Double-edged sword

A young, growing Middle Eastern workforce has potential for regional economies, but also carries potential problems - and automating with IT is not the answer. ACN reports.

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By  Eliot Beer Published  March 5, 2006

|~|alothman200.jpg|~|Al Othman: Cultural changes needed for shift to new economic thinking.|~|As the Middle East continues to boom on the back of strong oil revenues, it is facing a potentially critical long-term problem: unemployment.

This is the claim of Fahad Al Othman, founder, chairman and chief executive officer of Humansoft Holding Company. He says that countries across the region are not doing enough to plan ahead to deal with the demand for jobs, both now and in the medium term.

"The situation is critical, as economists expect up to seven million nationals in the six GCC states alone to be seeking jobs in the next decade," says Al Othman. "The Middle East is characterised by a relatively young population, where 60% of the population is under 21. This truly is a double-edged sword; while a young population ought to be viewed as a valuable asset, the reality is, if not turned into productive people, this segment of the population will not only create a constantly-growing and long-lasting economic burden, but will also be a source of grave social problems and political instability."

Al Othman blames the prevalence of large public sectors that often employ the majority of a country's workforce. He describes this as "masked unemployment", where individuals are placed in unproductive roles offering little scope for learning or advancement. In contrast Middle Eastern countries often have relatively small private sectors, based around a limited range of industries such as finance and real estate.

Humansoft, a fast-growing regional company with global aspirations, has had to deal with the challenges of recruiting, training and developing its own skilled workforce. Al Othman says the biggest issue has been to identify what skills are needed where, and how to allocate resources and personnel most effectively.

"You can look at a process which used to be done by one person and say 'OK, we're going to divide this up into four sections; one can be automated by using IT, and the other three can be given to other people’," says the Humansoft chairman and founder. "By examining your processes and your available skills, you can not only make the best use of your existing resources - human and IT - but also develop our employees' skills further," he adds.

Al Othman gives the example of how his company handles its enterprise resource planning (ERP) implementation. Instead of having the technical ERP specialists separated, the team at Humansoft is divided up in a different way, which gives a number of distinct advantages, according to Al Othman.

"Our ERP guys are actually sat with the human resources (HR) team; they're not separated out into a different office," he says. "This means that the IT staff know what the HR staff need from them, so the IT solution is much better aligned to the business. It also means that we can develop the skills of both sets of staff - they can learn from each other."||**|||~|alothman200a.jpg|~|Al Othman: The trend towards service industries serves us well.|~|Al Othman says the region as a whole needs to start dealing with HR and skill issues more effectively in order to deal with the growing unemployment problems it faces. He claims that simply automating processes using IT is not the solution, as this will just increase the masked unemployment rate by removing even more useful tasks from workers, especially in the public sector. But he says new service-oriented industries offer a way forward.

"The global trend towards service industries serves us well," Al Othman says. "Industries such as healthcare, education, IT, telecommunications, hospitality and entertainment have very little need for natural resources; HR and knowledge are the main resources besides capital. And when it comes to capital, the GCC countries are decidedly overcapitalised because of investors shifting from foreign to local investments.

"This is a major advantage, but the catch has been in convincing investors to take part in the types of ventures which lead to job creation and adding value to the economy in the long term. Such ventures typically require a significant initial outlay of funds and a gestation period beyond the one year cycle typical of the trading businesses that dominate the private sector in the GCC."

The Humansoft boss has clear ideas about some of the cultural changes that need to come about to ensure a shift to this new model of economic thinking. At the top of the list is people's attitude towards government and government jobs; Middle Eastern citizens need to stop thinking of the government as the ultimate source of employment, according to Al Othman.

"In the existing culture, government is perceived as the provider of secure employment; people believe it is more prestigious and a higher achievement to get a government job," he says. "Also, the nature of the government role is more like that of a guardian; it is the centre of expertise and the place where developmental efforts are initiated and executed. The government needs to evolve into the role of enabler to the private sector through legislation and monitoring."

For Al Othman, the key to succeeding in increasing long-term employment levels lies - unsurprisingly - in education. But he says simply entrusting formal education channels with the task of developing in young people the skills necessary to drive a modern economy is not enough.

"To achieve a cultural change we cannot confine our educational efforts to future job incumbents and to the schooling system; we need to integrate other parties in the process, including families, parents and legislators," Al Othman says. "Otherwise, the graduates of what may be viewed as an ideal schooling system will be slammed with hard realities of a culture that is not in synch with their profiles and aspirations."

Al Othman sees Humansoft as a company that has succeeded in changing the way its stakeholders think, moving away from traditional and "safe" investments such as real estate. He hopes other firms and other investors across the region will start to look at new ways of dealing with the old issues of HR, IT, education and automation.

"We see a change in investors' willingness to be in this new kind of business, which is encouraging," concludes the Humansoft founder. "We believe we are a success story that has provided the ground for such a change."||**||

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