Breaking the pattern: Efforts to increase Emirati participation in the private sector continue

A key aim of Abu Dhabi’s labour policies is to increase participation by nationals in the workforce. The government takes a multi-pronged approach, combining employment quotas enforced at the federal level with emirate-specific policies – including investments in education and training, and job placement programmes – designed to develop an Emirati labour force that will meet the requirements of local employers.

LABOUR MARKET: The emirate’s workforce has grown rapidly over the past 25 years. In 1985 the size of the labour force – which includes both employed and unemployed people of age 15 and above – stood at 297,406, according to the Statistics Centre – Abu Dhabi (SCAD). By 2011 – the latest year for which data is available – this had grown to 1.403m, of which 8.3% were nationals. This represents a rise in the national participation rate, which stood at 7.5% in 1985. However, over the same period, the unemployment rate for Emiratis also rose, from 3.5% to 11.8%. Part of the reason for the high unemployment rate in the private sector is that the emirate has adopted priority sectors as key economic drivers which require a highly specialised workforce, such as aerospace, energy, health care, biotechnology, telecoms and others.

In its Economic Vision 2030, published in 2008, the government wrote that Abu Dhabi’s unemployment rate was “relatively high”, adding that it “aims to reduce this figure to ensure nationals are benefitting from the emirate’s development”. In October 2011 Rashid Ali Al Za’abi, the executive director of Abu Dhabi’s Department of Economic Development, told the Gulf Newsthat his organisation was working to reduce the Emirati unemployment rate in Abu Dhabi to under 5% by 2030.

PUBLIC SECTOR: The public sector has traditionally been the preferred source of employment for nationals, with 60% of Abu Dhabi’s citizens employed in the public administration or defence sectors as of 2011. However, with near saturation of the public sector and a growing national population, it has become difficult for the government to absorb all of these potential national workers. Moreover, there is an issue of productivity and efficiency – the economy may well benefit more from additional private sector workers than from additional employees at public sector entities.

QUOTAS: The key question, then, is how to increase private sector labour market participation among Emiratis. One approach that has been adopted by many GCC countries – including the UAE – has been to implement partial quota systems. This type of scheme typically specifies that a certain minimum portion of employees of private sector industries must be nationals. In the UAE quotas were first used in the banking sector, with a 1996 law specifying that at least 4% of bank employees had to be Emirati, with this minimum set to be increased every year. The federal government subsequently introduced similar rules for the insurance and finance sectors in 2003 and 2008, respectively. The UAE then broadened the scope of its quota system in late 2010, with the Ministry of Labour announcing in December that Emiratis should account for no less than 15% of total staff at every UAE-based company.

However, quota systems face challenges. First, they can be difficult to enforce and some firms may try to avoid them by creating positions that exist only on paper. Second, private sector jobs in the UAE are often less well-paid than similar positions in the public sector. According to a World Bank study, recent Emirati graduates in the public sector earn on average $4248 per month, while this figure stands at $2846 for those who work in the private sector. This difference can make it difficult for companies to attract Emiratis.

Moreover, private firms can often fill an open position at a lower cost by hiring an expatriate worker. Therefore, on both sides of the equation – supply and demand – persistent wage differentials discourage private sector workforce participation by Emiratis.

Some have suggested subsidising private sector salaries to bring them in line with government pay. In October 2011, Saqr Ghobash, the UAE minister of labour, told a meeting of GCC labour ministers that government programmes to increase Emiratisation in the private sector had little chance of success without wage subsidies. While the cost of such a programme could be high, it would almost certainly be less of a financial burden than creating more government positions.

Moreover, a subsidy scheme could be structured such that the payments for a given worker were phased out over time. Subsidies can be paid towards training or salaries or both. That is, during the early stages of employment, when a firm may not benefit as much from a worker, the government subsidy would be relatively high, but this amount would be reduced over time as the employee acquired the skills and experience necessary to contribute more to the firm. This would lessen the risk of hiring an Emirati, making them more attractive candidates for private sector firms, and therefore making it easier for businesses to meet their quotas.

ADTC: While compliance with the UAE quota system is mandatory under federal law, Abu Dhabi has also taken steps to help businesses meet their quotas, as well as more generally encourage private sector companies to voluntarily hire nationals. These efforts have been largely spearhead by the Abu Dhabi Tawteen Council (ADTC), a government entity established in 2005 that reports directly to the Abu Dhabi Executive Council, the primary policy-making body in the emirate.

The ADTC works to match businesses with Emirati job-seekers, maintaining a database of CVs and available positions at local firms. Information on vacancies is collected from employers by the ADTC’s account managers, while a council support team handles jobseeker registration and follows up with individuals after placement. The ADTC’s placement team also reviews CVs in the database and tries to identify suitable matches between open positions and those looking for work. The ADTC also develops customised training programmes to help businesses meet their Emiratisation goals. These up-skill jobseekers, preparing them for employment in a number of different sectors, such as manufacturing, health care, education, energy and finance. In many cases, ADTC contributes toward the cost of the training or provides a stipend to participants.

Since 2010 the ADTC has created more than 15 customised training programmes in partnership with semi-government entities and private training institutions. One example is the Fatima Health Sciences Programme in Al Ain, which has the ADTC working with the Abu Dhabi Health Services Company (SEHA) and Fatima College for Health Sciences to target Emiratisation in the health care sector. Participants can earn diplomas in nursing, pharmacy, medical laboratory technology and medical administration. Upon completion of their training, all graduates are guaranteed jobs with SEHA hospitals.

EDUCATION: The types of training offered by the ADTC alleviate one of the greatest challenges when it comes to increasing employment of nationals, namely a mismatch between skills and labour market demands. In addition to its efforts via the ADTC, the government has taken steps to reduce any skills gap by implementing a series of education reforms and training initiatives that help ensure that Emirati employees meet the requirements of the private sector. In higher education this has been accomplished in part by inviting a number of foreign universities and academic institutions to establish campuses in the emirate. At the same time, the government has expanded funding for scholarship programmes, which can be used by Emiratis to pursue university degrees abroad. These types of schemes can help prepare nationals for higher-level positions in more technical fields such as engineering and finance.

ADVETI: In parallel to its efforts to improve higher-education options for Emiratis, the government has also worked to develop its vocational and technical training base. For example, in 2007 it established Abu Dhabi Vocational Education and Training Institute (ADVETI) with a mandate to develop and deliver vocational education and training designed for Emiratis. ADVETI manages several post-secondary vocational institutions, including the Al Jazirah Institute of Science and Technology in Abu Dhabi and the Al Jaheli Institute of Science and Technology in Al Ain. These schools have a variety of certificate and diploma programmes across a number of fields, including business, information technology, tourism, design, environmental studies, industrial technology, logistics and engineering.

ADVETI has seven entities and, at the moment, focuses on education groups including: business, information technology, travel and tourism, design, environment studies, industrial technology, and logistics and engineering. In June 2012 the Executive Council announced that five additional secondary schools would be set up in the near future. To help ensure that its graduates are ready to meet the needs of the local labour market on completion of their studies, ADVETI has designed its programmes in consultation with local businesses.

The creation of a skilled national labour force is an important part of helping the government to realise its economic development plans. By supporting training programmes and providing job placement support, Abu Dhabi is taking steps towards ensuring economic diversification and the full employment of Emiratis.