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HRM in UAE

HRM IN UAE

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HRM in UAE

Introduction
Recent studies have found that those educated in the Arab region are often ill prepared to
work in a global economy. As a result, policymakers there are paying close attention to human
capital development, the match between the populations skills and those demanded in the labor
market, and the quality of the education being provided. Deficiencies in these areas threaten to
undermine progress toward creating the type of society a knowledge and information society
needed to effectively address increasingly complex 21st century issues related to community
well-being and development.
Exceptional economic growth in the Arab region over the past decade has not coincided
with equally buoyant labor and human resource development, raising obvious concerns for
sustainable and balanced growth. Survey results reveal that only 38% of Arab CEOs believe that
there is an ample supply of qualified national labor, which therefore translates to a heavy reliance
on the recruitment of expatriates. The Gulf suffers the most from this insufficiency of skilled
labor and therefore has the highest reliance on expatriates at 91%. Moreover, another key
challenge as highlighted by Gulf CEOs is that the quality and productivity of expatriates is far
superior then the national workforce at all management levels.
Employment trends are not Women and Youth friendly
It is evident therefore that employment creation is a major challenge in the region,
especially for young people as they move towards entry to the labor market. Unfortunately,
regional economic growth has not been youth employment friendly per se. In other words,
these economies have been ineffective in creating jobs for the youth age cohort, evident from the
low employment-to-population ratios of 32.2% in the Middle East and 27.4% for North Africa.

HRM in UAE

Almost 50% of the GCCs population is under the age of 25. On the employment front,
this could be a boom! If such manpower is employed suitably it would accelerate growth
significantly. Thus over years to come, creating job opportunities to such a young and rapidly
growing population is a major challenge.
Increasing labor force participation and the integration of women into the workforce are
major challenges faced by Arab business leaders. The failure to make improvements could result
in both a social and economic cost to the region in terms of the loss in potential human capital
utilization and returns from education. This concern has been highlighted by several Arab
business leaders. In addition, more than 90% of Arab CEOs believe that increasing female
education will have a positive effect on the Arab world by enhancing the human capital value of
women in the region. An overwhelming majority of business leaders believe in increasing female
education, even in countries with very low levels of female workforce participation, such as
UEA.
To add to this dilemma, the Arab world also has one of the lowest labor productivity
growth rates. This is a serious concern for many in the business community, especially as the
region moves towards greater participation in the global economy
Rising Labor Costs
When asked whether they expect labor costs to increase in the coming years, 84% of
Arab CEOs believe that they will, particularly those based in the Gulf region. Results
demonstrate that Arab CEOs consider the high demand for labor (92%) to be the primary drive
behind the rising costs of skilled labor, followed by a shortage in skilled domestic labor (78%)
and inflation (66%). These results are fairly consistent across the three sub-regions.

HRM in UAE

Rising wages can in part be attributed to the continued growth and subsequent demand
for skills which have outstripped supply, most of which are imported. The recruitment of
professionals from foreign countries has thus encouraged the introduction of higher remunerative
packages so as to attract workers. Moreover, soaring house prices and the rising cost of living
have compelled companies to raise staff wages in order to retain staff. This scenario sets the
stage for a wage price spiral, which is likely to see wages continuing to rise in order to remain in
line with inflation.
Emphasis on Soft Skills
It is clear that Arab CEOs favor soft skills such as problem-solving and communication
skills over the ability to perform routine tasks. The International Labor Organization corroborates
these finding when suggesting that employability is closely linked to the capacity of an
individual to adapt to change and the ability to combine different types of knowledge and build
on them by managing self-learning throughout his/her working life. When analyzing the views of
business leaders by industry, CEOs in Engineering, Construction and Real Estate rated
communication skills and teamwork highest at 66% and 65% respectively. Teamwork and
communication skills were also regarded as vital by CEOs in the Retail and Consumer Goods,
Travel and Tourism, Healthcare, Mining and Utilities sector. While those from the Energy,
Financial Services and ICT sectors, regarded analytical and critical thinking skills as most
important.
Nationalization of Human resources in UAE
It is not possible for a nation to sustain its development agenda if it is primarily
dependent on foreign labour to fuel this national task. This is what makes emiratisation so critical
to UAE national policy. Emiratisation is aimed at "reducing unemployment" amongst Emiratis

HRM in UAE

and reducing dependence on foreign labour. This may raise questions about what the
implications of this might be. For example, does it mean expats will lose their jobs? Does it
mean that expats living and working in the UAE for years will have their contributions
overlooked? The answer to those questions is no.
The DNA of UAE society is comprised of tolerance, diversity and a pro-business attitude;
the culmination of which has allowed people from all over the world to work, create their own
businesses and thrive in the UAE. And that sentiment will continue. However, when the latest
statistics indicate that the unemployment rate among Emiratis is 10 per cent, that there is 14 per
cent unemployment amongst Emiratis in the UAE's capital (Abu Dhabi), and that Emiratis
represent less than one per cent of the private sector, then without being alarmist, or reactionary,
we must acknowledge that we are facing a serious challenge to our sustainability. Therefore, in
parallel to affirming our place as a tolerant society with a global market economy, we must
equally acknowledge that it is unacceptable for the size of our local population, relative to the
economic growth and wealth of the UAE, to have even one Emirati unemployed who is seeking
work. According to various studies, the reasons behind the statistics are attributed to Emirati
nationals preferring the often higher salaries and security of government-sector jobs. Conversely,
private-sector companies prefer to hire expats for less pay.
This is exacerbated by the demographics of the UAE because the growth rate of the
country far outweighs the growth rate of the Emirati population. Education is also a major issue;
the education system too often falls short of providing Emiratis with the calibre of skills needed
to compete against global market candidates. In response, the federal government has taken
action by investing more aggressively in education and creating quotas in the finance sector.

HRM in UAE

The government also recently set up the Federal Human Resources Authority and the Emirates
Council for Emiratisation. There are also various initiatives by the government that promote
emiratisation, such as Tawteen, Tanmia, Abu Dhabi Tawteen Council and Emirates National
Development Authority. The solution is holistic; it will come about through an emiratisation
policy that is practically and dynamically implemented across multiple industries and by creating
institutionalised synergies between these entities.
These entities must include:

Institutions controlling primary, secondary, and higher education (federal, local, and
private)

Credible vocational/professional/technical training centres

Federal and local bodies developing Emirtisation and human-development policies

Government-sector employers

Private-sector employers

Private-sector employers, which are government owned (semi-private)

The goals to strive for should be:

Ensuring Emiratis are the majority in leadership roles across strategic industries, not just
because they are Emirati, but because of the true virtue of their ability. This should be

HRM in UAE

applied and measured with strict performance indicators of human-capital development


and not quotas.

Inculcating civic duty among Emiratis living in each of the emirates, to achieve an equal
sense of national identity that translates into an innovative and solid work ethic.

The majority of Emiratis work in the government sector. Therefore, we need to redefine
the government work environment, to eliminate the traditional practice of short working
hours and easier performance measures. We need to instead ensure that a new
environment is fostered; one that is engaging, innovative and results-driven, capable of
competing even with multinational corporations. And in order to attract and develop the
best and brightest government employees who can feed the broader job market.

Providing dynamic and effective vocational training to close the skill gaps across the
board.

Implementing Federal policy that aggressively encompasses human development as the


core of the entire national agenda.

Institutionalising career counselling across schools to ensure proper guidance for students
that matches them to jobs they aspire to, can achieve, and will dedicate themselves to
performing admirably.

Developing a centralised database across the UAE to manage Emirati talent and to
maximise human capital regardless of gender.

HRM in UAE

Increasing R&D to determine future employment trends, develop job-creating


technologies and prepare Emiratis for the roles required to serve those evolving market
needs.

The 18th century writer Johann Wolfgang von Goethe wrote: "Treat people as if they were what
they ought to be, and you help them become what they are capable of becoming." Emiratisation
will require a significant investment, no less than that of building monumental islands, or towers,
but here we will be building human beings, capable of facing any challenge and inspiring
humanity.
What Education and Training System Reforms Have the UAE Initiated?
Human capital challenges are the motivators of reforms that have been implemented or are under
way in the UEA. This Gulf country also recognises the importance of advancing their education
and training systems. With their greater resources, the UEA has been able to engage in moreextensive reforms at all levels primary and secondary education, higher education, and training
Primary and Secondary Education Reforms
The UAE is engaged in broad-based reforms to their primary and secondary education
systems. UAEs education reforms are arguably the most comprehensive in the region; changes
initiated in 2002 address the management and delivery of educational services, the curriculum,
and the quality of teachers and other critical resources. Faced with the prospect of dwindling
natural resources and spurred by a 25-year map established in 1995 for the countrys economic
development, Oman initiated reforms to its publicly funded education system earlier than the
other two Gulf countries. Policymakers in two emirates within the UAE recently brought primary

HRM in UAE

and secondary education reform to the forefront with the formation of the Abu Dhabi and Dubai
Education Councils.
Higher Education and Training Systems Reforms
The higher education and training reforms are a mix of strategies designed to focus on
quality through curricular changes, international accreditation, and other reforms; to expand
access by introducing new higher education institutions and providing scholarships; and to
strengthen links to the labor market through job placement programs. All three Gulf countries are
making an effort to expand the number of technical and vocational colleges and to forge publicprivate partnerships to increase training opportunities for nationals, especially in skills required
for the private sector. Although changes in the training domain are under way, efforts to address
the needs in this area are not as systematic or sustained as those in the education domain.
Training and Development
It is important to recognize that bridging the skills gap requires more than just reforming
the education system represented in schools, high schools, and universities. It is also about
reforming vocational education and training and introducing the notion of career development.
92% of Arab CEOs are aware of the importance of training for development, while 87% of
UAEs view training and development as a tool to retain staff. The poor education system could
be compensated by virtue of good and effective training, but having deficiencies in both the
education system and training reflects negatively on the quality and skills of graduates
Public and Private Sector Cooperation
Arab business leaders indicate a clear mismatch between the skill set of new graduates
and the requirements of prospective employers in the market. Survey results reveal that only
35% of Arab CEOs have communicated their needs to the education system, while 72% of

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UAE CEOs are willing to be involved in educational reform should the chance arise.
CEOs point to three types of mismatches regarding fresh graduates:
First, there is a quantity mismatch in terms of insufficient supply, a phenomenon largely
confined to the Gulf States. Second, there exists a quality mismatch between soft16 and technical
skills of new graduates, and the skills required by the private sector. Third, there is
a structural mismatch between the subject matter of the degrees graduates are obtaining, and the
requirements of the current and future job market. In order to combat these mismatches, top
CEOs recommend various areas for public and private sector cooperation in the education
system: National R&D Strategy Formulation UAE CEOs identify insufficient R&D programs
between governments, industry and higher education institutions, limiting the research potential
and competitiveness of regional universities. To address this deficiency, CEOs recommend
devising national R&D strategies that promote joint research initiatives between industry
government and universities, in sectors and areas of strategic importance and relevance to the
economy, which may include actions such as:
Identifying key areas of research that are strategic for the economy
Develop a government fund to invest in joint R&D projects
Develop a legal infrastructure for joint intellectual property
Develop incentives and tax breaks for industries to fund R&D projects with universities
Develop incentives for foreign companies to invest in joint R&D ventures with local companies
and universities
Labour Nationalization
Survey results reveal that a vast majority of UAE CEOs believe imposing compulsory
nationalization quotas will not enhance the performance of their company, while only

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41% believe such quotas will benefit the economy in the long run. A major concern indicated
regarding these quotas is the negative effect on company productivity and competitiveness due to
forcing corporations to recruit based on numbers rather than skills. In cases where quotas are
based on professions, they raise the challenge for companies to fill such positions, when the
number of nationals in such fields is insufficient. UAE CEOs recommend that nationalization
policies be part of the broader labor strategy aligned with current and future growth sectors of the
economy, and that the subsequent demand of professions be matched with the supply of
graduates from the education system. CEOs across the board stress that nationalization initiatives
must have a strong training component attached to them, in order to be effective. In this regard,
CEOs recommend the creative design of government sponsored training funds, educational
programs, and incentives or tax breaks to encourage companies to train and invest in nationals.
Conclusions
As UAE respond to human capital challenges, tremendous amounts of energy and
resources are being devoted to initiatives to raise the skills of the population and ensure that the
resulting human capital is fully utilized throughout the economy. However, the use of national
policy has limits that UAE should consider. Specifically, policymaking must balance the
complex demands of a countrys social culture and its economic realities. For example,
workforce flows, strife within or directly outside a countrys borders, a populations adaptability
to major changes in education or labor market structures these are all part of the context within
which policymakers must develop policies. Ultimately, for reforms to be the most effective,
policy evaluation must become an essential component of the process of change so that
initiatives can be refined and improved based on measured effects. With evaluation also comes
the potential to minimize unintended consequences and identify barriers to successful

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implementation. Moreover, the extensive range of reforms under way throughout the country
offers a tremendous opportunity to learn from the cross-country experimentation and to build a
knowledge base of lessons learned and strategies that can be transferred from one country to
another. The UAE will then have the information essential for making the best investments in the
human capital of their people in the decades to come

References

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Mohammed, Bin R (2009). Arab Human Capital Challenge: The Voices of


CEOs:http://www.pwc.com/m1/en/publications/abir/ahccenglishfeb172009.pdf
Najla Al Awadhi (February 1, 2010).AE must develop its human capital
:http://gulfnews.com/opinions/columnists/uae-must-develop-its-human-capital-1.576499
Rand (2008).Addressing Human Capital Challenges Assessing the Experiences of Four
Countries in the Arab Region:
http://www.rand.org/content/dam/rand/pubs/research_briefs/2008/RAND_RB9383.pdf