'Need to revise compulsory quotas for Emirati workforce'

Compulsory quotas for the national labour force should be revisited as the policy is creating negative effect on companies' productivity and competitiveness, according to a survey of Arab CEOs. In the past, labour nationalisation initiatives have been supply-driven with quotas on hiring nationals being historically enforced irrespective of industry demand. This trend, however, failed to address a core private concern that the national workforce was not equipped with adequate skills leading to the continued preference of hiring expatriates, said the survey, Arab Human Capital Challenge – Voice of the CEO, done by Mohammed bin Rashid Al Maktoum Foundation (MBRAMF) and PricewaterhouseCoopers. Only 29 per cent of the 587 CEOs surveyed believe that such compulsory quotas will enhance their company's current performance. A vast majority of Gulf's CEOs thus believes that imposing the quota will not enhance the performance of their company while only 41 per cent believed that such quotas will benefit the company in the long run. A major concern aired is the negative effect on company's productivity and competitiveness due to "forcing" corporations to recruit based on numbers rather than skills. "The notion of labour quotas and the nationalisation policy is effecting negatively for the simple reason that the supply of expertise does not match what the industry requires," said Hussam Abu Issa, Vice- Chairman and Chief Operations Officer, Salam International Investments, Qatar. The rising unemployment rates among nationals and the need to increase the human capital contribution of the capital workforce has encouraged many Arab governments to embark on labour nationalisation policies. (This issue was not a concern for CEOs in the Levant and North Africa given their minimal reliance on foreign labour.) According to Dr Sulaiman Al Hattam, CEO of Arab Strategy Forum, unemployment remains a major problem in the region. Citing a recent World Bank report, he said 60 million to 80 million jobs need to be created in the Arab World by 2020 to close the gaps of unemployment. "Even at the most optimistic scenario, the scenario is still grimmer than the expectations of World Bank," said Dr Ghaith Fariz, Director of Arab Knowledge Report – a UNDP and MBRAMF joint initiative. Sultan Ali Lootah, Vice-President, Employment and Entrepreneurship, MBRAMF, added that majority of the population is below 16 years and if no sufficient jobs are created unemployment may balloon to 30 per cent in 2020 from the current 15 per cent. The region's economies have been ineffective in creating jobs as evidenced by the low employment-to-population ratios – 32.2 per cent in the Middle East and 27.4 per cent in North Africa, according to International Labour Organisation. The problem is aggravated by the fact that employment trends in the region are not women and youth-friendly, which comprise more than half of the population. "About 50 per cent of the population is female so this certainly needs to be addressed," said Anne Simon, Director and Head of PwC Middle East Intelligence, Research and Survey Unit. "More than 90 per cent 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." Employing women has always been a challenge due to a number of cultural factors. Salah Al Afaliq, Managing Director and CEO of National Trigeneration CHP Company in Saudi Arabia, said: "We would like to employ female workers but are unable to do so because of constraints imposed on employers in relation to logistical issues, special entrance, seating arrangements, separation… making it harder to in fact hire females." Nationalisation policies were thus developed to increase participation of nationals in the labour force, increase their proportion in national workforce across different sectors, enhance their productivity and replace expatriate workers with nationals. Survey results however confirm that such policies have not lived up to their initial expectations. "In fact, Gulf business leaders have been reluctant to replace expatriate workers with nationals," it said. "Gulf CEOs tend to regard the quality, productivity and efficiency of expatriate workers to be of superior value to their national resources." These same CEOs would rather avoid replacing an already efficient expatriate human resource base with potentially less productive national resources. In cases where quotas are based on professions, the CEOs raised the challenge for companies to fill those positions when the number of nationals in such fields is insufficient. The report stresses that the Arab World faces a dual dilemma – on one hand, there is heightened pressure from a growing labour force that largely comprises of people under the age of 29 and on the other hand, the skills available do not coincide with market requirements. In other words, there is a mismatch between the supply and demand of local