Emiratisation as a Movement - Term Paper Example

Executive summary The purpose of this paper is to study Emiratisation and its precursors and analyse how the national policy of UAE impacts private sector establishments' cultures, job specifications and working conditions. This analysis is basically aimed at identifying and prioritising the issues affecting Emiratisation. The paper will also discuss the structural barriers to Emiratisation, which include low standards of education and inferior skills of potential employees, poor English, and distrust by employers in the work-willingness of United Arab Emirates (UAE) nationals. The paper shall also touch upon the reason for why the nationals consider that the private sector offer lesser career prospect and low income as compared to the public sector group. On the whole, this paper shall present a complete overview. Introduction  By definition, Emiratisation is a movement by the government of the United Arab Emirates to proactively employ its citizens in the public and private sectors to reduce its dependence on foreign workers. This drive is for the UAE national employees to enhance their efficiency in order to develop the aptitude to take over key positions in all government entities and departments within Abu Dhabi Emirate and the rest of Emirates. To fulfil this major role, the government carries out programs of hiring, employment, training, scholarships, study leaves, and succession plan for senior positions in Abu Dhabi Government Departments and the rest of Emirates. With the burgeoning UAE local labour force, Emiratisation is a vital process to ensure a smooth transfer of work power back to the local work force. The process of Emiratisation has been pursued aggressively by the Ministry of Labour and Social Affairs with success, as we have seen, in sectors such as telecommunications and banking. In April 1999, an agreement giving priority to graduates of the Higher Colleges of Technology (HCT) in recruitment for jobs in both the public and private sectors was signed between HCT and the Ministry of Labour and Social Affairs. However, the Ministry is in favour of simultaneous development of the economy and human resources and is reluctant to alienate the private sector by forcing a quota for employment of nationals. The difficult task ahead is to assist job seekers in finding suitable employment. In the past, national graduates have shown a reluctance to enter private sector employment. This was borne out by a recent study entitled "Attitudes to the Private Sector" which showed that 96.5 per cent of students at Abu Dhabi Women’s Higher College of Technology wanted to work after graduation, of which 62 per cent favoured the oil sector, a further 48 per cent said they would like to work in the government sector and only a meagre 11.5 per cent opted for the private sector. Most students cited high salaries, greater benefits, job security and shorter working hours as their reasons for preferring the state and semi-state sectors. The population and labour market imbalance between UAE nationals and non-nationals in the private and public sector organisations is one of the impediments. The paper examines the factors that really hinder the local people to get in to employment. The overflow of massive foreign workers has created social and economic crisis for the UAE labour market (Prasad and Yang 2002). Foreigners constitute 2.4 million (91per cent) in the Emirate labour market, overpoweringly working in the private sector. UAE nationals, thus, include just nine per cent of UAE nationals employed, of which eight per cent (192,000) is involved in the public sector and just one per cent (70,000) is working in the private sector (Human resource report 2005; Freek2004; Abdelkarim 2001a). During the last ten years, the Emirates’ average yearly employment growth rate is 7.9 per cent, with UAE nationals’ input a little higher at 8.2 per cent. Although, in 2005, UAE nationals’ unemployment rate was 12.6 per cent (35,000), of which 19.8 per cent were females and 8.9 per cent consisted of males and, it is anticipated that the percentage will rise strongly within the next decade if the government did not intervene.(Human resource report, 2005). According to Godwin (2006), Emiratisation is a confirmatory action quota motivated employment policy that guarantees UAE nationals’ employment opportunities in the private sector. Since 2000, the Gulf Cooperation Council (GCC) countries, and especially UAE, launched a range of economic policy implements influencing national labour markets and endorsing employment for their citizens. These implements comprise government wage restraints fees, quotas and wage subsidies, and enhancing the education system’s quality and upgrading the training of nationals, putting charges on foreign labour, and employment objects for UAE nationals (Al-Lamki 2000; Economic Development Board 2004; Kapiszewski 2000). Freek (2004) confirmed that many studies have offered the reasons behind UAE nationals’ preference of working in the public sectors for job security and better compensation. However, the present low employment rate or high attrition rate could be ascribed to UAE nationals’ inability to finish a job satisfactorily (Abdelkarim 2001), in turn, compelling them out of job in the public sector (Freek 2004). This naturally creates a less desirable work environment for UAE nationals. To ascertain this belief, Proad et al. (2002) later hypothesize that working in the private sector is a comparatively new experience for UAE nationals. Because of this reason, UAE nationals have just broad and at times even fuzzy impressions as they don’t have much first hand experience or knowledge (Yang & Samiha 2001). In order to find the basic criteria that set up the UAE nationals employable in private and public sector organizations, the paper mulls over three factors: personal, organisational and social (Shaw et al. 2005; Seibert et al. 2001; Tomer 1998), essential to Emiratisation program and examines how these factors hinder or favour UAE nationals to join the labour force. Discussion To put Emiratisation in perspective, the literature on social capital predictors needs to be studied in order to classify dimensions in the social structure of the UAE and illustrate parallel phenomenon as themes for this research paper. Since, there is a dearth of Gulf literature on this particular topic, this paper enhances social capital literature by examination of outlook of public and business sector executives, through the data collected from various fields in the public and private sector.  Before getting into a detailed analysis, it is important to understand a few points regarding Emiratisation. The off-center character of the work force and job-scene in the private sector are the chief reasons of concern of the government and many UAE citizens. The minimal representation of nationals in different vocations is conspicuous. Since 2005, a hands-on policy has been cheering employers to hire locals for vacancies corresponding with their criterions. In some situations, quotas are being placed for local recruitment. This process of Emiratisation may prohibit the recognition of a knowledge economy. Emiratisation is a confirmatory action plan with a motto – specifically for the minority nationals. Off late, a rising discourse has surfaced pertaining to the national identity. In times of globalization, there is a fear that there is a chance of vanishing of the local culture. Emiratisation and the Knowledge Economy The UAE government is doing every bit to put Emiratisation in the right place. It is taking several supplementary steps to boost Emiratisation. For example, the government has identified the aim of promoting a knowledge based economy and so has invested US$10 billion for the expansion of a knowledge city. Emiratisation in Banks To accomplish estimated Emiratisation, the government paid attention on banks (private sector retail and commercial enterprises) for the long-termed strategy of guaranteeing that the leadership of a major economic faction was a national precedence and a practical approach of the accessibility of competent jobs in a working atmosphere suitable to UAE nationals. In the year 1998, Cabinet Decree No. 10 asked all banks to attain four per cent yearly incremental boost of Emirati personnel. In UAE, the banks already had sizeable numbers of national recruits, and the quota was thought to be a considerable target (Tanmia, 2004). Successive studies performed by Tanmia (2006) propose that among the 47 private sector banks operational in the UAE, only seven attained their 2004 Emiratisation goal of four per cent swell over the earlier year; that more than 19 banks registered about 10 per cent gap between the actual and the targeted levels; and so the by and large Emiratisation percentage accomplished by the banks was only 27.6 per cent instead of the 2004 target of 35.9 per cent. Nevertheless, the employment rate of nationals emerges to be steady for banks. The Human Resources Development Committee on the banking sector (Emirates Banks Association, 2005) testified 29.8 per cent Emiratisation or 6,957 in the year 2005. This is a time taking process. The Emirates Institute of Banking and Financial Services released a data that confirmed that out of the 47 local and foreign banks, just 22 sustained 4 per cent annual target. The Labor Ministry is cheering Emiratisation by banks through rewarding attainments to authorized levels with consent to develop through new products or locations. Hence, by mandating a 4 per cent annual growing quota set for Emiratisation and encouraging and yet not compelling private trade to implement the decree; the government accomplished a regular employment rate augment of 2.6 per cent in, of relatively slow growing area of the UAE. Emiratisation in the insurance sector Subsequent execution of the 1998 Cabinet Decree No. 10 authorizing an Emirati service quota for banks, in the year 2001, the government advocated a voluntary five per cent quota for insurance groups, mandated (yet not imposed) in 2003. However, a mandatory two per cent quota on trading organizations employing more than 50 employees was implemented in 2004. Nonetheless, an examination of Tanmia insurance employment statistics over the time demonstrates that insurance groups are normally incapable to attain Emirati employment increases, with inadequate figures and additional data anticipated in 2009. Insurance companies refer to lack of real interest by nationals in insurance service as the chief blockade to attaining the Emiratisation target., The legal adviser of Zurich International Life Insurance, Hamed Ibrahim revealed that the revenue of national workers just after a couple of months after joining a corporation reveals absence of genuine interest in them (UAE Department of Civil Aviation, 2005). Emiratisation of the insurance companies is less booming than for the banks. There were about 150 nationals, which was 4.5 per cent of the country's 2,760 insurance employees in the year 2004 (UAE Interact, 2006), and in 2005, out of the 46 insurers just a single insurer achieved its 5 per cent target. Workplace factors impacting Emiratisation The varied working conditions and job specifications in GCC nations often form barriers to Emiratisation. The literature reviews in the past prove that GCC nationals are not comfortable with erratic working conditions of the private sector such as long and uneven hours, time restrictions on cultural and religious adherences, absence of long leaves and a strictly disciplined outlook to employee performance (Abdelkarim and Ibrahim, 2001; Al-Enezi, 2002; Ali, 2004; Al-Lamki, 1998; Al-Mansory, 2003; Kapiszewski, 2003; Madhi and Barrientos, 2003; United Arab Emirates University, 1999; Willoughby, 2005). The following factors illustrate the barriers to Emiratisation. Figure 1: Workplace factors impacting Emiratisation Lengthy business hours Unlike other countries in the world, the official weekend in the GCC, and UAE, is Thursday and Friday. As an exception, few multinationals do close on Friday and Saturday to agree to longer stakeholder communications. However, most private organizations in the UAE close only on Friday, and possibly for a half day on Thursday. Government offices observe a rather short business schedule from 7.30 a.m. and to 2.30 p.m., Saturday to Wednesday. On the other hand, private organizations have a propensity to keep longer business hours, as most employees come back to work in the evening post a relatively longer midday break, while there are even people who work from 8 a.m. to 5 p.m. During Ramadan most work is usually done in the first half of the day or rather late in the evening after the fast is broken at sunset. In the interest of Emiratisation, insurances offices from 2006 started utilizing one shift system i.e. 8 am to 4 pm instead of the earlier two shift system. They also reduced the working hours from nine hours to eight hours. The banks have also begun conforming to these standards (8am to 3.30 0r 4pm, five days a week.) But unlike insurance offices which extended their weekend to 2 days, banks are open for six days a week, so the employees rotate on a 5 day week basis. Disparity in Remuneration levels Concerning GCC Private Sector, it is a notable point that the young nationals seeking employment are often unfavorable to private sector because of their compensation levels and working conditions. For example, Al-Lamki (1998) found that, because of the private sector pay structures, 65 per cent of Omani respondents preferred public sector. This was later confirmed for UAE by both Tanmia (2004), in a study of 1,300 male and female UAE nationals, where compensation was an obstacle to private sector employment; and by Berengaut and Muniz (2005) who mirrored Tanmia's results a year later, finding that due to higher compensation levels, UAE nationals have a strong preference to work in the public sector. This led to a recommendation by Elhage et al. (2005) that the disparity between public and private sector compensation and benefits should be reduced to the maximum. Thus, in the insurance example and to solve the salary disagreement between lesser-paid Emiratis and expatriates, the High Committee for Insurance suggested an exclusive Emirati pay-scale for insurance companies which aimed to attract national job-seekers and maintain Emiratisation levels for those already employed. However, this step has been widely opposed in the industry. On the other hand, Top private companies are occupied with divergent Emiratisation activities – corporate universities, recruitment fairs and training programs Dearth of skilled personnel Education levels and training opportunities for Emiratis can also act as major hurdles. Taking again the insurance example, standards of tertiary qualifications for entry-level positions, and on-the-job training in insurance workplaces are issues facing the government. For many years, all insurance companies contributed 0.1 per cent annual profit to the Emirates Insurance Associations fund for Emirati training, including English fluency and computer skills. To make Emiratisation less costly, the High Committee adopted after-employment training instead of pre-employment training. This process covered 1,200 training programs in different insurance specializations made available over the past three years. An insurance diploma program is also available. Organizational culture Organisational culture is not of such great importance in GCC workplaces. Research (Abdelkarim, 2001) makes evident that UAE has not given importance to concepts of commitment-based work culture, instead using monetary rewards and organizational directives to increase productivity in workplaces. In the public sector, Emiratisation itself is the focus for developing a culture of coordination between the participating government agencies (Al-Lamki, 2000; Al-Dosary, 2004). Career expansion In developed economies, success in professional career is a personal issue contributes to an an individual's status (Sharf, 2006). Professional careers include several factors: a quality education, job-search and workplace skills; and life-long training which gives him the quality of adapting to changing scenarios. In UAE, like all other GCC countries, employment-based studies address issues career development issues in detail. In their private sector study, Abdelkarim and Ibrahim (2001) found that most UAE nationals prefer to work in the public sector due to better career opportunities. Private sector employers, they suggest, can get better results by developing and publishing discipline-based career plans for prospective employees. This hypothesis is supported recently by Freek (2004), who found high labor yield in the private segment, partly due to employers' common lack of career enhancement tactics, due to the transitory nature of the mainstream employees. Low English fluency Importance of English can not be denied even in the context of GCC Countries, English being the lingua franca for technology, management and even trade. Therefore, fluency in English has a direct impact on an Emirate citizens' employability. Presently, the level of English fluency in UAE is an issue of concern to Abdelkarim (2001), whose findings tell us that employees think that their incompetence in English language is due to the present Emirates' education system. In Saudi Arabia, Samman (2003) reported that 60 per cent of the total students had English language insufficiencies; also it is worth mentioning that 70 per cent of science students were diffident in English. The Basis of Emiratisation The conceptual framework for Emiratisation comprise of three factors: social, organizational and personal capitals. According to Dakhli and Clercq (2004), industry specific personal, organizational and social capital may play a vital role in pioneering actions within an industry. More human capital pilots to higher reward and personal remunerations: workers who are more educated and experienced are likely to be paid more than the less skilled ones. Apart from the personal capital, people obtain organizational and social capital over time, which aid them increase productivity. Various stages of personal, organizational and social capital may interrelate to create combined effects on productivity. When personal capital interacts with social capital, there is a transport of knowledge that generates elevated productivity. When personal capital interrelates with organizational capital, satisfaction level increases and the outcome is higher efficiency. Social capital and Emiratisation The UAE government's verdicts and enterprises are means to tackle the seclusion of Emiratis from their escalating economy, to fill in the gap between a purist Arab culture to the acquisitiveness and propinquity of Abu Dhabi and Dubai. The social capital dichotomy is apparent as Emiratis' bonding capital of their families and clannish arrangements, and the ephemeral bridging capital of the overpowering expatriate records, according to (Putnam, 2000). Many Emiratis,even though they are at country's senior positions, may not find themselves capable of planning or controlling its future.. 1. According to the Social capital theory, organizational competitiveness, profitability and long term endurance are direct effects of government and society support coupled with conducive work place environment. An employee's personal skills attributes to his personal success which, in turn results into higher organizational productivity, yielding benefit to society itself (Adel and Kwon, 2002; Cohen and Prusak, 2001, McElroy, 2002). It is evident from studies that many Arab nationalists don’t want to get involved with remunerative work. The reasons can be various personal factors (Al-Otaibi, 1992):- 1. An unrealistic expectation of reward and workplace conditions, 2. lack of skills and knowledge, 3. attitude toward demanding work, 4. unwillingness to compete even with oneself in productivity measures, 5. lack of interest Based on social capital theory, the above study corresponds to cultural and environmental aspects attributable to Emiratisation. Together these themes as an agenda can lessen the current trends in Emirate society. Companies willingly adopt the concept of social capital theory for enhancing organizational performance, as it proves to be advantageous because of a person's position in a relationship structure; to be more specific, the workplace. Amassing social capital supports workplace flexibility, enhances communications and association, thereby allowing the unit to function at a lesser transaction cost (Adel and Kwon, 2002; Cohen and Prusak, 2001; Platteau, 1994). Though there are many dimensions accredited to social capital, only three predominantly pertain to Emiratisation: trust, gender issues and discrimination or nepotism. Trust Studies have showed that trust is a major obstacle to employment in the Gulf Cooperation Council countries for nationals. In Oman (Budhwar et al., 2002), it was reported that emigrant managers prefer strict control and monopolized decision-making, with minute entrustment for their human resources. The reason behind UAE nationals' inclination towards public sector employment is because Expatriate management tends to look down upon national employees' technical skills (TANMIA, 2004; Freek, 2004). Gender In GCC nations gender play a major role in determining an employer’s attitude. Often female employees have to face lot of hardships in their work field, such as marginalization, subordination and undermining. Females in leadership positions are subjected to various disparities as compared to their male counterparts such as difference in pay and negative attitudes in the conservative Arab world. The situation is quite similar in UAE as it is part of the same social environment. For example, according to legalities, women must earn less in any job. (Whiteoak et al., 2006; Baud and Mahgoub, 2001). In practice, TANMIA (2006) reported, “discrepancies can occur; given education, seniority and job descriptions, 37 per cent of women participants reported dissimilarities in their pay rates based on gender.” However, discrepancies in pay structures are also consequences of greater chances for career enhancement accessible to Emirati males, an aspect in the high revenue rates for UAE females (Adam, 2003). Later, Baud and Mahgoub (2001) noted “21 per cent of the women said that they had experienced discrimination in the awarding of job opportunities for promotion.” Nepotism Nepotism, also called wasta, practiced in Arab culture, refers to “both the act and the person who mediates or intercedes” (Cunningham and Sarayrah, 1993, p. 1). In organisational behaviour, the practice of wasta has a major and odious role and is principally applicable to the distribution of jobs, either blatantly or otherwise. Though there is minimal data on the possible effects of wasta and relatively little evidence on its practice, wasta's cultural and controversial influences cannot be denied. A different person generally uses his “wasta” influences on a prospective employer on behalf of a job aspirant. Practice of wasta employment is prejudiced and frequently illegal. The results of this practice are often unsatisfactory for both the employer and the employee, the reason being that there were better candidates available with higher productivity, who were not selected. Another negative impact of Wasta is that it discourages competent GCC nationals to leave for developed countries.in search of transparent and gratifying work (Haajenh et al., 1994). In the Emirates, wasta generating negative social capital, often comes out as an obstacle to reform and a more capable governance. Governments in the area are reluctant to dedicate the assets and social disturbance to tackle ingrained sensitive and negative social problems., Whiteoak et al. (2006) found in their study that the younger generation is more susceptible to Wasta because of a new and difficult private sector, which is a result of the easy ways to find public sector jobs at the times of its previous generation. Recommendations Organizational policy Thirteen respondents (76 per cent) reported policies which support Emiratisation, including better compensation and incentives, higher prospect for promotions for Emiratis and career development/training opportunities, a convenient work environment inclusive of the traditionalist approach, trust and empowerment. In contrast, six respondents reported no specific Emiratisation policy and citing the reasons: that Emiratisation was defined already by regulation; their association did not support the policy per se, or UAE nationals ignored work in the private sector, therefore it was unnecessary. How government can deal with non-compliance? Numerous options to encourage Emiratisation: 1. Escalating quotas, connecting visa policy to policy conformity, improving visa observance. 2. Limit numbers of emigrant labor permits and amplify taxes on the permits, make it mandatory to show documentation that proves that no appropriate Emirati is vacant for each job; significantly augment overheads to re-issue an emigrant’s permit; or on the other hand do not allow the renewal of expired permits. 3. Audit association’s acquiescence standards, and put monetary fines for non-compliance. 4. Launch tough Emiratisation awareness campaigns, endorsing successful companies; alluring Emiratis to take in rational job offers. 5. Emiratisation should be supported by government by remunerating companies’ differential compensation in order to match up to the public sector pay scales for preferred job categories and sustain internal training curriculums for nationals, on the other hand, curtail the wage slit between private and public sectors and deal with certain position limitations on UAE nationals. 6. Provide non-complying organizations little precedence for public sector ventures. 7. Create a unique entity accountable for the employment and expansion of UAE nationals, and supply increased technological and language training during service. 8. Cheer wok positions for UAE nationals' students from educational institutes. 9. Ensure rational cultural consciousness equilibrium in the workforce. Figure 2: Options to Increase impact of Emiratisation Conclusion Presently the UAE is going through isolation of its citizens because of their inability to access private sector jobs. The public sector, which had been the sole employer, has stopped accepting Emiratis into its overflowing ranks. Furthermore, the government policy, guided by the social capital principles, is to deal with the incessant influx of experienced and qualified expatriates who if stayed for three years can smoothly continue to work in UAE till the age of 60 years, after which they must depart from the UAE. The workplaces have thus adopted conditions conducive to the expatriates, and with one per cent or less of nationals, Emiratisation issue is not at all a priority. The government's policies are aiming for a superior sense of stability for the economic workplaces, particularly banking and insurance, but success is still awaited.. Emiratis, in face of workplaces giving monetary reward for performance and attitude, and otherwise basic conditions profitable to business clients rather than employees, are understandably disheartened and confused. They are a small minority trying to attain standards in a few decades that Western economies have been developing for ages. Greater attention must be directed to their predicament. At the present phase of the UAE’s growth, it would be unrealistic to expect a radical disconnection of the dependancy on foreign professionals who are indispensable for the UAE economy and education in various ways. The goal of complete emiratisation would contradict the goal of the creation of a knowledge economy unless a careful calibration of the emiratisation process is introduced. Presently, a step-by-step emiratisation process is being implemented. However, the creation and stability of knowledge economy in the long run may not be attuned with such nationalistic aspirations. References 1. 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