Emiratization in the UAE and its Impact on Unemployment
The UAE, presently has a population that is estimated at more than 8 million. It is estimated expatriates make up 87% of this. According to the Ministry of Labor statistics (2009, cited in Koji, 2011), 99% of the workforce in the region are expatriates. There is no doubt, these figures are very alarming. Emiratization policies have been the response of the UAE government and strategy to the demographic imbalance noted in the labor market. The policies of Emiratization, in this regard are aimed at increasing the UAE nationals participation in the labor market, as well as reduction of the country’s reliance on expatriate labor and expertise. This paper evaluates the Emiratization policies as well as their effects on the unemployment state in the region (SCCI, 2009; Koji, 2011; Stuart, 2011; Forstenlechner, et al., 2012).
Emiratization and Unemployment
As stated above, the policies of Emiratization have always been aimed at increasing participation of UAE nationals in the labor market. In this regard, the government, also attempts to address the issue of low employment rates among nationals of UAE. In 2009, for instance, only 38.7% of UAE nationals were employed in the region as compared to 76.8% for expatriates (non-nationals) (Stuart, 2011).
In line with these policies, the government has already introduced a quota system within the banking industry. In accordance to the system, employers in the sector of banking are mandatory supposed to increase the number of Emirati workers by 4% annually and insurance by 5%. However, in 2010, amendments were done to the quota system as a response to challenges that Emiratization, as a national policy faced. The amendments were released by the Ministry of Labor. The private sector business, accordingly were compelled to “apply a specific Emiratization ration by implementing a quota based system” (SCCI, 2009, p.14). In this regard, companies were expected to reserve at least 15% of their positions for Emirati nationals in private industries. The companies, however, have been known for going round the requirements by attempting to fill these positions” with what are effectively non-jobs or ghost workers just to meet Government quotas” (Stuart, 2011, p.1). The government has been watchful in this case and companies guilt of such behaviors face great fines among other penalties like “additional punitive rates on labor cards” (Stuart, 2011, p.1).
However, despite this, the policy continues to face numerous challenges. For instance, according to Koji (2010), expatriates, more than the nationals are willing to tolerate poor working conditions, long hours of work, accept lower wages as well as tolerate jobs that are more physically demanding.
Ultimately, however, the question is whether the policies of Emiratization have in reality helped improve the rates of employment among the Emiratis (that is, decreased unemployment). This paper mainly focuses on the financial and banking sectors. The statistics and indicators of Emiratization cited by Al Tayer (The UAR financial and banking sector’s Head of the National HR Development Committee show results that are contrasting. For instance, in June, 2009, of 36,516 employees in the sector of banking, 11,188 were Emirati men and women. In other terms, UAE nationals constitute only 6% of the workforce. Almost, at the same rates, UAE nationals comprise only 6.5% and 10.6% of the workforce in exchange for financing and business respectively (SCCI, 2009).
Al Tayer expected towards the end of 2009, Emiratization percentage in the sector of banking would be 35% (which is the targeted percentage). Al Tayer made the argument that global crisis could not have any influence in the nationalization process of the sector’s workforce.
Despite promising figures seen in the financial and banking sectors, the reality is quite different. For instance, in 2008, December, UAE nationals in the financial and banking sectors were 53, 575. By 2009, June, the number decreased by 1,468 to 52, 107. This in part was attributed to resignations by UAE nationals from their positions. 1,388 UAE nationals in the sector had resigned between June 2008 and June 2009. In the end, the Emiratization process by 2009 dropped by 0.5%, 0.1% and 0.35% in the financial, insurance and banking sectors respectively. The indicators, further showed that the bank branches in the country had rose by 27 branches, reaching a total of 784 branches. Yet, the percentage of Emiratization has dropped over the same duration (SCCI, 2009).
Indeed, these figures are not a satisfactory justification of Emiratization. But again, the figures are not supposed to be read to mean Emiratization is having completely no effect towards rising participation of UAE nationals in the nation’s labor market. As it was, there are numerous factors that explain the contrastive trend, factors that do not exclusively have do with Emiratization only.
A possible explanation for the continued demographic imbalance has a lot to do with a shift towards non-oil sector which is aimed to reduce the dependency of the government on oil revenues. New sectors (manufacturing, construction and services) have expanded. Unfortunately, just as the government was forced to bring in a large number of expatriate workers during the 1970s owing to lack of skilled and unskilled national workers, such new sectors have prompted mass arrival of expatriates who take up jobs the UAE nationals are still just learning.
What is more, the UAE nationals do not like taking jobs in the unskilled sectors: “these sectors create job opportunities mainly for the expatriates because nationals tend to avoid working there due to the working conditions” (Koji, 2009b, and p.71-72). Another factor is the rising number of youth within the country. The national youth (15 to 24 years old) population in the nation is estimated at about 230,000. This is about 25% of the entire population. Statistics show 15,000 graduates (young people) enter the labor market annually. As such, while the efforts of nationalization go on, the overwhelming number of young people who are searching for work undermines the potential of Emiratization policy. Other aspects include development of human resource in the post-oil era (that is, great revenue against the inadequate human resource) as well as globalization among others (Koji, 2011; Forstenlechner, et al., 2012).
To conclude, this paper, through the statistics provides justification for the UAE government’s desire to increase participation of its nationals within the labor market. However, the efforts have not paid off, as it was initially affected to. The attitudes of UAE nationals towards certain types of working conditions and work, the increasing number of young people within the country, development of human resource in post-oil era and globalization among others are factors that contribute to contrastive effects of Emiratization in the nation. The implication that the policy has not failed necessarily, it might be a victim of other circumstances like the ones cited above. Time, might prove that the policy is effective.
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