DUBAI, 19 July 2006 — The creation of public-sector jobs solely for the purpose of employing Gulf nationals and the prevalence of foreign laborers willing to work at low-wage private-sector jobs are the two main factors in the bifurcation of the regional labor market, according to a study released yesterday from the National Human Resources Development and Employment Authority (Tanmia).
The study of long-term unemployment of citizens in the Gulf Cooperation Council member countries is part of the recently proposed Labor Market Information System (LMIS) project for the region.
The study analyzed micro- and macro-level data and researched the relationship between unemployment, oil prices, output gaps, and other macroeconomic indicators. It also explores the lessons learned from labor market policies implemented in the GCC and other economies.
The study showed that the clustering of nationals seeking public sector jobs while foreign-born citizens take up low-wage jobs in the market are root-causes of regional unemployment.
The other findings of the study reveal that the region is dependent on higher oil prices to create more public sector jobs for citizens that have high expectations of salaries and benefits. When oil revenues dip and the governments adjust output gaps, fewer government jobs are available, which increases the level of unemployment among citizens of the GCC.
The findings do not support the claim that nationals’ unemployment is voluntary. Unemployment rates were found to be five times higher among poorer nationals than among the wealthier.
Tanmia’s study also shows that employment subsidies and employment quotas have had negative rather than positive effects on employment, with subsidies serving to increase wages overall, thereby reducing labor demand; and firms employing ghost workers’ (on paper only) just to meet quotas, such as the “Saudization” policies in Saudi Arabia.
The paper recommends specific measures such as enhancing the productivity of citizens so that they can compete more effectively with more experienced foreign workers; adopting a system of apprenticeship, similar to the German system, that links the education system to the labor market; instituting programs and policies that will attract the unemployed into employment; and training and retraining for the previously employed who become unemployed.
