UAE unemployment timebomb

Economists have called for bold measures to increase the amount of UAE nationals employed in the private sector, after new government figures showed a four-fold increase in unemployment among locals in the last decade.

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By  David Robinson Published  October 23, 2005

Economists have called for bold measures to increase the amount of UAE nationals employed in the private sector, after new government figures showed a four-fold increase in unemployment among locals in the last decade. The number of out of work UAE nationals jumped from 8000 in 1995 to 35,000 this year, according to the Ministry of Labour. “[The rise] is undoubtedly a concern for the government as we have seen the implementation of Emiratisation policy in a number of sectors,” Emilie Rutledge, an economist at the Gulf Research Centre in Dubai told Arabian Business. Emiratisation in the federal government is 54%, and in the local government it is 15%, while the percentage of nationals in the private sector comes to just 1%. Rutledge said the increased number of unemployed nationals reflected structural and institutional changes in the labour market that are likely to become more acute in the years ahead. “While the policy of Emiratisation will increase national employment, it could eventually have some drawbacks such as reducing the competitiveness of private sector companies and leading to a less flexible labour market and economy overall, which cannot adjust to shocks as easily,” she said. “A better longer-term policy would be to reduce the inequalities between private sector and public sector employment, in wages, working conditions and benefits, over time so that nationals face incentives to compete effectively for private sector jobs against expatriates, which they don’t at the moment,” Rutledge added. A recent report by the International Monetary Fund (IMF) said the UAE’s policy of trying to avoid straining private sector resources by forcing employment quotas for nationals was working in view of the significance of expatriate labours’ contribution to growth and development in the country. However, the global body warned that emerging labour market strains in the UAE indicate that unemployment among nationals is likely to pose a major problem in the medium to long term. Therefore, it said, the broader and more important sustainability issue for the UAE is how to create enough jobs in the private sector for nationals in order not to strain public finances in the future. “Some bold measures need to be taken to increase employment of nationals and their employability in the private sector,” The IMF report stated. “Those measures include restricting government sector employment and controlling increases in government wages and benefits, better targeting subsidies and transfers, promoting changes in the work attitudes and educational preferences of nationals for them to acquire more marketable skills, and greater efforts to improve job matching and counselling.”

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