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Labor nationalization, and the related need to develop critical work-readiness skills in the younger generation, were cited as the top human capital priorities across the Middle East in recently published research.
Seventy-two percent of business and HR leaders indicated that labor nationalization—the concept of reducing expatriate employment by hiring more citizens—is a top priority, according to the MENA Labour Market Confidence Index. The survey report also revealed that nearly half of respondents from the Middle East North Africa (MENA) region expressed optimism in local labor markets for 2015.
The data was collected from 1,251 respondents in August and September 2014 from the following countries: Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar and Saudi Arabia, and two cities from within the United Arab Emirates, Abu Dhabi and Dubai.
Top HR Priorities
The top human capital priorities were developing talent both from the local population (cited by 72 percent of respondents) and from the younger generation (cited by 45 percent).
Within the labor nationalization goal, the top aim was defining a long-term sustainable strategy.
“There is clearly a trend toward a term we define as ‘Nationalization 2.0,’ which is characterized by a fundamental reboot of the current approach to localization,” said David Jones, author of the report and managing director of The Talent Enterprise, a human capital think tank dedicated to the region. “It’s a shift from attracting talent based on a quota-driven approach, toward meaningful, genuine and enduring talent advancement. This requires an increasing focus on developing skills and competencies, rather than a quantitative focus on filling jobs, as has been the case in the past.”
If the future direction of economic growth in Saudi Arabia will be in manufacturing or retail, for example, more Saudis must be encouraged to make these career choices and seek appropriate qualifications, Jones said. “Abu Dhabi needs to focus on its core sectors such as health care, education and aviation in terms of aligning educational skills with employer demands, and Dubai is clearly seeing a trend toward increasing its service delivery via sectors such as retail and hospitality.”
Optimism for 2015
Forty-two percent of survey respondents expressed optimism for their organizations in 2015, and another 51 percent believed things will stay the same. Twelve percent said they were cautious about the labor situation in the new year. Forty-six percent reported that the overall economic outlook in their countries improved in 2014, while 45 percent stated it remained the same. Just nine percent responded that the situation had gotten worse. The numbers were nearly identical for organizational growth outlook.
Approximately a third of organizations based in the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) indicated that the overall labor outlook has significantly improved over the past 12 months. The United Arab Emirates led the list, much of which could be attributed to winning the right to hold the World Expo in 2020, according to the report. Expo 2020 will represent the first time the event is hosted in the Middle East.
Dubai (31 percent) and Abu Dhabi (30 percent) reported the strongest rate of improvement in 2014, followed closely by Oman (29 percent) and Saudi Arabia (28 percent).
The tourism and retail industries reported the most improvement in 2014, attributed to enhanced growth prospects across the region in preparations for large global events within the next decade, expansive government budgets and economic recovery, according to the report. The public sector and construction also reported improvement in 2014, while manufacturing and health care remained stable.
“This is a clear sign of the overall economic buoyancy across the region and a generally expansive outlook, especially after the recovery from the global financial crisis as well as the Arab Spring,” said Jones. “Though each country in the region was impacted by both events either directly or indirectly, the changes have been far more seismic and pervasive on our labor markets with regards to a renewed focus on economic diversification and localization,” he said.
The MENA labor market is unique, with extraordinary challenges and opportunities. “With its projected levels of economic growth, an unprecedented increase in its youth population, some of the fastest rates of increase among female participation in the workplace in the world and dramatically changing patterns of immigration, the region is currently a laboratory for labor market reform,” he said.
Recruitment Outlook Cautious
The majority of organizations surveyed (68 percent) said they are following a “moderate and cautious” recruitment strategy. “It is clear that the MENA region’s labor markets are maturing and becoming more complex in their movements,” said Jones. “Some geographies, industries and positions are clearly hot at the moment, with a scarcity of productive talent available for recruiters, while other areas are languishing, or at best remaining stable.” Jones explained that using “simple averages” in terms of pay and benefits across industries and geographies was “increasingly inadequate” as a means to capture the complexities of the region’s highly segmented labor markets, where local factors are the main determinant of the talent landscape.
Health care led the way in terms of expectations of increased head count, followed closely by construction and hospitality. All three industries have traditionally depended on expatriate labor as a major source of employment. The highest levels of anticipated hiring are in Kuwait, Saudi Arabia and the United Arab Emirates, all of which are increasingly focusing on accelerating labor nationalization, and reducing their historic reliance on foreign workers.
The outlook on rewards, salaries, bonuses and benefits indicates a “wait and watch” approach, with a majority of employers (86 percent) indicating no significant increase in budgets for 2015, according to the report. Salary increase projections also remained balanced across all levels of seniority, at an average of 9 percent. Sixty-one percent of learning and development budgets remained flat in 2014. Twenty-three percent of organizations increased their training budgets.
“Clearly, [the study] highlights the role that HR professionals need to play in shaping the future of the region in terms of human capital development, especially in the U.A.E. in preparation for Expo 2020,” said Jones. “We need to build a resilient, skilled and diversified workforce contributing to all sectors of the economy.”
Roy Maurer is an online editor/manager for SHRM.
Follow him at @SHRMRoy
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