Category: Demographics

Economic reform required

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First published in:

The Economist (2016). Time to sheikh it up. The Economist, 420(9006), 11–12. https://www.economist.com/leaders/2016/09/08/time-to-sheikh-it-up

If Gulf citizens are to keep enjoying rich-world standards of living, they will increasingly have to find productive work in the private sector; this means overhauling labour markets that keep too many of the region’s citizens idle

THE people of Saudi Arabia have for decades enjoyed the munificence of their royal family: no taxes; free education and health care; subsidised water, electricity and fuel; undemanding jobs in the civil service; scholarships to study abroad; and much more. This easy life has been sustained by gushers of petrodollars and an army of foreign workers. The only thing asked of subjects is public observance of Islamic strictures and acquiescence in the absolute power of the sprawling Al Saud dynasty.

Similar arrangements hold in the other countries of the Gulf Co-operation Council (GCC), a six-member club of oil monarchies. But these compacts are breaking down. The price of oil has fallen sharply since 2014, and the number of young Gulf citizens entering the job market is growing fast. The maliks and emirs can no longer afford huge giveaways, or to pay ever more subjects to snooze in air-conditioned government offices. The monarchs know it. They say they are seeking to diversify their economies away from oil rents; they are also whittling away generous subsidies and plan a new value-added tax across the GCC.

But reforms have to go further. If Gulf citizens are to keep enjoying rich-world standards of living, they will increasingly have to find productive work in the private sector. That means overhauling labour markets that keep too many of the region’s citizens idle.

The pampering of Gulf citizens has made them expensive for firms to hire (see “Labour laws in the Gulf: From oil to toil”). By contrast, the third-class legal status of many migrant workers makes them extra-cheap (see “Migration in the Gulf: Open doors but different laws”) and puts them at the mercy of their employers. Given the choice between a hardworking foreigner and a costly local, private firms have long preferred the foreigner.

In response Gulf governments have imposed ever more stringent quotas on foreign companies to employ locals, especially in desirable white-dishdasha jobs. In Bahrain 50% of workers in banks must be Bahrainis; but only 5% of those in construction need be. (It’s awfully hot on building sites.) Quotas reduce the incentive for Gulf citizens to do a job well: why bother, when your employer has little choice but to keep you on? Firms often regard hiring locals as a sort of tax. Some pay them to stay at home.

The best policy would be to phase out quotas entirely, while also slimming the bureaucracy and making it clear that civil-service jobs are no longer a birthright. In Saudi Arabia two-thirds of citizens are employed by the state. Public-sector wages account for 12% of GDP in the Gulf and Algeria, compared with an average of 5% across emerging economies.

The way migrant labourers are treated needs to change, too. Gulf states deserve credit for letting in far more immigrants than almost all Western countries, relative to their populations. (In many cases, foreigners outnumber locals.) Migrants gain from earning far higher wages than they could back in India or Pakistan. But the coercive parts of the kafala system of sponsoring foreign workers should be dismantled. Migrant workers should not need their employers’ permission to leave the country. After a while, they should be allowed to switch jobs. Contracts should be clear and enforced by local courts. Long-term foreign workers should be able to earn permanent residence; ultimately those who wish to should have the opportunity to become citizens.

These reforms–less pampering for locals and more rights for migrants–would reshape the labour market. More locals would have to do real work. Migrants would be better treated, though inevitably fewer would be hired. Some new ideas are being tested. Bahrain is allowing firms to ignore quotas by paying a fee for each foreign worker they employ. As part of its ambitious economic agenda, Saudi Arabia is talking of issuing green cards to some migrants.

A new social contract
At a time of bloody turmoil across the Arab world, many royals fear undoing the social compact that has kept them in power. But cheap oil makes change unavoidable; doing nothing merely postpones the reckoning. Economic transformation should nudge Gulf states towards political reform. Perhaps, as their citizens are asked to do more to earn their living, they will demand that rulers do more to earn their consent.

Vocational majors

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First published in:

Swan, M. (2014, March 1). University staff hope to steer students to appropriate majors. The National. https://www.thenational.ae/uae/education/university-staff-hope-to-steer-students-to-appropriate-majors-1.685582

Too often students follow career paths set by their parents that are considered prestigious, whether or not they are well-suited to the studies.

University staff are trying to break down the stigma attached to certain degree courses in an attempt to steer students towards subjects they are more suited to, rather than those that carry social prestige.

Students wishing to make early applications to degree courses with limited vacancies will soon be deciding what to study, but those choices for as many as 20 per cent of students will often be the wrong ones.

It has been well documented by academics that among Arab and Arabian Gulf families, in particular, parental influence over subject choice is key and parents still think engineering, architecture, medicine and business are the only subjects that will lead to a successful career with good salaries for their child.

“It’s critical to change this perception that one is defined by their major and to explain that true success will come when one does what one is good at,” said Kevin Mitchell, vice provost at the American University of Sharjah.

“It’s the first step on a long career path so it’s got to be something you’re going to be engaged with over the course of a lifetime.”

He said there was still a lack of awareness of other disciplines and where they can take a graduate, such as international relations, mass-media communications or multi-media design.

“It always comes back to ‘does it make you employable and what do you do with it?’ ” he said.

These preconceptions are outdated, Mr Mitchell said. Employers look for soft skills, such as writing and critical thinking, more than a particular subject of study, something that is reflected in numerous studies in recent years from major employers in the region.

Dr Emilie Rutledge from UAE University, a federal institution, is currently studying parental influence on degree and career choices among Emirati students. She said career guidance from secondary education through the early stages of higher education was key.

“The more flexible the structure of undergraduate degree courses, the more feasible it will be for students to actually reconsider their majors,” she said. “If such a structure was in place, they would be able to experiment with the subjects.”

Ali Shuhaimy, vice chancellor of admissions at AUS, said that parents see these areas of diversification but still prefer majors like engineering and architecture.

“You don’t see investment into projects for history or geography,” he said. “We see investment in nuclear energy, in solar energy.”

It is a culturally bound issue however.

“If you were in the US or Canada where there is a great history in higher education you will have many people studying a general major like history and when they graduate there are hundreds of organisations to employ them. But here, the only place that would consider hiring a history major is a school, where the compensation and status is deemed very low.”

Every year the university increases its outreach, educating prospective students and meeting parents. Last year the university held 170 functions and this year 220.

“With these realities or limitations we try our best with students to encourage them to do what they love,” Mr Shuhaimy said. “It works sometimes, but most of the time it doesn’t. Parental pressure and prestige is a huge cultural factor.”

Prof Samy Mahmoud, who resigned as chancellor of The University of Sharjah in January after six years, said that since 2009, a system has been in place to try to avoid the problems that arise when students do not choose wisely.

A high-tech guidance system helps students to envisage their career orientation and uses multiple-choice questions to help steer them to areas that match aptitude and personality. In addition, advisers from the university meet prospective students and their parents for in-depth conversations.

“Once the students are admitted and get into the first three weeks of classes, any student who shows doubts about their choice can meet one of the counsellors and ask for a transfer to another programme,” Prof Mahmoud said. “In addition, the student’s classwork is monitored carefully for the first few months for possible remedial courses of action.

“With the above system in place, fewer students find themselves in the wrong programme than was previously the case. We found in recent times that the percentage dropped closer to 5 per cent, which is practical for most universities around the world that are known to have the best advising practices.”