Comparative Analysis of Human Resource Management in UAE and Oman - Term Paper Example

BUS 640 – Human Resource Management May - June (2013) HRM Project: Comparative Analysis of Human Resource Management in UAE and Oman Student Name Student ID Jassem Al Marzouqi M80000965 Table of Contents 0 Table of Contents 0 Introduction 2 Impact of National Culture on HRM 2 Economic Issues Impact on HRM 3 Relying on Non-national Expatriates and Nationalization Policies 4 Public and Private Sector Challenges 5 Women Participation in the Workforce 6 HRM Administrative Systems and Developments 7 References: 10 Introduction Middle Eastern countries are often assumed to be all the same particularly by those who are unfamiliar with the region. While these countries possess some similarities, they also exhibit many differences. Each country has its own unique opportunities and challenges. The similarities and differences affect human resource (HR) perspectives in the various Middle East countries. Multi-national firms conducting business in the Middle East region may experience a lot of challenges in HRM if they do not understand the specifics of each country. Businesses that establish a single code of conduct to apply for the entire Arab World often find themselves in conflict when they have to deal with different countries in the Middle East. It is necessary to collect information on the local law, customs, and traditions, of specific countries that one is dealing with. This paper provides a critical analysis of human resource management (HRM) issues by comparing and contrasting challenges in Oman and UAE. Impact of National Culture on HRM Both Oman and UAE are very rooted in religious and ethnic values which bring conflict and resistance to adopting western-inspired solutions for HRM issues (Rahman, 2010). Nevertheless, UAE and Oman provide a special chance for HRM establishment as a result of their magnificent wealth that enables the sponsoring of initiatives regardless of support from corporate forces that sometimes fail to consider the cultural requirements of the workforce (Rahman, 2010). However, they also have a significant level of variation, especially in regards to economy. Both UAE and Oman governments have identified human resource development (HRD) as a major component in their development schemes, which makes the challenge to find the right fit all the more necessary (Rahman, 2010). Another common characteristic of Oman and UAE is that population in both countries is graced by both national and foreigners, with the latter being the higher in number, especially in the labour market. Rapid economic growth in the economies and foreign workers has put the countries in the Middle East in a unique situation. Despite high economic growth rates in both UAE and Oman, local unemployment rates are high. Oman shows at least 15 percent of unemployment rates overall and 35 percent for young workers between the age of 16 and 24 years (Figliolini, 2008). Economic Issues Impact on HRM Situated in the Gulf region both UAE and the Sultanate of Oman have experienced robust economic growth since the discovery of oil (Figliolini, 2008). Both countries have oil and gas resources. However, the UAE’s economy is largely dependent on oil and gas while that of Oman has well-developed agricultural sectors. Nevertheless, both countries are frantically following a development layout that places emphasis in heterogeneousness, privatization, and industrialization with the aim of minimizing dependency on the oil domain. UAE is a rich and liberal economy with a higher per capita earning and sizeable yearly trade exceeds (Figliolini, 2008). The government is spending more on creation of jobs and expansion of infrastructure as well as greatly allowing the participation of private sector in its utilities. Oman has a strong and diversified private sector which covers agriculture, industry, textile, tourism and retail. Its major industries are copper, mining and smelting, oil refining, and cement plants (Figliolini, 2008). Oman’s policy makers projected that by 2020, the anticipated share of the industrial sector to the country’s GDP will increase by 29 percent while that of crude oil will decline by nine percent (Budhwar & Mellahi, 2006). Relying on Non-national Expatriates and Nationalization Policies Similar to majority of nations in the Middle East, both UAE and Oman face the challenge of relying on the inclusion of expatriated to ground their flourishing economies. Foreign labour forms almost 70 percent of the workforce in the Gulf Cooperation Council. The UAE has a larger percentage of foreign labour at 88 percent while Oman has about 54 percent (Mashood, Verhoeven, & Chansarkar, 2009). The reliance on expatriates is feared to have long-term political, social, and economic consequences; hence both UAE and Oman began to acquaint themselves with policies and strategies targeted at affecting the demand and supply of foreign and national labourers (Mashood, Verhoeven, & Chansarkar, 2009). UAE has adopted the name Emiritization, while Oman has adopted the name Omanisation for their strategies to employ more of their citizens in the workforce. Emiratization is the nationalization of the labour market program where the government has chosen industries that it considers worthy for its national women and men to offer their labour and establish quotas that need to be met by the companies within these industries (Mashood, Verhoeven, & Chansarkar, 2009). Thus, the program has set objectives to establish work chances for the UAE citizens, minimize the proportion of unemployed people, promote skills and potency of the national workforce, and endorse policies to the Emirati federal government. Emiritization is seen as a policy of affirmative favouritism which can enhance the ubiquity of nationals in the companies with the objective of world competitiveness. UAE also has a corporate rule that all businesses operating must have at least 51 percent of local citizen ownership (Figliolini, 2008). Like Emiritization, Omanisation has been set by the Oman government in localization of the workforce. Whereas, Emiritization programs are largely focusing on the public sector jobs, the Omanization is placing its focus on private sector, in addition to public sector where it wants most the Oman citizens taking part (Mashood, Verhoeven, & Chansarkar, 2009). To accomplish the objective of having more Oman nationals in the private sector, the government is establishing strategies to offer support to consenting Omanis to create small commercial capstones and inspire entrepreneurs-to-be in fields that they are passionate about by giving them the direction and necessary motivations. Public and Private Sector Challenges Both Omani’s and Emiratis opt to work in some areas while avoiding others (Rahman, 2010). The most rejected sectors in both countries include the private sector, and also manual and technical jobs for perceived poor working conditions of more working hours and less incentives. People from both these groups prefer to work in government sectors where the wages are perceived to be fair and working conditions are better (Rahman, 2010). The government sector in both countries also offers life-long employment and retirement benefits among other incentives. Moreover, foreign employers from the private sector mostly avoid employing nationals because of cultural conflicts, for example, language differences, and the belief that nationals are reluctant and will portray higher absenteeism rates than the expatriates (Mashood, Verhoeven, & Chansarkar, 2009). Both countries have benefitted economically from the proliferation of the small and medium enterprise (SME) sector. However, UAE’s SME is more globalized and advanced than that of Oman and this can be attributed to its more liberal legislations compared to Oman. Oman’s government initiated a comprehensive privatization project to promote private-sector development also involving the Commercial Company Law and Foreign Capital Investment Law which were amended to attract foreign direct investment (Budhwar & Mellahi, 2006). Nevertheless, foreign investors are prohibited from owning over 65 percent of equity in public infrastructure initiatives, although this can be increased to 100 percent in special circumstances. Companies with foreign involvement are treated similarly to entirely-owned Omani companies and may be exempted from corporate tax in their first five years of establishment, and can also repatriate capital and profit at will (Budhwar & Mellahi, 2006). Furthermore, Oman’s involvement with World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT) enabled the country to align its business laws with the mentioned organizations in order to make provisions and meet the new requirements of a global marketplace (Budhwar & Mellahi, 2006). Women Participation in the Workforce It is a common misconception women participation in the workforce in the Middle East world is limited. Throughout the region, there are many women, of which some are expatriates, playing a prominent role in the business world. However, participation of women in the workforce is more encouraged in the UAE, which adorns more liberal legislation than the Oman (Bloomberg Report). UAE has the most liberal jurisdiction in the Middle East and efforts to support the role of women in workforce participation are eminent. For instance, four females are now working on ministerial positions at the Federal government level. In addition, it is norm for the law organizations conducting their services in the UAE to recruit female advocates, or partners, and in several businesses, workers are recruited exclusively as being qualified and having the ability to work well void of sex prejudice and with the consent that customers in the entire region treat women workers in a similar manner as they treat their male counterparts in the same position (Bloomberg Report, 2010). Similar to UAE, the Omani women take an assertive act in participating in the workforce and are conspicuous in different areas within both the public and private sector (Randeree, 2009). However, defined gender roles are more prominent in Oman than the UAE; hence women presentation in the labour force is lower. More women in Omani than UAE are less-educated, very traditional, and will go for jobs entailing cleaners, hospital orderlies, and kitchen assistance (Al-Talei, 2009). As per now at least 18 percent of women are in the workforce compared to 59 percent of UAE working women (Randeree, 2009). Oman’s culture exhibiting patriarchy and mixed with a conservative religious way-of-life is a major issue that continues to put a profound effect on women participation. Conventionally, and legally men are viewed as the heads of households, in contrast to UAE where women are encouraged to compete as men. As a result of traditions, the Omani women do not have equal rights with men, and are mostly subordinates. Women’s presentation in the government and judiciary institutions is low, and they lack the full freedom to make their own decisions regarding their well-being and rights affecting their reproductive roles (Al-Talei, 2009). Moreover, the personal status law, which administrates marriage, divorce, child custody, and inheritance, affords the women unequal rights (Al-Talei, 2009). HRM Administrative Systems and Developments Oman announced a long-term development plan in 1995, dubbed Vision 2020 which will act as the blue print expected to enhance Oman’s performance into the first two decades of the new millennium (Budhwar & Mellahi, 2006). The plan is aimed to work towards the achievement of a diversified, flexible, and globalized economy, as also aided by the operation of an efficient and competitive private sector (Budhwar & Mellahi, 2006). The targeted goals include the development of human resources, as well as the capabilities of the Omani nationals to generate and manage changes in technology in an efficient manner, in addition to skills, standards, and abilities to face the contemporary era and reduce the major challenge, which is illiteracy. Also, in the constantly changing local and international environment, the vision guides ways to identify strategies that will ensure the maintenance of Omani’s traditions. Effective HRM policies are possible as both Oman and UAE are looking for ways to establish a framework that will consider the cultural composition in regards to traditional beliefs, religion, and other cultural factors between foreign countries and the Arab countries (Figliolini, 2008). An effective HRM framework should not generalize the problems of the Arab countries but treat them according to the specifics of each country. For example, the UAE holds more liberal perspectives to issues compared to Oman. Therefore, it will be ineffective to establish a liberal working policy for women in companies in Oman as compared to UAE. In regards to the HRM leaders in the UAE and Oman, the nationalization solutions that are being sort do consider the need to balance economic development and having more nationals in the workforce (Figliolini, 2008). Training for skills and knowledge in different sectors is required for both countries, hence effective training programs should be considered in the nationalization process. Oman can bring better policies in support of women participation in the workforce, while the UAE should focus on diversifying its economy to include its nationals in other sectors. Conclusion Effective Human Resource Management is an essence of the national resource and plays a centrifugal part of a national economy. Many governments across the world are taking an interesting approach towards HRM programs through establishing policies and strategies by which HR initiatives can be utilized in an effective manner. However, methods or initiatives that have been tried and tested for one country or region may not work for another. This applies to the Middle East countries which have always been perceived to be similar and hence interpreted in a similar fashion. Although they have an almost similar cultural orientation, the differences are also distinct and this can affect the success of HRM implementation in the various Arab countries. The paper has compared and contrasted HRM issues and challenges in the UAE and Oman. Both countries are seen to rely on foreign experts for various positions, to the extent that the foreign demographics have exceeded the nationals. Fortunately, both governments are addressing this challenge, through Emiritization for UAE and Omanization for Oman. UAE is smaller in size but has the highest economic growth of the two. The legislation guiding trade encourages liberalism to a larger extent than that of Oman. Women have more equal rights in UAE than Oman leading to a higher number of their participation in the workforce. References: Aggarwal, K. (2011). “The small and medium enterprises in GCCs: A comparison between Sultinate of Oman and United Arab Emirates”, International Journal of Research in Commerce, Economics and Management, vol. (6), 1-5. Al-Talei, R. (2009). “Women’s rights in the Middle East and North Africa-Oman”. Retrieved June 4, 2013 from http://www.refworld.org/topic,50ffbce582,50ffbce5f7,49bf7ad6c,0,,,OMN.html Bloomberg Report. (2010). “Doing business in the Muslim World-Practical issues for employers and employees,” Bloomberg Law Reports. Budhwar, P., & Mellahi, K. (2006). Managing human resources in the Middle East. London: Routledge. Figliolini, A. (2008). “Localization/nationalization in the GCC: Meeting the challenge.” Retrieved June 4, 2013 from https://est05.esalestrack.com/eSalesTrack/Content/Content.ashx?file=a1844cf3-79a4- 4dc3-ba0b-db49c595e42b.pdf IndexMundi. (2013). Oman vs. United Arab Emirates. Retrieved [June 19, 2013] from http://www.indexmundi.com/factbook/compare/oman.united-arab-emirates/demographics Mashood, N., Verhoeven, H., & Chansarkar, B. (2009). “Emiritisation, Omanisation and Saudisation: Common causes-Common solutions?” Retrieved June 3, 2013 from http://wbiconpro.com/17.%20Helen-UAE.pdf Rahman, M. (2010). "The changing face of Human Resources Management in the Gulf Region: An Oman and UAE Perspective,” Capstone Collection, Paper 2381. Randeree, K. (2009). Strategy, policy and practice in the nationalisation of human capital: ‘Project Emiritization’, Research and Practice in Human Resource Management, 17(1), 71-91. Read More