Regional organisations consider job-market nationalisation a liability that encourages some to undertake illegal practices to meet quotas, says a new report.
The study from the management consultancy Booz Allen Hamilton says the “plug-and-play” model of recruiting expatriates to sustain the private sector is no longer viable.
“It has resulted in organisations treating the hiring of nationals as a necessary and costly burden with very limited benefits,” it says.
Budgetary surpluses are turning into deficits across the region as governments seek to accelerate plans to reduce their reliance on hydrocarbons and provide jobs that help to diversify economies.
Boosting private-sector employment of national citizens is particularly pressing in the UAE and Qatar, which have the highest proportion of expats working in the private sector.
The GCC private sector is expected to create 600,000 new jobs for nationals by 2019, according to the IMF.
But that would absorb just half of the 1.2 million nationals projected to be in the workforce at the time.
Efforts to boost the participation of nationals in the private sector date back to the 1980s, but labour nationalisation has been “modest at best”, says the report, Improving Labour Nationalisation in the Private Sector.
A focus on quotas and exclusions has led the private sector to consider such efforts to be an unwelcome cost, say Fuad Abdelhadi and Rasheed Eltayeb, the report’s authors.
They say that reserving job categories for nationals, restricting companies that do not comply with quotas and the enforcement of salary premiums are in conflict with private-sector needs.
Some corporations have effectively incorporated nationals, including Saudi Aramco, Sabic, Emirates, HSBC and DHL, says Booz.
The consultancy calls for a strategic human resources plan that starts with ensuring the skill sets needed by companies are available within the national labour market through collaborating with colleges.
Compensation should be linked to performance with the same standards applied to all employees.
Policymakers must change how they measure nationalisation in order to tackle tokenistic compliance, said Radhika Punshi, a director at human resources consultancy The Talent Enterprise.
“If policymakers continue to focus on a simple numerical approach … companies will make sure they have the right percentage,” she said. But if they look to complex metrics – nationals in senior management positions, female nationals hired, or retention rates – nationalisation may have better results.
“There are pockets of employers who are making genuine efforts,” Ms Punshi said. But many expat managers remain uncomfortable with diversity, she said. “There’s an us-versus-them dynamic between expats and nationals. Although many workplaces are very diverse, they are not very inclusive.”
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