Crisis in Dubai

Dubai is one of the seven ‘Emirates’ that make up the United Arab Emirates (UAE) located in the Persian Gulf. Dubai’s economy was originally built on the oil industry, but revenues from petroleum and natural gas accounted for less than 10% of the country’s US$16.4 billion economy in 2000 as the Emirate has diversified into manufacturing, property and financial services, information technology, and tourism (USA Today, n.d.). However, Dubai is experiencing major challenges during its process of nation building and economic development. One of these challenges facing Dubai is the training and development of its local national human resource to enable nations to take an active role in supporting and contributing to the Emirate’s rapid development (Randeree 2009).
According to Dyer and Yousef (2007), the entire region is facing an unemployment crisis. This is because countries in the Middle East region rely heavily on the use of expatriates to underpin their booming economies. Foreign labour in the region is 70% of the work force, with the UAE having the largest percentage of foreign labour at almost 90% (Mashood et al, 2009). According to a report produced by McKinsey and the Ministry of State for Federal National Council Affairs (MFNCA) in 2007, the private sector in UAE labour market is staffed by 99% expatriates, which causes a level of youth unemployment of UAE nationals to be above 30%.
Why is Dubai facing an unemployment crisis? The very low percentage of Emirati nationals in the private sector can be explored from the employee’s perspective and the employer’s perspective. There are several reasons Emirati nationals are not seeking work in the private sector. First, some argue that nationals view themselves as a “natural middle class,” and therefore the work that they are willing to take has to match these expectations (Morris 2005: 7). Workers mainly expect comfortable white-collar jobs in managerial roles, regardless of whether they have the qualifications and expectations for these positions (World Economic Forum 2008). And therefore industries such as retail and service do not really fit in with the aspirations of Emiratis (DBM Arabian Gulf 2006). Thus one of the main issues facing the government is how to persuade nationals to work in manual and technical jobs as well as in the private sector (Wilkins 2001).
A second aspect of this is that Emirati nationals generally find many of the private sector’s working conditions unacceptable, such as the long and irregular hours, restrictions on time for cultural and religious festivals, short periods of leave, and a disciplined approach to employee performance (Abdelkarim & Ibrahim, 2001). On the other hand, the public sector is very attractive because of the salaries and working conditions. Overall, compared to the private sector, the public sector offers higher salaries, shorter and more flexible working hours, better work conditions, better career development prospect and training and promotion, and better non-monetary benefits (Al-Ali 2008, Godwin 2006, Harry 2007, Nelson 2004).
Private sector employers are not too keen to employ nationals either for a variety of reasons. First, private sector firms have long-standing negative perceptions about of nationals’ levels of productivity, skills, and motivation and being more expensive than non-nationals (Nelson 2004). Al-Ali (2008) also reports that low levels of English fluency and distrust are barriers to workforce participation. Second, employing expatriates is cheaper than hiring nationals because nationals expect to be paid more than immigrant workers and therefore the cost of employing expatriates is often much cheaper than the cost of employing nationals (Gulf, 2007). Additionally, the minimum wage set by the government is only applicable to Emiratis and employers also have to make mandatory pension contributions to the government for every Emirati employee that they have and this adds to the cost of employing Emiratis (Ballinger 2007). Finally, Harry (2007: 138) argues that Emiratis have many more rights than to non-nationals and this means that employers tend to avoid hiring them. Al-Ali (2008: 366) sums it up by saying:

Highly flexible and outcome-driven private sector organisations, rapidly expanding, that for decades imported their resources immediately and with impunity, do not readily consider themselves vehicles to nurture citizens of a fledgling state. Public sector organisations which comply to the desires of job-seeking Emiratis with working conditions and nurturing environments are over-staffed and ineffectual in dictating terms to the private sector.

This has to be tackled because Dubai’s great dependence on foreigners has grave consequences for its economy and society in general (Rees et al. 2007). However, this is not seen as impossible, as Al-Ali (1996: 5) argues that HRM can be moulded to fit the Islamic-Arab tradition as a frame of reference, but this means that the government has to developing an HRM perspective that is pertinent and useful in dealing with particular and peculiar cultural aspirations and problems.
To tackle this crisis, the UAE, as well as the other Gulf Cooperation Council countries (Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait), introduced policies aimed at influencing the demand and supply of national and non-national workers. Godwin (2006: 8) defines Emiratisation as “an affirmative action quota driven employment policy that ensures UAE nationals are given employment opportunities in the private sector.” This nationalisation of the labour market-programme started in 2000 is a policy of ‘positive discrimination’ aimed at increasing the presence of nationals in the workforce (Al-Ali 2008). The Emiratisation effort is led by the National Human Resources Development and Employment Authority. Also called TANMIA, the UAE Federal Government Authority’s main job is to help in the effective localisation of the workforce through: the creation of opportunities for Emirati nationals, decreasing the level of unemployment, increasing the skills and productivity of the national workforce, and advising the government on relevant policies (Al-Ali, 2006). Overall, Emiratisation aims to promote citizens’ employment, but many Emirati workers still target their career efforts on government and public entities and the government remains a major employer (Mashood et al. 2009).
On advice from international organisations, Emiratisation was first implemented through structural reform, rather than specific measures (Al-Ali 2008). Nonetheless, initiatives to accelerate education reform, implement education-to-employment programmes, and finance private sector organisations to employ and then train locals have not proved successful (Mashood et al. 2009, Godwin 2006) and it is thus not surprising that no industry has yet achieved quota (Morris 2005). There are many reasons for this, including a widely held view that the authorities have insufficient coercive powers to implement the policy (Al-Ali 2008). Overall, Randeree (2009) concludes that the government policy of Emiratisation has been mostly unsuccessful since its inception, thus:

…a reexamination of policy in the UAE based on the reality of the situation is needed, to culminate in the production of a strategy that reflects the real needs for the nation, rather than achieving Emiratisation through the imposition of targets and quotas based on false expectations (Randeree 2009: 78).

The most significant obstacles to Emiratisation in the workforce as perceived by the 17 senior managers interviewed by Al-Ali (2006) were related to the unavailability of career development prospects, relatively lower standards of education among the nationals, low wage, little or no training and promotion, lack of English language proficiency, and lack of trust in the competence of Emirati nationals. He also identified other obstacles, such as absence of a work culture, attitude to work, and gender issues, which are also important factors in increasing the participation of nationals in the workforce (Al-Ali 2008). Overall, Randeree (2009) notes that the major issue for the government is to engage the country’s human resource in education and employment, developing the economy at the same time that Arab and Islamic tradition are respected.