issacjohn@khaleejtimes.com Filed on October 16, 2018 | Last updated on October 16, 2018 at 06.49 am

Rapid GCC population growth leading to increased demand for jobs

Job creation requirements for UAE nationals are estimated at 130,000 over the next 20 years, or just 3 per cent of current employment levels, quite modest compared to other GCC countries, a study by Moody's Investors Service reveals.

The UAE has the youngest population in the GCC with 50 per cent under 20 years old, but the small size of the national population relative to the total workforce means that the policy challenges are far more manageable than elsewhere in the region, the report said.

"The UAE's national population is very small at just 11 per cent, meaning that there are a larger number of expatriate jobs that could potentially be filled by nationals," said the report.

In contrast, other GCC countries face a bigger job creation challenge with rapid population growth across the region leading to increased demand for jobs as new entrants join the market and only modest numbers of workers retire.

In 2017, the UAE labour market, comprising non-nationals, created jobs for more than 5 million people and received 1.35 million workers for the private sector, according Nasser bin Thani Juma Al Hamli, UAE Minister of Human Resources and Emiratisation. He said robust economic activities made the UAE economy more resilient and sustainable, creating more job opportunities.

"Average job transfer in the UAE labour market reached more than 5 per cent in 2017, driven by a package of reforms introduced by the government in 2016," Al Hamli said at the 45th Arab Labour Conference in Cairo.

Maryam Eid AlMheiri, Head of the Work Opportunities Committee and CEO of the Media Zone Authority - Abu Dhabi, said building relations with government and private authorities and creating employment programmes in various sectors would help achieve the vision of the Abu Dhabi Government to create thousands of jobs for citizens.

The Abu Dhabi government has developed a 'sustainable job creation system' for Emiratis as part of a recently announced accelerator programme called Ghadan 21.

In Dubai, as per the Industrial Strategy, plans are underway for the creation of 27,000 jobs while the government aims to increase total GDP by Dh165 billion by 2030.

While labour market nationalisation policies of GCC countries aim to provide more jobs for a rapidly growing population, they are also likely to raise labour costs and hamper diversification, the report said.

The capacity of public sectors to absorb large numbers of new labour force entrants is dwindling. GCC governments have historically used the public sector to create jobs for nationals entering the labour market and distribute oil wealth.

In the UAE, Qatar and Kuwait, public sector jobs account for between 80 and 90 per cent of total employment of nationals.

Public sector jobs typically offer better pay, greater benefits and more favourable working hours than their private sector counterparts. However, labour force growth coupled with significant increases in government salaries has seen government payrolls rise rapidly in recent years, reducing the ability of the governments to continue acting as employers of first resort.

For most GCC governments there is limited scope to create jobs by displacing expats, as nationals already account for the vast majority of public sector jobs.

Relative to the current size of the job market, the number of new jobs for nationals needed in the next two decades to meet labour market and social objectives is highest in Saudi Arabia, Oman and to a lesser extent Kuwait.

"The size of the challenge is greatest where nationals comprise a relatively large share of their total populations, unemployment is relatively high, and there is less capacity to absorb new entrants into the public sector. Among the GCC these conditions apply to Saudi Arabia and Oman in particular," said Thaddeus Best, a Moody's analyst and co-author of the report.

By contrast, despite their young demographics, pressures are less marked in the UAE and Qatar, where expatriate numbers are higher relative to nationals, which indicates greater scope to create jobs for nationals as long as skills requirements are met.

- issacjohn@khaleejtimes.com