Getting the right numbers from Emiratisation

This article appeared originally in Gulf News: link to original article

Unemployment among Emiratis is not a problem because of government efforts to recruit graduates, one of which is the Absher initiative to encourage the private sector to achieve set Emiratisation targets. The initiative pays for the training of Emiratis and subsidises 30 per cent of the total salary.

The initiative has no precedent and is great, but if the private sector hires Emiratis just because of that, we will be on the verge of having wrong estimates of unemployment from the time of application onwards unless this is an initiative that is of a temporary nature.

Emiratisation has been in effect for years now, with no real results because of lack of compliance by the private sector.

Even those who do comply cook the books in one way or another; they do so either by recruiting to raise the percentage of Emiratis, but without providing them with proper training. Or they would place them in entry-level jobs and without a clear career path to advance.

Not only that, many of the 12, 18, or 24-month training programmes lead to a dead end once the training period is over. Recruits, then, are stuck in one grade higher than the entry level. I have experienced two of these programmes with no clear path post the training.

Based on a report by the National Bureau of Statistics for the academic year 2012-13, there are around 80,000 students currently enrolled in higher education institutions, both public and private. Before going further into calculations of labor force and job market, let’s say the population of Emiratis stands at 1 million.

Unemployment has grown at an average annual rate of almost 3 per cent from 2006-13, from 3.1 per cent in 2006 to around 4.2 per cent in 2013. Since unemployment has only decreased once from a high of 4.6 per cent in the period 2011-12; the 3 per cent is applied to latest unemployment figure to forecast a 4.32 per cent unemployment for 2014.

The assumption is this rate is purely for Emiratis as it is unlikely for foreigners to stay in the country if jobless.

Moving forward, the rate cannot be applied to the entire assumed population of a million Emiratis, but rather to the participating labour force. Another estimate by the National Bureau of Statistics is that 24 per cent of these are university graduates based on the years 1995 to 2005.

According to all numbers provided, we are looking at a number of unemployed being around 10,000 among higher education graduates, excluding other jobseekers with high school and primary education credentials. Those who held jobs previously are also excluded from the calculation.

Since we currently have 80,000 higher education students, not counting those from abroad studying abroad here, then we have some 865 graduates who will end up being jobless.

(Note: the number was concluded from multiplying the forecasted unemployment rate for 2014 by 1/4 the number of current higher education students, assuming that 20,000 will graduate every year.)

Assuming the currently unemployed remain unemployed, with 865 being added to them every year until 2020, this will result in a total of around 8,900 unemployed Emiratis.

I have kept the numbers constant without taking into account the fact that the younger generation is around 35 per cent of the population and that the number of graduates will increase exponentially. I have also ignored forecasts of population growth as these reflect immigration numbers as well.

Adding the numbers, we should be looking at some 16,000 unemployed Emiratis by 2020, presumably with no drop in annual recruitment from current levels.

I am also not taking into account the existing number of unemployed Emiratis because of the following reasons: 1. Discrepancy in statistics between local and federal institutions; 2. Different unemployment rates in all sources disclosed here; and 3. Inclusion of jobseekers in the list of unemployed Emiratis — basically those switching jobs and not ones who haven’t been employed ever.

Making Emiratisation work

For Emiratisation to actually work; there needs to be a department established under the Ministry of Economy that liaises with the Central Bank for unemployment targets. Having a committee, even if it included members from the Federal National Council, cannot cut it as whoever involved already have their hands full.

A department would have more time, as well as human resources, to establish a solid database of employment numbers, demographics, future projections of graduates, future growth in Emirati population, labour force participation, etc.

Besides, the department will also need to: 1. Ensure 100 per cent Emiratization in all government jobs with no excessive recruitment to shadow real unemployment, with an exception clause for certain jobs; 2. Set up higher Emiratisation quotas for the private sector based on each industry’s dynamics and linked to qualifications existing in the market; 3. Supervise the private sector and issue quarterly reports assessing their performance and whether targets are met.

It would also be good to establish specific rankings for companies based on their compliance, with a list of benefits attached for Tier 1 companies. A mechanism will need to be put in place to reward government and semi-government contracts to private companies with highest compliance rates with Emiratisation strategy.

With a population of 313.9 million (World Bank 2012); the US has only two million federal employees. This is exactly why the US government shutdown affected just 800,000 of those. And Thailand, with a population of 66.79 million, has an unemployment rate of 0.65 per cent.

Whichever way we look at this, it is possible for the UAE to achieve a zero per cent unemployment rate among its nationals before Expo 2020. The thought that I want to leave you with is this: How should public sector recruitment policies, including wages, change with the aggressive and more competitive private sector recruitment practice?

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