MANAMA, 22 September 2004 — A leading Saudi economist called on GCC business leaders on Monday to assist the governments of the region to bring about vitally needed educational system improvements through the creation of private universities and a more active role both in financing and advising institutions of higher learning.

The comments were made by Dr. Said Al-Shaikh, chief economist of the National Commercial Bank of Saudi Arabia during a speech to leading businessmen, industrialists, contractors, financiers, researchers, academicians and young professionals gathered at the first Gulf Society for Organizational Learning (GulfSoL) conference being held at a remote location in Bahrain.

Al-Shaikh noted that the education levels of GCC countries were skewed to the low end, with more than 50 percent of the work force having less than a high-school diploma; college graduates accounted for less than 20 percent of the total.

He said current public school graduates lacked mathematical, scientific and language skills necessary for job success and called for improvements across the GCC. “We certainly have a problem in terms of economic structure,” Al-Shaikh said. “The skills of those filling the jobs have to match the requirements of those jobs. How do we go into the 21st century if 60 percent of our work force has less than a high-school education? Where do we compete and with whom?”

“If we look to the total number entering the work force of 120,000, and only 23,000 of them have college degrees, what about those remaining?” Al-Shaikh asked. “They don’t speak English, and they’re computer illiterate. Honestly, it is very serious. I cannot emphasize it more than that.”

The economist then made some recommendations to improve the current situation. “We have an obvious gap between education and employment,” Al-Shaikh said. “We need to allow the market to dictate the course of education. We need private universities so that children don’t have to leave their own countries to study. There are many businessmen who are willing to commit their resources, but we need to operate in an environment where they can achieve the goals they hope to. We need to emphasize practical skills.” Al-Shaikh gave participants a detailed overview of macroeconomic structure across the Gulf region and the challenges GCC members will face in an ever more competitive global environment. He expressed concern on the region’s continued dependence on oil production as the primary source of economic activity as well as the problem the region’s reliance on expatriate workers causes in creating a “dual” labor market.

Al-Shaikh commended GCC governments for their efforts to encourage more national workers in the private sector but said that market-based resolutions would be more effective. “Basically, we’re importing the wage curves of India, Pakistan and the Philippines,” Al-Shaikh said. “There is an unlimited number of foreign workers available and that could continue to push the average wage down for GCC residents.”

Of particular concern to Al-Shaikh were the statistics showing that the region’s domestic savings rates fluctuated along with oil prices and that the investment to GDP ratio for the GCC was 18 percent, compared to 32 percent for Malaysia and 38 percent for China. He also noted that with so many women idle across the region that family incomes went to supporting dependents through consumption expenses as opposed to savings or investment.

Al-Shaikh also said the region’s continued reliance on expatriate workers revealed some disturbing trends. Throughout the GCC foreign residents account for 40 percent of population growth but make up 60 percent of the labor force. Al-Shaikh said that as long as there were wage and working-condition disparities between nationals and expat workers the region would suffer from high unemployment rates. The economist said that disparity coupled with a large, unskilled domestic labor force create a situation that could lead to dire consequences in the future if left unchecked.

The GulfSoL conference concludes today with participants seeking ways for the private sector to assist GCC countries with these serious challenges.