Why Majority of the United Arab Emirates National Dont Work in the Banking Sector - Research Paper Example

RUNNING HEAD: AN INVESTIGATION INTO WHY THE BANKING SECTOR DOES NOT ATTRACT UNITED ARABS EMIRATIS NATIONALS Name Institution Tutor Date Introduction The banking institutions play a pivotal role in the UAE economy and the relative exclusion of the nationals in this sector needs an urgent reversal. This study sets out to investigate why majority of United Arab Emirates national don’t work in the banking sector. In this proposal, the background to the study will be followed by the statement of hypothesis, study objectives, questions and the rationale for study. The latter sections present the research methodology, data collection procedure, data analysis and presentation. The final part of this proposal outlines the expected outcomes, general issues for discussions and possible recommendations. A major challenge and motivation for Emiratisation of the job market in UAE is the dismal representation of the nationals in the country’s workforce. To reverse this trend, several institutions have been set up to build capacity for the locals to be equitably absorbed in the country’s labour market. These establishments include, the Abu Dhabi Tawteen Council (ADTC), the Abu Dhabi Emiratisation Council, the Department for Human Resources Development (in Sharjah), Emirates National Development Programme in Dubai, Emirates Council of Emiratisation and most prominently, Tanmia - the National Human Resource Development and Employment Authority. To increase the number of Emiratis in the job market, the 1996 legislation requires that 4% of the workforce in the banking sector comprises nationals. This percentage is to progressively increase annually with 4 points up to 48%. In spite of these and other efforts, the UAE Ministry of Labour (2010), however reports that Emiratis account for only 4% of the labourforce in the private sector as opposed to 52% working in the public sector. With most banks in the private sector, it is deplorable to note that they have failed to attract/absorb the nationals with approximately 96% of the banking jobs in the hands of foreigners. This study investigates the reasons Emiratis don’t take up jobs in the banking sector. The banking sector in the UAE records tremendous growth. According to the data from the Central Bank of the UAE (CBU) the number of banks grew from 46 in 2003 to 53 in 2011. Privately owned banks are 37, state-owned are 16 and foreign are 30 while 7 are locally owned. There are 133 branches of foreign-owned banks (CBU, 2011). With the heavy investment in the banking industry and the revenue that accrues from such ventures, it would be desirable for the locals to benefit from the job opportunities offered. In a market study for UAE women nationals in the private sector, several reasons are given for their dismal percentages compared to men (Nelson, 2004). Nelson investigated the conditions and constraints that limit the number of Emirati women in the labour force. The study among other things revealed that most Emiratis prefer to work in the public institutions (of which banks are very minimal) because of three major reasons: higher salaries, better fringe benefits and shorter working hours in comparison to the private sector. Another important finding was the role of religion which was seen to constrain the type of banking institutions UAE nationals are willing to work for. It is clear that many Emiratis would not take up jobs in non-Islamic banks. By the year 2011, there were only 8 Islamic banks compared to 45 non-Islamic ones (CBU, 2011). Nelson also observed that educational level and course choice may also define Emiratis’ absorption in some job opportunities. Labour force data indicates that most Emiratis opt to join early employment rather than enroll for or continue with higher education. Data from the Ministry of Planning (2004) indicate that UAE University with the highest enrolment in the year 2002/03 academic year registered only 305 nationals compared to 2,336 non-nationals. Related to low enrolment in the higher learning institution is the choice of areas of specialization. In the same academic year, only 157 Emiratis enrolled in the Institute for Banking Studies compared to 4, 168 nationals attending Higher Colleges of Technology. It emerges from this study that sector preference, religion and education play a major role in the job occupancy in UAE. The study recommends that incentives for making the private sector jobs attractive, retentive and human capital intensive. In a more recent study that analyzed the structural impediments to Emiratisation, factors that hinder UAE nationals from realizing a greater participation in the labour market in the private sector emerge (Al-Ali, Shee & Foley, 2008) . The study cites data that contrasts non-nationals workforce at 91%, or 2.4 million, ostensibly absorbed in the private sector with Emiratis 9% with only 70,000 in the private sector. This scenario is contributed to in part by job preference for the public sector to the private sector which is a relatively new concept here and the nationals’ negative attitude to the private sector due to their inability to satisfactorily compete at work with the non-nationals (Abdielkarim, 2001; Yang & Samiha, 2001; Freek, 2004). The study, however, proposes three criteria for understanding the employment matrix that works against Emiratis namely personal capital, organizational capital and social capital (Al-Ali et al, 2008). The personal capital includes personal values/attitudes consistent with the institutional expectations and relevant training in the required field. The organizational capital is defined by the working environment, career development in the organization and the roles of English fluency and remuneration in employability of an Emirati in an organization. Lastly, the social capital factors in gender inequality trust and a form of nepotism called wasta. All these factors were found to negatively impact on the employment potential for the nationals in the private sector. The locals are blamed for lack of initiative, low educational qualification and lower English proficiency while the organizations were challenged to technically empower the locals to enhance trust. The researchers call for further and broader investigations to include market forces and client satisfaction. Though these studies address several aspects challenging the Emiratis in the private sector job market, they paint a general picture which lays a scientific premise for further investigation into this subject. This study therefore will recast the question of unemployment of the UAE nationals not on the context of the job market suitability but that of the perceptions of the Emiratis of careers in the banking sector. In effect, the study customizes the structural and environmental challenges reviewed by the two studies at a personal perspective of an Emirati. It could well be the case that the most significant impediments for realizing the full job potential for Emiratis in the banking sector are personal perceptions. These perceptions could necessarily exclude an Emirati from certain career pursuits, in this case, banking. For Emiratis with requisite academic qualifications, perceptions could inhibit aggressive job search. Thirdly personal perceptions could also compromise work performance and upward mobility for the Emirati workforce in the banking sector. These idiosyncratic bottlenecks may thus plausibly inform career choice, educational pursuit and job prospects for Emiratis in the banking sector and the entire job market. The perceptions may stem up from the market conditions, socio-cultural factors and personal considerations. The purpose of this study is, therefore, to investigate the underpinning personal perceptions of the Emiratis towards working in the banking sector. The study will also trace the issues of market structure, socio-cultural factors and personal attributes which influence these perceptions. Hypothesis The study hypothesis will be as follows; H1 There exists a significant relationship between personal perceptions and career choice or pursuit in the banking sector. H2 There exists a significant relationship between personal perceptions and job output H3 There exists a significant influence of structural and socio-cultural factors on personal perceptions of the jobs in the banking industry. Research questions The study will be guided by the following research questions. 1. What personal perceptions hinder Emiratis from pursuing careers in the in the banking sector? 2. How do the perceptions influence the UAE nationals’ job performance and upward mobility? 3. What factors shape Emiratis’ perceptions of the careers in the banking sector? The rationale for the study The rationale for this study is premised on the reality that only about 4 – 5% of the UAE nationals are working in the banking sector in spite of legislative and policy undertakings anchoring the Emiratisation process. The banking industry being one of the fastest growing sectors in the UAE economy with an asset base of almost a half a trillion AED is key for achieving the goals of Emiratisation. Literature on the labour industry indicates an expansion in the labour market to absorb the citizens but the response of the latter is far from commensurate. The policy makers especially the councils/committees charged with labour nationalization will find the study outcome of this research valuable in two ways. One, it will bridge the gap between national and individual expectations. There could be a mismatch between what the government goals for enacting labour laws and the personal labour aspirations for the citizens. This may result into processes that will either modify the labour industry to meet the personal goals or to persuade the citizens to embrace the national labour policies. If for instance, it emerges that religion is a major barrier towards achieving the national labourforce threshold, the government may consider giving incentives for the non-Islamic banking institutions to operate Islamic products which may attract local labour. This study also hopes to unearth the personal grievances and misgivings which if addressed will catalyze absorption of the citizenry in publicly and privately owned banks. Methodology The research model The study will employ an analytical research design in which views from different segments of the Emirati community will be collected and analyzed according to the relevant themes. The study independent variables will be the perceptions of the careers in the banking sector, while the dependent variables will include job pursuit and job output in the banking industry. The study intends to sample three segments of the population namely the general public, students and banking institutions employees. A perception study is largely attitudinal hence data collection tools such as a 5 point likert-scale will be included in the questionnaires for all the respondents. The study will also conduct a key informant interviews (KIIs) for Emiratis employed in the banking sector to collect data on perception and performance. Students in the final high school year and higher learning institutions will also be engaged in focused group discussions (FGDs) based on career choice. Primary data will also be sought from the relevant government departments like the ministries of planning and labour. The Central Bank of UAE and a sample of the commercial banks will also be requested to provide data. Data analysis The data from these instruments will be analyzed using frequencies, means, percentages and regression. The data will then be presented in form of narrative, tables, figures, graphs, charts and histograms. A perception index for the banking industry jobs will be calculated and described statistically. Possible results The expected outcome of this study are statements of perceptions in binary qualitative terms such as friendly/unfriendly, favorable/unfavorable, dignified/undignified, acceptable/unacceptable, fair/unfair, godly/ungodly, attractive/unattractive, well remunerated/ poorly remunerated, secure/insecure, competitive/uncompetitive, reachable/unreachable and so on or statements of grades like poor/fair/good/satisfactory/excellent and so on. Two sets of results are possible from this study. The hypotheses may be proved or disapproved in part or in full. If indeed a relationship is established between the variables then the second possibility is likely. That is, the UAE nationals may hold a positive or negative perception of the banking sector jobs. Either way, study implications are bound to emerge and these are discussed in the last paragraph. A negative perception of the banking industry job market would imply that if nothing is done to change the perception, then the goals of job industry rationalization would suffer as far as a very integral segment of the national economy is concerned. Changing perception may mean dealing with the ‘perception shapers’. These are the factors that inform the unfavorable perception be they religious, social, cultural, economic, human or organizational. Another remedy may be to engage in civic education to separate facts from myths about the banking sector jobs. Students may also be motivated through advocacy and sponsorship to develop capacity for banking industry jobs. A positive perception index for the industry jobs would mean that the problem of the low participation levels by Emiratis lies elsewhere. In that case this study will make recommendations for further research into areas deemed relevant. Crafters and implementers of the macro-economic policies in UAE and players in the banking sector will find the findings of this study valuable. References Al-Ali, J, Himanshu, H.K and Foley, P. (2008). Structural Barriers to Emiratisation: Analysis and Policy Recommendations. World Business Institute,1-32. Abdielkarim,A. (2001). UAE Labour Market and Problems of Employment of Nationals, an Overview and Policy Agenda, Research Report 1. Centre for Labour Market Research and Information, Tanmia, Dubai. CBU. (2011). Central Bank of the United Arab Emirates Retrieved from: http://www.cbuae.gov.ae/. Freek, S. (2004). Voices from the Shope Floor: The Impact of the Multi-cultural work. Environment on UAE. Dubai: Tanmia, Ministry of Labour. (2010). Retrieved from: < http://www.tdic.ae/en/media/get/20100922_epp-joint-statement-22-sept.pdf > Ministry of Planning(Central Statistical Department). (2011).UAE in Figures, .Dubai.http://www.uae.gov.ae/mop/UAE_figure/UAE_%2011.files/sheet003.htm Nelson, C. (2004). UAE National Women at Work in the Private Sector: Conditions and Constraints. Dubai: CLMRI, Tanmia. Yang, G and Samiha, A. (2001). Skill, Wages and Working Conditions in the Insurance Sector: Centre for Labour Market Research and Information. Dubai:Tanmia, UAE. Read More