February 03, 2007
Khaleejization: Background Information
The Arab Gulf countries have long relied on foreign labor to keep their economies running. Nationals largely work in cushy government jobs that pay above-market wages and require relatively few hours. This was part of the bargain the royal families struck with their populations- no representation, no taxation. By contrast, private sectors in the Gulf are dominated by expatriates. With the partial exception of certain kinds of managers, the latter are compensated poorly and work long hours.
In recent times, problems have surfaced with this formula. While oil revenues have grown, they have not kept pace with birth rates, and governments could only create so many public sector jobs. Unemployment has become a problem for the first time since the discovery of oil, and nationals are understandably unhappy about this. The obvious solution would be for them to join their countries' booming private sectors. By and large, this has failed to happen.
One reason for this is social in nature. Many private sector jobs- especially those not at the managerial level- are not prestigious. Gulf nationals who have seen their parents' generation occupy comfortable positions in the government do not want to start at the very bottom in private sector firms and make peanuts in positions that have no status attached. However, most of them don't have the educational, technical, or language skills necessary to start higher up.
There is also a lack of integration between expatriates and nationals. A myth has developed among the former that nationals are inherently lazy, and segregation has prevented this from being debunked. The truth is just that incentives simply do not exist to compel nationals to take low-paid positions. Governments have been good at giving jobs or doling out cash to those in need, family support networks are strong, and people in menial or vocational positions are looked down upon. Yet, this myth, along with the notion that nationals expect higher pay and better treatment than expatriates- this idea being more grounded in reality- means that even qualified nationals sometimes have a hard time landing jobs in the private sector. This has led to complaints from nationals that they are being discriminated against in their own countries.
For decades, governments avoided this dilemma through the creation of make-work positions. Bureaucracies expanded until they could not cope anymore. But eventually, they realized that it would be necessary to push their citizens into the private sector. They did this using programs with names like Bahrainization, Qatarization, Omanization, and so on. Together, they can be described as Khaleejization, or Gulfization.
TrackBack URL for this entry:
A major issue here is the perception - or rather reality - that you cannot fire a duff local. Once you hire them, you're effectively stuck with them, they are very very hard to get rid of. Even if you could fire them, the negative wasta might be enough to severely hurt if not destroy a small private company. And bear in mind that all companies here (outside the freezones) have a local majority partner, one doesn't want to risk offending local society, which is still very tight knit and interlinked in most Gulf countries.
Some of the worst offenders for not wanting to hire locals are locals themselves. Why? Because they know they can get a harder working expat for less money, and get rid of them at the drop of the hat. Firing one of their own can be even harder for locals than it is for non-locals.
Then taking a different angle, there is the tragedy of all the myriads of very highly educated, very motivated local women that are prevented from joining the workforce by the male members of their family.
Posted by: secretdubai at February 9, 2007 04:27 PM