There is a major need to develop the regional workforce for continued growth, says a report quoting Arab business leaders.
The report titled Arab Human Capital Challenge, which gives the opinions of CEOs in the Arab World, clearly demonstrates that without concrete changes today, future regional growth and development could be severely hindered.
In the report, Arab CEOs also identified the issues of quantity and quality in discussions pertaining to the region's human capital challenges. For example, most Arab business leaders feel that there is an insufficient supply or quantity of qualified regional labour. Accordingly, only 38 per cent of CEOs surveyed felt that there was a sufficient supply of qualified workers belonging to the region. This perception varies, however, amongst the different sub-regions, with 70 per cent of CEOs from the Levant perceiving the supply of qualified national labour as being sufficient.
The report, which was prepared by the Mohammed Bin Rashid Al Maktoum Foundation in association with PricewaterhouseCoopers, states: "The Arab World faces a dilemma with regard to its human capital development. On the one hand, there is a heightened pressure from a growing labour force that largely comprises people under the age of 29. On the other hand, it appears that the skills available do not coincide with market requirements. In other words, there is a mismatch between the supply of and demand for local human resources. Arab CEOs blame this on the weak links between education, training, skills development and labour market.
Only 14 per cent of CEOs from the UAE and 12 per cent from Bahrain expressed satisfaction in the supply of skilled regional workforce. While Kuwaiti CEOs ranked highest at a mere 29 per cent in terms of their satisfaction in the supply of skilled nationals, results for the Gulf as a whole demonstrated low confidence levels.
Talking about the issue, Debabrat Mishra, Principal and Consulting Business Leader, Middle East, Hewitt Associates, told Emirates Business: "We do not think it is justified to make a broad statement about a skills gap in the region. Our point of view in this regard is simple – the region has faced tremendous growth over the past decade and the infrastructure to generate "ready talent" for organisations to staff their technical or managerial functions has clearly not ramped up fast enough.
"We have found most progressive organisations realise this and respond to it by structuring internal programmes that aim at quickly bridging this gap between recruiting raw talent and transforming them into capable managers/executives. We have worked with organisations in assessing and developing their young graduate talent and have found in them a very receptive audience, who want to learn and develop themselves and are willing to go the extra mile to achieve this."
Balakumar, Director, Dulsco HR Solutions, said: "There is a gap between skills needed and those available in the local workforce in the region mainly because the local population is not large and the base of qualified people, compared to expatriate population, is small.
"It has also been seen that the local employees belonging to the new generation have high expectations from their jobs, which in turn translates into high financial expectations. This, at times, can act as a barrier. They also prefer to work with government organisations. On the other hand, some employers admit that they would prefer to pay less to an expatriate employee than hire a local employee at a higher salary. This trend is accentuated, given the economic scenario."
Patrick Luby, Managing Director, Manpower Middle East, said : "Over the past five years, the construction/real estate industries have dominated the region in terms of skills requirements. Now due to the downturn in some of the markets, this has changed dramatically. We are increasingly seeing a move towards service-based and electronic commerce-related industries, which in turn means that there has also been a shift in demand for the type of skills required in the local market. So the problem is often less about lack of available skills and more about finding the right person for the role."
The report goes on to say that the rising unemployment rates amongst nationals and the need to increase the human capital contribution of the national workforce have encouraged many Arab Governments to embark on labour nationalisation policies. These policies were designed to increase the labour force participation of nationals, raise the proportion of national workers across different sectors, enhance their productivity and ultimately replace expatriate workers with national workers. Survey results confirm that labour nationalisation policy outcomes have not lived up to their initial expectations.
Only 54 per cent of Arab CEOs expressed satisfaction with their education systems to produce students with adequate skills. Equally, only 48 per cent believe that these skilled students are provided in sufficient quantities. Gulf leaders are amongst the least satisfied with the supply of skilled students, with only 37 per cent citing their satisfaction.
One particular obstacle faced by the fast-growing economies of the Gulf is that the educational sector is unable to keep up with the pace of development and demand for skills. In other words, there is a shortage of educational institutions – schools, technical and vocational centres – that are able to provide a sufficient supply of human capital to meet market demand.
Equally, on a more positive note, a high proportion of CEOs believes that there is an adequate transfer of knowhow from their expatriate staff to national staff. Assuming that CEOs hire the local workforce on the basis of selection not enforcement, labour nationalisation policies still require a stronger skills development and training component which might enhance the applicability of national skills to industry needs. This in turn would encourage companies to hire nationals whose competencies are considered useful.
Going into what the solution might be Mishra said: "We believe that development of talent in this region has to be driven by a public- private partnership model wherein the state focuses on developing capabilities to improve the quality of curriculum and delivery at the primary/secondary education levels, while industry should support in developing a structured curriculum for vocational courses. Industry should also step in early to support the development of behavioural skills required for becoming effective managers."
Balakumar said: "I think the solution to the problem lies in a multi-pronged strategy. First, the enhancement of skills that the market demands by making appropriate career choices; second helping them to change their attitude so that there is a match between market demand and their expectation; third the employers need to be made aware so that their myth about the regional workers not having adequate skill sets and being expensive can be altered; and lastly the private sector needs to put a more conscious effort in engaging local population as part of their workforce."
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.