Mobilising the Emirati workforce takes grass roots education policies, not just cash and quotas, writes Ryan Harrison, a lesson the UAE is slowly learning.

Hard cash still forms a hefty chunk of the UAE’s incentive package to drive nationals into the private sector. The government’s latest ploy, subsidies, will top up the salaries of locals joining a private firm to match what they would have received in the public sector. Previous tactics have included imposing legal quotas on businesses – historically the most popular nationalisation method in the region. But emiratisation experts are adamant that just throwing bodies at jobs based on nationality will not necessarily make a difference to businesses.

Cash is always an instant sweetener, but to attract and retain a healthy workforce needs a nutritional employment pack beginning with education and training, says Younes Proctor, an emiratisation specialist at Abu Dhabi-based Sorouh Real Estate.

“Quotas backfire because you’re basing your success on a percentage. People can play with the numbers very easily,” he says.

“And subsidies are a partial solution in the sense that certainly it’s going to attract people but when they get to the job they still have to do it themselves – there’s no money that will be a substitute for getting the job done.”

He adds: “There is no one silver bullet that will move the process on very smoothly. So you have to come up with a number of solutions that go towards your vision. One of the ways is to align educational qualifications with the needs of business – so, we need people with finance, IT skills, real estate development and so on.

More needs to be done at the educational level, argues Proctor, to offer these vocational types of degrees.

Critics have argued in the past that when faced with legal allocations of Emiratis, private companies often hire locals as merely “quota-fillers”, following the letter of the law but not its spirit. The danger being that this leads to staff that are not qualified or not committed.

The UAE government has tried in the past to push private companies to hire Emiratis. For instance, firms with more than 100 employees have to allocate a quota of positions for locals.

It even took the step last year of declaring that Emiratis cannot be fired from private companies unless they are accused of “serious misconduct, including, among other reasons, absenteeism, theft or drunkenness.”

But the Abu Dhabi government said last month it was looking beyond quotas. Abdullah al Darmaki, the head of Abu Dhabi’s emiratisation department, told UAE daily The National that the quotas system could eventually be scrapped, and instead the government will offer subsidies to companies to encourage them to hire and keep Emirati staff.

Abu Dhabi said subsidies will start immediately and that companies would use the money to train their Emirati employees and help them gain a foothold in the private sector. The funds would also allow the companies to match the salaries offered by the public sector.

Charles Wilson, a nationalisation expert and senior HR adviser to the Chartered Institute of Personnel and Development, says: “I don’t agree with subsidies for getting nationals into the private sector as it’s not solving the problem. It’s up to the private sector to compete against government because government is more attractive.

“For the government to subsidise that gap is pushing the problem under the carpet. The problem is there and needs addressing, but throwing money at it is not the solution,” he says.

Wilson says the UAE is in desperate need of a broader link between educational qualifications with the needs of business or, as he calls it, “crossing the bridge”.

“Not enough work is being done to cross the bridge between education and the workplace. And I don’t think we can rely on the workplace to do that, it’s only partially their job.

“I think it’s up to the private sector to get across that bridge, to go into the world of education and to make sure that they identify their needs to the world of education and encourage the nationals across.

“Once they’re across, we need properly constructed training schemes because so often I see a national brought into a company and then left. He needs coaching, she needs mentoring, looking after, caring for, and a constructive training scheme which leads ultimately, if possible, to an accredited qualification that the company wants,” Wilson says.

It’s worth noting that although many students from the region return home after being sponsored by their governments to study in international universities, they return and concentrate on positions in the public sector, rather than the private sector.

Wilson adds that it’s a myth that matching the public sector’s high salaries is key to getting nationals into the private sector. “The important factor is, do you care, have you got a good development system, am I going to be looked after by your organisation and can I see a way ahead.

“There are some factors as regards to salaries and conditions but they have lessoned in my opinion in the past few years. There was a time when it could be truthfully be said that a national was looking for the big office and all that goes with it. That’s no longer true.”

The director of Booz & Company Ideation Centre, Hatem Samman, on making education a national obsession in the GCC.

If there is one thing that will determine nations’ economic competitiveness in the 21st century, it is their quality of education. In today’s global race for talent and innovation, it is not only important to provide education for all, but also to ensure that the quality of education is globally competitive. For emerging countries such as the GCC, which must leapfrog to higher educational standards in the decades ahead, quality of education must become a national obsession. By creating incentives in the education market and opening up the landscape to competing ideas in education, local governments can improve the GCC’s return on investment and engender fervor and excitement about the education system.

Encouraging innovation
For starters, inducing private-sector competition tends to make up for demand gaps in public education by increasing the quantity and quality of education providers. Indeed, competition will improve education quality, especially when aided with government regulation that promotes the entry of reputable institutions with a history of education excellence. The success of the few will encourage many more quality players to enter the education market. In an increasingly global world with more liberalised markets, international investors are bound to play a crucial role in shaping the GCC’s education system.

In India, Educomp Solutions Limited, one of the largest providers of technology education products and services for kindergarten up to 12th grade, helps millions of students domestically and internationally in countries including the US, Canada, South Africa, Australia, Malaysia and Vietnam.

Closer to home, the Lebanese Choueifat School – renowned for quality education – has helped improve the education of GCC pre-university students through its franchises in the region. More such schools are needed and more should be encouraged by providing more autonomy for schools, public-private partnerships and by facilitating investments in the GCC’s education system through the easing of rules and regulations for the provision of education in GCC countries.

The competition will help reduce government expenditure on education which, in the GCC, ranks among the world’s highest.

Kuwait’s public expenditure from primary to tertiary education reached close to US$47,000 per student in 2006, compared to US$27,000 for Finland in the same year and about US$8,000 for Korea in 2005. Oman’s and the UAE’s total public expenditure on education reached 31 per cent and 28 per cent of government expenditure in 2005 and 2006 respectively compared with 12.6 per cent for Finland in 2006 and 15.3 per cent in 2008 for Singapore – two of the leading countries in education.

Fuelling innovation
Furthermore, competition tends to breed innovation in educational methods in order for competing parties to survive and grow. This process will continue ad infinitum, spurring more innovative ways to improve the return on education. For example, competition has led education organisations in India to develop breakthrough innovations in education software and teaching strategies via information and communication technology. These have helped to reduce the overall cost of education and improve teacher salaries through economies of scale and provide education access to previously unreachable rural areas – all the while making good profit.

On the government side, market forces will generate results that will encourage governments to hand over poorly performing schools to the private sector in order to improve their returns on educational investments. It will also encourage governments to enter into public-private partnerships to increase the number of quality schools and reduce government expenditure.

Tackling education quality is never an easy task for any nation. But there are encouraging examples from around the world that give hope to the prospects of quality education in the GCC region. Some countries, such as India and Brazil, sought to introduce more incentives for the private sector; in other countries, such as Singapore, governments have taken the lead. What all winning countries have in common, however, is a national obsession with education.

Hatem Samman the director and lead economist of the Booz & Company Ideation Center, a Middle East business think tank with the mission to spearhead innovative research and idea generation on prominent socio-economic topics in the region.

Gulf countries will benefit from improved teaching standards, a senior Booz & Company director says.

Education quality will be the most important factor in dictating national economic competitiveness in the coming decades, according to a senior director at Booz & Company.

“Emerging regions, like the GCC, must leapfrog to higher educational standards in the decades ahead, education quality must become a national obsession,” said Hatem Samman, director of the Booz & Company Ideation Centre, a Middle East think tank.

“By creating incentives in the education market and opening up the educational landscape to competing ideas, local governments can improve the GCC’s return on educational investment and create fervor and excitement about the education system.”

The director added that inducing private sector competition tends to make up for demand gaps in public education by increasing the quantity and quality of education providers.

“Competition will improve education quality, especially when aided with government regulation that promotes the entry of reputable institutions with a history of excellence,” he said.

“The success of the few will encourage many more quality players to enter the education market. In an increasingly global world with more liberalised markets, international investors are bound to play a crucial role in shaping the GCC’s education system.”

The talent imperative: the growing need to nurture, attract, and retain human capital in the GCC, according to Booz & Company’s lead economist.

Talent is a top item on national agendas worldwide, as globalisation disperses top performers around the world and the recent economic downturn demands that countries build a talent base for the recovery. In the GCC, in particular, a number of circumstances make it necessary for countries to focus on their talent strategies.

First, GCC countries need to attract talent to address immediate shortages in certain industries to sustain their economic development. For example, initiatives in education, energy, and communications, among others, are likely to create unprecedented demand for talent.

Second, Gulf countries’ membership in the World Trade Organisation and its associated obligations will require employees, managers, and experts. For example, in the telecom sector, the GCC will need talent to handle the increasing pressure to accelerate privatisation, as well as the liberalisation of the sector, which has resulted in competition between operators within national markets, as well as operators’ expansion into regional and international markets.

Finally, GCC countries need to nurture the next generation of local talent to ensure there will be enough skilled individuals in strategic sectors. This will entail efforts in education reform and workforce-development programmes.

Just as circumstances are converging to necessitate a stronger focus on talent, a number of developments in the GCC are making this the ideal time to engage in these efforts. Savings from the recent oil boom, as well as expected demand for oil from emerging economies, will bring a substantial amount of capital into the GCC, which it can put towards education and training of local talent. At the same time, the global recession is providing rare opportunities to attract international talent, including many people of Arab origin who have been laid off in the downturn. Indeed, the high demand for talent in the GCC and its inadvertent large global supply never seemed more opportune.

In addition, changing global demographics have resulted in a fundamental shift in the cost of talent. Only 22 per cent of college graduates in the global workforce now come from western Europe and North America; the size of the talent pool from Asia means that top talent is more affordable to countries such as the GCC.

These developments provide a rare opportunity for GCC countries. However, taking advantage of these opportunities will require immediate action on a number of fronts.

Creating financial opportunities in which talented individuals have a long-term stake is an important factor in attracting foreign talent and investments (eg, from multinational corporations) alike. The arrival of both entities often results in the nurture of local talent through knowledge transfer and the creation of new skills.

Talented individuals will also require good living and business environments to commit themselves to the region.

GCC countries will need to create a welcoming culture for expats; remove bureaucratic obstacles to immigration; create a flexible work environment that accommodates, for example, those working from a distance; provide clear and simple rules for business transactions; encourage openness to new ideas and acceptance of foreign cultures; and find a way to publicise all of these efforts.

Finally, social initiatives can help nurture and develop talent, especially improvements in the quality of education. Indeed, education quality and the cost to expatriates of properly educating their children are often among the top factors that determine the attractiveness of host countries.

Ultimately, both short- and long-term socioeconomic strategies and policies are needed to nurture, attract, and retain talent in the GCC region. In the short term, the region must continue to lure foreign talent in order to satisfy the increasing demand for highly skilled professionals. This requires immediate economic and social initiatives and reforms to attract the best and brightest
expatriates to work in the region.

In the medium to long term, countries should focus on enhancing factors that develop local talent, such as education and workforce development. These strategies will help create the critical mass of talented citizenry necessary to lead key sectors and ensure the future success of GCC economies.

Hatem Samman is the director and lead economist of the Booz & Company Ideation Center, a Middle East business think tank with the mission to spearhead winnovative research and idea generation on prominent socio-economic topics in the region.