrolment in

studies that are aligned with the job market

requirements of the UAE economy. This may

result in students opting to study for careers

(such as scientists, bio-medical professionals

and/or engineers) that are more relevant in a

knowledge-based economy.

Expat 5,9843.8% 96.2%

Emirati 3,29557.2% 42.8%

Number ofEmployees within a

Government Entity

CoreSupport



TCO Management Consulting is

support in the delivery and impl

government. We provide advis

region. Through our precise foc

and knowledge management, T

This White Paper was prepared

Ahmad Ghannoum, a

Hassan Ali Habib Ali,

For more information please co

Ahmad Ghannoum, +971 (0)50

Visit http://www.tcoconsulting

© Copyright 2012

an initiative born out of the need for first-class

mentation of strategic initiatives across all for

ry services to public sector organizations in th

s on the quality of service delivery, capability d

O aspires to be a Strategic Partner in Public S

y:

Principal Consultant with TCO based in Dubai.

an Analyst with TCO based in Dubai.

tact:

89 7232 or ahmad.ghannoum@tcoconsulting.

.com to learn more about TCO Management C

consulting

s of

UAE and MENA

evelopment,

ctor Innovation.

om

onsulting



References

The following sources of information and data-points were used to inform our thinking, and the statistics utilized in

this document.

iWorld Bank Development Indicators, 1990-2009

iiUAE economic growth report; http://www.uaeinteract.com/docs/UAE_may_see_3.3_real_GDP_growth/46586.htm

iiiUAE National Bureau of Statistics- Labour Force Survey 2009

ivTCO analysis; UAE National Bureau of Statistics- Labour Force Survey 2009

vUAE National Bureau of Statistics- Labour Force Survey 2009

viUAE National Bureau of Statistics- Labour Force Survey 2009

viiUAE National Bureau of Statistics- Labour Force Survey 2009

viiiMinistry of Higher Education & Scientific Research 2011

ixUAE National Bureau of Statistics- Labour Force Survey 2009

xSource: UAE Ministry of Health 2011

http://www.uaeinteract.com/docs/UAE_may_see_3.3_real_GDP_growth/46586.htm

http://www.uaeinteract.com/docs/UAE_may_see_3.3_real_GDP_growth/46586.htm

Documents

Harnessing the Full Potential of Emirati Human Capital_January 2012