Today the United Arab Emirates is turning 44. I enjoy living here, and wanted to celebrate some of the country’s achievements and recognise some of its challenges.
In 44 short years, the country has moved from having very few (mostly poor) residents and very little infrastructure, to being a symbol of economic and social success – even if the global crisis or the impact of the slump in oil prices is also felt here, but much less than in Europe for example.
Go to Dubai or Abu Dhabi and you will see glimmering towers, large streets (sometimes clogged by traffic), endless numbers of 5-star hotels and luxury cars, youth everywhere and a mix of population that actually causes a shock the first time you set foot in the country coming from Europe or the USA.
Very few countries can claim to have gone through such an impressive leap in such a short timeframe.
Under the wise leadership of the founders of the nation and their successors, the country invested massively in its infrastructures, creating the background for the development of the rest of the economy thanks to the massive revenues generated by the oil and gas exploitation.
Suddenly, schools and hospitals appeared. The population grew dramatically in one of the large demographic booms of the recent years. In order to build this infrastructure, the import of large amounts of “expats” was and is still needed, from the unskilled labour coming mostly from Asia to the highly trained and experienced professionals that are mostly Westerners.
The country is now eyeing to move into the knowledge economy, and its ambitious plans such as the Abu Dhabi Economic Vision 2030 or the equivalent Dubai Plan 2021 explain the way in which it is intended to move away from the dependence on hydrocarbons in the economy and the weight of government as the main employer of Emiratis, to an active private sector where the Nationals can find fulfilling jobs and bring value to the country in fields such as tourism, trade, culture etc.
What does this have to do with HR and Compensation and Benefits ?
Well, more than meets the eye. As a Compensation manager, you have to deal with all these trends and facts and how they affect the design of your rewards approaches :
- Government jobs still being the preferred route for UAE Nationals – not surprising given its current advantages over the private sector : reduced work hours, higher pay, more benefits, and priority given to Nationals sometimes irrespective of individual performance.
- A local education sector still struggling to provide training in the fields that are required for the economy. Combine that with the high numbers of young Nationals who are high school dropouts (Previous reports indicated between 20 and 25% of male Emiratis, 15% of females “only” and falling but it seems the trend might be reversing lately).
- A demographic explosion with more than 60% of the citizens being less than 25 year old that will soon come to the job market. 250,000 graduates are expected to be looking for new jobs by 2020. And the fact that local pension pays after 20 years, meaning experienced Emiratis can leave their jobs and go about setting up their own business, which they often do – but that reduces further the pool of available, experienced candidates, which is already small due to the size of the local population 20 or 25 years ago.
- A recently increased focus on emiratisation in the wake of a co by 2020)mbination of factors (impact of the Arab spring, government will not be able to continue to be the main employer of locals as it is unsustainable in the long term, fight against the unemployment of Nationals….).
- At the same time, expats are still much needed. How do you keep attracting them in such a job market ? How do you incentivise them to share their knowledge with their Emirati colleagues, and even as importantly how do you keep those that are good coaches and therefore help the Nation, when the average stay of an expat is barely over 3 years ?
- A composition of packages with basic pay and multiple allowances that is difficult to maintain and evolve (for example what happens when housing costs fall or education costs continue to rise sharply), and will not change while the End of Service contributions are based on basic pay only and there is no pension or long-term savings for expats based on the fixed salary.
Those are some of the external factors that directly influence and impact the work that Compensation managers must do.
It may look daunting to some, but to me it is exciting. We are at a time and place where we can truly have an impact. I am proud to be working for a country where my work can directly contribute to the shaping of the Nation, where I can leave my mark.
The Government is aware of the challenges it faces with respect to its national AND imported human capital, and is taking action to address the gaps.
They want to achieve full employment for their citizens, which is a noble and worthy cause. And yet at the same time they recognise that in order to thrive in the future, there will not be enough UAE Nationals, and expats will always be needed.
So we all work towards creating an environment where these objectives can become a reality.
I look forward to the coming years and witnessing how the country continues to grow and move into the next stage of its development.
Happy National Day !
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This is an updated and revised version of a post previously published in 2011.