UB40's melody of Thatcher's broken Britain could haunt UAE

There is an employment problem here in the UAE and it is as great as that which defined Thatcher's Britain. The UAE's employment problem, however, is invisible - for now, at least.

Private sector applicants were thin on the ground at Tawdheef. Fatima Al Marzooqi / The National

Growing up in the UK during the 1970s and 80s the hallmarks of a society wracked by unemployment were plain to see.

Dole queues on the news, cardboard cities of homeless youth, rising crime and urban decay were all the norm.

Even the songs on the radio reminded you that the prospects of finding a job were pretty slim. The reggae band UB40 took its name from the form you had to fill in to claim unemployment benefit while their hit One In Ten referred to the unprecedented unemployment rate at the time.

The UAE could not seem a greater contrast. It may come as a surprise to learn, then, that there is an employment problem here and it is as great as that which defined Thatcher's Britain. The UAE's employment problem, however, is invisible - for now, at least.

More than 90 per cent of the Emirati workforce is employed by the Government, according to a study of 2009 data by McKinsey, a management consultancy. But as the economy develops, and the wheels of industry begin to turn, these same nationals must migrate out of the public sector into private sector jobs. If they do not, the country will be unable to fulfil its ambition to diversify the economy to prosper once the oil and gas is gone.

However, there are no signs this change will occur any time soon.

Last week, at the annual Tawdheef Emirati job fair in Abu Dhabi, the majority of would-be applicants showed little interest in the private sector. They said the higher wages, more flexible working hours and greater opportunities for study in government jobs were a bigger draw than the prospect of working nine to five for a private company. And who can blame them?

But this can't go on forever. The population of the UAE is rising rapidly, as it is across the Middle East. The so-called "demographic bulge" created by population growth will dump tens of millions of young people into the labour market across the region in the coming decades and without some major policy changes there will be few jobs for them to choose from. There certainly won't be enough government jobs to go around.

McKinsey estimates the unemployment rate among nationals in the UAE is at about 14 per cent, with about 30 per cent of young people out of work. By 2020, the firm claims, as many as half a million Emiratis will be out of work.

This dire situation in waiting is by no means unique to the UAE. The UN International Labour Office (ILO) released a study last month that showed the whole Middle East and North Africa region faces a similar problem.

The office predicts unemployment across the region will increase to 10.3 per cent this year with next year unlikely to show any improvement, given the gloomy global economic outlook.

That's the same as the one-in-10 scenario UB40 sang about in the 80s. The difference is, it has been the norm in this region for years.

In the rest of the world the problem of providing enough jobs for a rapidly expanding and increasingly youthful workforce is no smaller. The ILO expects there to be 200 million unemployed globally this year out of a total workforce of 3.3 billion. Another 6 million to 12 million will be added to their ranks depending on the rate of economic growth, the organisation believes, while young people are three times more likely to be unemployed than older adults.

Over the next decade 600 million new jobs will be needed worldwide to absorb the 40 million new entrants to the job market a year and the backlog of 200 million out of work.

Governments in the US and Europe have tended to focus on political and fiscal solutions. Hundreds of billions of dollars have been poured into bailouts but relatively little has been spent directly on job creation.

The latest US employment figures show a glimmer of hope. But it remains to be seen if these new jobs born out of repeated fiscal stimuli are economically meaningful and sustainable.

Real job creation must now become a worldwide priority if we are to climb out of the current economic predicament and, perhaps more importantly, avoid the next one.