DUBAI, 5 November 2004 — Faced with high unemployment, the fast-developing United Arab Emirates has embarked on a program of replacing foreign workers with Emiratis, but some say this policy pushes employers to hire less-experienced native workers.

The UAE government began the “emiratization” in the 1990s as fears grew that a burgeoning expatriate workforce, which make up 85 percent of the country’s four million population, was taking over the leadership of key economic sectors.

The process included a quota system for several sectors to take on a set number of UAE nationals or face penalties. “The government imposes Emirati engineers on us who have no experience of working in a tough job,” said a company executive who has worked in the UAE for the past 25 years.

“They end up sitting behind their desks and show no interest in the day to day running of the business. I can’t see how they’re supposed to take over from us when they haven’t mastered all parts of the job,” he added.

Daniel Hanna, regional analyst with Standard Chartered bank, said the UAE’s remarkable economic success, particularly that of the emirate of Dubai, was partly due to the availability of a highly talented pool of workers at a competitive price. “If you start trying to take some of that away through emiratization targets then this could cause tension,” he said.

The UAE’s economy depends heavily on an army of cheap foreign labor from the Asian subcontinent and the Far East. Millions of Indians and Filipinos work at fast food restaurants and construction sites — jobs that Emiratis often do not want. But the replacement of expatriate workers with UAE nationals has been most dramatic in the financial sector. The number of nationals employed in UAE banks grew from around 12 percent in 1998 to 23 percent last year, Tanmia said.

Banks are required to increase the number of nationals they employ by four percent annually, which would bring total national employees to 50 percent by 2007. If they fail to meet this target the government has threatened to refuse visa applications for new expatriate employees and stop the opening of new bank branches.

But Suresh Kumar, general manager of Emirates Financial Services, said some banks are finding it difficult to compete with the public sector employers in trying to attract locals. “Some young nationals prefer government jobs because of the better pay and (fewer) working hours,” he said.

There are no exact figures for unemployment among UAE nationals, but the labor minister said earlier this year that six percent of those seeking jobs were unable to find them. Nationals only represent 10 percent of the work force.

Hanna said the UAE and its neighbors will have to tackle a twin demographic and employment problem over the next decade. “Half of the local population in the Gulf is below the age of 21 and it’s growing at a rate of around three percent per annum,” he said. “This means the labor force is going to be growing very dramatically over the next few years. Already pressures are being felt amongst young graduates.”

The quota system was introduced after the government became frustrated at what it believed as foot-dragging by employers and to reduce UAE’s dependence on foreign labor. “The process is being speeded up through the quotas,” said Marwan Al-Sawaleh, assistant director-general of Tanmia, the government employment agency involved in putting emiratization into action.

Sawaleh said there has been some resistance among employers to the quota system. But he said it was the only way for some nationals to get their feet on the career ladder. “It’s unfair that companies should always choose well experienced expatriate workers over fresh UAE nationals. Emiratis are just as talented as anyone else,” he said.