A “ticking time-bomb” was how delegates and panellists at the World Economic Forum Roundtable on Arab Competitiveness in Doha last week dubbed unemployment in the Arab world. Yet whilst many countries are having to deal with this growing problem retroactively, Qatar is in the happier position of having the opportunity to learn from the experiences of its neighbours.
The roundtable saw discussion centre on how governments in the region could formulate labour policies to boost job creation. Whilst discussing the challenges in the whole Arab world the problems of the oil-producing Gulf Cooperation Council (GCC) nations were highlighted. The problem is that the quality of the labour supply does not match the needs. The result of this is that the jobs created do not go to GCC nationals.
One response aimed at encouraging firms to employ national labour is the labour nationalisation programme. Yet these schemes often compound the problem by forcing firms to hire nationals who cannot be fired and have no incentive to work. In some countries this has even resulted in a system of “ghost workers” who are employed to fulfil nationalisation targets but never have to attend their job, as the work is done by expatriates.
The large proportion of non-nationals in the labour market is a phenomenon dating back to the early 1970s. With considerable increases in oil revenue flowing into the coffers, some Gulf states were able to enjoy accelerated development and modernisation of their economies, stimulating greater demand for labour than national populations could provide.
Much of this demand was for low-skilled labour which came en masse from South Asia. However, greater expertise was then needed to operate the large capital and energy intensive industrial plants that were set up. The technical and administrative needs of these created jobs for both nationals and expatriates, but by far the largest proportion of the labour market was still filled by low-wage, low-skilled expats.
Compared to its neighbours, Qatar is much further back down this development trajectory. A quick comparison with Bahrain spells the difference out clearly. Conservative estimates of Bahrain’s unemployment are put at 16%, and with population growth, the figure is likely to almost double within a decade if left unchecked. Qatar, however, had an unemployment rate of 2.7% in 2001, a figure that most agree has since fallen.
Typically governments in the GCC have absorbed much of the national labour. Sound remuneration and job security make it an attractive option for locals whilst the private sector employs roughly half of the labour force, recruiting from the pool of low-skilled expatriates. As a result, the private sector has developed business models based on cheap labour.
With populations growing rapidly over the last 15 years, as in Bahrain, the result has been a growth in national labour numbers; but these workers are un-willing to compete with expatriates at low wage levels. Despite high levels of education they lack the skills or are unwilling to participate fully in the semi-skilled section of the labour market. But governments have become saturated and cannot keep pace with job creation.
The problem in Bahrain is that in the last 15 years, two non-competing segments of the labour market have developed. On the one hand, there are nationals who are unable to secure public sector employment and unwilling to enter the private sector at the low wages available, and on the other, expatriates who are employed by the private sector for low-skilled work.
This characterisation is not true of the Qatari labour market. Rapid expansion and huge revenues from hydrocarbons are driving highly visible, accelerated development and modernisation; the current need is for more labour imports.
Thus far, immigration of workers has been overseen by the Department of Labour in the Ministry of Civil Services Affairs and Housing. The International Labour Organisation (ILO) in Geneva estimates that roughly three-quarters of the labour force is made up of expatriate workers.
The total population in the 2004 census was 840,290. Of this figure roughly 18% were Indian and roughly 18% Pakistani. Whilst 40% of the population were ethnically Arabs, this figure is by no means made up exclusively of Qataris. There are a host of other Arab nationals working in Qatar, including many Yemenis, Egyptians and Levantine Arabs.
Immigration thus far has been managed by quotas; limits have been placed on the numbers of nationals from each country. However, there is now pressure on these quotas and many firms are struggling to recruit qualified staff from abroad.
“We find people who are qualified for administrative jobs but they aren’t allowed in because they are Indian and the quota for Indians is full,” explained the managing director of one local firm. “The ministry say we can have Nepalese, but they don’t come with the same level of education and skills.”
A similar story is told by many firms around Qatar. Whilst some nationalities are suitable for high-skilled jobs such as computer-programming or sophisticated administration in specialised practices, the quotas for these nationalities are full.
“Whilst low skilled workers from countries such as Nepal are fine for construction, we face problems when it comes to jobs that a Qatari wouldn’t take but a qualified expatriate would be happy to take,” he continued.
With this concern in mind, the private sector has been making its voice heard through its representative institutions. The Qatar Chamber of Commerce and Industry (QCCI) and the recently formed Qatar Businessmen’s Association (QBA) both represent these concerns of their members.
Some have even suggested that the role of administering immigration and the arrival of expatriate workers be moved into a Ministry of Labour or a directorate in the recently created Ministry of Economy and Commerce.
“There is currently a lot of interaction,” explained Mohamed Al Thani, minister of economy and commerce, when speaking to OBG recently. “To make the business environment easier the private sector need to have a hand on how they get their people from executive level right down to the bottom. We want the directorate to handle it, but we want them to co-ordinate with us and the private sector more. We will co-ordinate more, but we don’t want to absorb the function in the Ministry of Economy and Commerce. It is a specialised task and they have to abide by the ILO regulations, which is not something we want to be involved in; but we want them to appreciate our aspirations.”
Whilst the directorate may be erring on the side of caution having seen the experiences of their neighbours the government is planning to make sure the other side of the equation, national labour, is ready to meet the challenge.
The labour market strategy is currently being drawn up by the Planning Council. Formerly known as the Manpower Planning project, work began in 2004 with the aim of balancing the labour market and avoiding the skills gap that has affected other GCC countries.
The project aims to produce a model for the labour market and to understand how unemployment occurs in a country that imports labour. The plan is focussed on the future requirements of the pubic and private sector on the basis that unemployment is not currently a problem in Qatar.
“Where we do currently have unemployment of nationals, it reflects the culture of work,” explained Jassim al-Nasr, director of social planning at the Planning Council. “Market entrants hold out for specific jobs or avoid participating in the market due to social norms.”
With the participation of 12 major government and non-governmental institutions, including Qatar Petroleum, Qatar Foundation and Qatar National Bank, the project is currently at the stage of finalising background papers before proposals are submitted to a higher authority to become policy.
Although at this stage details of the actual model are not available, the challenges and objectives are clear. The broad idea is to bring together the education system and major employers to make sure that graduates with the right skills are produced to meet the demands of employers. This includes not only graduates from universities, but from all levels of education.
With this in mind, the project hopes to match the needs of the government, the mixed sector and organised private sector areas such as tourism, banking and insurance to make sure that national labour can participate in meeting Qatar’s economic development goals. A similar model has already been successfully introduced on a micro level by Qatar Petroleum and the hope is to move this to the macro level.
However, with GDP per capita reaching extremely high levels, the challenge may well be complacency among future generations of Qataris. Some are disturbed by the potential lack of enthusiasm among a younger generation whose attitude to work, and hence their desire to match their skills with requirements, may not be driven by economic necessity.
As one local businessman put it, “Why should some guy who finishes high school and can buy a Porsche feel the need to go and be trained to get a good job?”
Whilst attempts to prevent Qatar’s labour market from diverging into two non-competing segments will continue, the outcome may depend on the economic realities faced by the population.
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