Nationalization as Affirmative Action

When Geraldine said that the topic for this month was to analyze the success of affirmative action, it took me a while to think about how affirmative action works here in the United Arab Emirates.

In Canada, affirmative action focuses on women, indigenous people and minorities, but in the oil rich countries of the Middle East it focuses on nationals (indigenous people) only.  The goal of affirmative action is to place qualified nationals in the technical, professional and labour roles currently held by expatriates.  This goal is congruent throughout the United Arab Emirates (the Emirates), the Kingdom of Saudi Arabia, Oman, Kuwait etc.  These initiatives are referred to as Emiratization, Saudization, Omanization and Kuwaitization respectively.

In these countries, foreign labour is employed to do much of the work.  Among Saudi Arabia, Oman and the United Arab Emirates, the Emirates have the highest ratio of expatriate workers.  It’s estimated that 88% of the population are expatriates (Rees et al. 2007).   In Canada, these workers would be immigrants and essentially there would be no distinction between them and the national workforce, but in the Emirates it is almost impossible to gain citizenship so employees have resident work visas and retain citizenship in their home countries.

One of the drivers of these affirmative action programs is the increasing unemployment rate for nationals leading to a concern that there will be civil unrest. As Looney (2004) notes: The unemployment rate among Saudis is 8.2 percent, reaching as high as 32 percent among younger workers. Clearly the inability of a youthful Saudi workforce to displace foreign workers is one of the great challenges facing the Saudi authorities

Economically, repatriating jobs is important because expatriates typically send 50% of their earnings to their home countries so they are not investing in the country where they reside, nor are they purchasing as many goods and services as the nationals. It is estimated that a decrease of expatriates would increase the purchase of goods and services leading to an increase in earnings in the private sector and an increase in international investments (Taecker, 2003 cited in Looney, 2004).

Two polices that have been introduced to stimulate this change-over include: charging fees to hire expatriates and providing financial incentives for hiring nationals.

In the Emirates, the Emiratization program began in 2000.  It was marketed as ‘positive discrimination’ and quotas were set for targeted industries including banks, airlines as well as for certain positions including HR managers, Secretaries and Public Relations positions.

Tanmia, The National Human Resources Development & Employment Authority, is tasked with leading the way and their mandate includes, reducing unemployment of nationals and recommending policies to the government (Tanmia 2006 cited in Mashood et al 2011).  In tandem with these initiatives, the Khalifa Fund for Enterprise Development focuses on the development of Emirati entrepreneurs, providing them with training and loans to start small businesses.

Like the Emirates, the Omani government is focused on job creation in the private sector for nationals. They are trying to improve the working conditions in that sector to attract Omanis and they are also encouraging Omanis to become entrepreneurs.

Funding higher education is another way the governments encourage their citizens to prepare themselves for gainful employment.

Has Affirmative Action Succeeded?

Back to the initial question: have these affirmative action programs been successful.  The articles I found are not completely up to date, but my observation is that these initiatives have been successful in the public sector and in the banking sector.  I still see very few Emiratis in private enterprise.

The public sector has higher wages, shorter working hours and more flexibility than the private sector. Private sector employers seem to prefer expats due to their knowledge, skills (including language skills), working attitude, related discipline issues and, one of the main factors, lower pay roll cost … (Mashood et al 2011).

 

Affirmative Action has made a Difference in Public Organizations

While it seems that there is a ways to go before nationalization becomes a fait accompli, I have to wonder if the tipping point is closer than we think.   In the Emirates, the government has offered incentives for hiring Emiratis – sometimes their salary costs are covered for the first year, and they have also increased wages in professions, like teaching to attract Emirati graduates.  Our college has a number of Emirati women who are administrators and instructors and our Associate Director is an Emirati man.  It is unlikely that we would have come this far without affirmative action, so looking at it from that perspective, it is a success!

Suggestions for the Future

 

Looney (2004) suggests that the government in Saudi Arabia needs to continue to offer incentives to encourage nationals to take jobs in the private sector.  His suggestions include:

  • making social benefits available to all nationals not matter where they are employed
  • limiting public sector employment
  • rationalizing recruiting and termination policies for nationals and expatriates
  • promoting self-employment
  • increasing technical training

I look forward to following the progress of nationalization in these countries and to reading what others have to say about affirmative action in the areas they are exploring.

Sources

 

Mashood, N., Verhoeven, H. & Chansarkar, B. (2011) Emiratisation, Omanisation and Saudisation- common causes: common solutions?

Looney, R. (2004) Saudization and Sound Economic Reforms: Are the Two Compatible?

Strategic Insights, Volume III, Issue 2

Rees, C., Mamman, A. & Braik, A.B. (2007) Emiritization as a strategic HRM change initiative: case study evidence from an Emirates petroleum company, International Journal of Human Resource Management, 18(1) 33-53

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