26 March 2009
The GCC needs to create a labour market that can meet the region's growth mandate and is immune to economic fluctuations, says a report.
According to a recent report released by Booz & Company, a global management consulting firm, new labour policies that align supply and demand must be instituted to reflect economic liberalisation and the gradual withdrawal of states from markets. They must create sustainable opportunities for their citizens and protect the rights of expatriates. Most important, they must provide security against economic fluctuations.
"In this way, the region's labour and economic policies can be brought in sync to create a solid foundation for long-term economic stability and growth," explained Rabih Abouchakra, a partner with Booz & Company.
The report states that as GCC governments try to downsize public sector employment to shift towards more market-driven policies, they look increasingly to the private sector to provide solutions.
After the oil boom of the '70s and the '80s oil revenues were used to subsidise public services and employ nationals in the public sector. To satisfy the growing demands for labour in the private sector, GCC governments welcomed foreign workers resulting in an influx of workers from countries including India, the Philippines, and Indonesia.
"The GCC needs new labour policies that will move the region away from a welfare orientation, create sustainable opportunities for nationals and protect the rights of non-nationals, while insulating labour markets against economic shocks," explained Mona Hammami, an associate at Booz & Company.
However, Balakumar, Director, Dulsco HR Solutions, told Emirates Business: "There are already various efforts underway across the region to rationalise the job market, which remains highly vibrant by the way. We can observe quota schemes and special training and recruitment programmes aimed at slowly weaning dependence from expatriates in key positions and industries and promoting more local participation in nation building. At the same time, the Gulf has made significant progress in adopting regulatory mechanisms that protect the interests of foreign labour.
"The current financial crisis is affecting these initiatives to a minimal degree only, and with projected developments such as a surge in service sector job openings throughout the region we can expect the market to eventually balance out.
"When you talk about the immunity to economic fluctuations, the fact remains that the whole world did not expect this kind of magnitude, so we are all actually learning valuable lessons on how to handle the labour markets. Governments and industries are in fact in the process of assessing practices and policies to better manage labour resources and protect them from all kinds of adverse regional and global conditions."
The report says that policymakers must assess market performance, set objectives, articulate policies, and select and design new programmes to address these issues.
There is a need to gauge market performance and wages, income distribution, and hourly compensation costs, the ratio of employment to population, labour productivity, working hours, unemployment duration and benefits and the educational levels of the labour force are some indicators used to assess market performance. These are then mapped against the market's key objectives to attain employment, create income security, and allow for wage and work flexibility.
The report states that setting objectives for the labour market is a balancing act between creating new jobs and infusing the market with a sense of energy and opportunity, while protecting those already employed.
Labour market policies must rest on three pillars: active, passive and protective. An ideal policy portfolio balances all three - for a country's specific security and flexibility objectives.
Active policies work to create jobs and improve the quality of the labor market by providing the unemployed with work and creating a more robust and skilled labor pool, which in turn increases productivity and earnings.
Passive policies are aimed at providing a safety net for workers during periods of unemployment and downturns.
Protective policies that set labour standards and conditions, typically take the form of legislation and regulations. These govern health and safety measures, wage setting, contract conditions, training requirements, and other issues that are essential to a fair and safe workplace.
"The GCC needs more active labour policies to create positive incentives in the market," Samer Bohsali, a principal at Booz & Company said.
The report states that despite the global financial crisis, the long-term growth prospects for the Gulf remain solid and the region's economies are less likely than those in much of the world to experience deep recession. As such, they will continue to have the same challenges as before the downturn in terms of labour demand: double-digit levels of unemployment among the citizens and a need for foreign labour.
Talking about how a solution to this issue could be found without anyone's interests getting hurt Balakumar said: "We have to start with highly-focused, open and productive discussions among the public and private sectors. Labour conditions are unique for each country, so there has to be a proper assessment at the national level before any viable solutions can be formulated. There is definitely no silver bullet to solving national unemployment and the high expat labour. Solutions must be based on dissemination, regulations and reforms grounded on a comprehensive assessment, to safeguard the interest of all. Efforts to enlighten nationals on their crucial role in government and industry stewardship have to be intensified and backed up by realistic and sustainable government programs. Laws must be scrutinised and overhauled if needed to ensure that policies align with the specific conditions, needs and goals of a country's economy and labour market."
The report says that job creation programmes increase the number of employment opportunities and are most valuable during cyclical economic downturns. They include creating job pools, to promote public sector positions for the unemployed; establish wage subsidies; and implement trial employment programmes.
Training and retraining programmes are also needed, which focus on equipping workers with the skills they need to compete in the marketplace and the global economy by addressing structural problems underlying unemployment.
Patrick Luby, Managing Director, Manpower Middle East, agreed: "Education is the key, and that means education of companies as well as the citizens. Many governments and other organisations are already taking steps to help the education process by inviting companies into colleges and universities to speak to young students about what to expect in the world of work. The local populace is also given the opportunity to express its needs and desires in the workplace. This process of discussion needs to start as early as possible, and continue throughout the working life of natives. Nationals should have access to impartial, honest advice and guidance about how they can better integrate into the private sector workforce. Companies need to have flexibility in their workforce practices, with assistance from the government, to allow them to effectively train and mentor native staff."
The report goes on to say: "As GCC countries seek a natural balance and alignment between the skills of their workforce and the opportunities available within their market, policymakers need to determine an adequate mix of labour market policies to achieve labour market objectives. Policymakers can focus on achieving a security-flexibility balance through a blend of active, passive, and protective programmes that are customised for their countries' specific needs and challenges. "GCC countries must also weigh the benefits and costs associated with labour policies, testing a mix of several programmes and evaluating and streamlining along the way," concluded Bohsali.
The GCC needs to create a labour market that can meet the region's growth mandate and is immune to economic fluctuations, says a report.
According to a recent report released by Booz & Company, a global management consulting firm, new labour policies that align supply and demand must be instituted to reflect economic liberalisation and the gradual withdrawal of states from markets. They must create sustainable opportunities for their citizens and protect the rights of expatriates. Most important, they must provide security against economic fluctuations.
"In this way, the region's labour and economic policies can be brought in sync to create a solid foundation for long-term economic stability and growth," explained Rabih Abouchakra, a partner with Booz & Company.
The report states that as GCC governments try to downsize public sector employment to shift towards more market-driven policies, they look increasingly to the private sector to provide solutions.
After the oil boom of the '70s and the '80s oil revenues were used to subsidise public services and employ nationals in the public sector. To satisfy the growing demands for labour in the private sector, GCC governments welcomed foreign workers resulting in an influx of workers from countries including India, the Philippines, and Indonesia.
"The GCC needs new labour policies that will move the region away from a welfare orientation, create sustainable opportunities for nationals and protect the rights of non-nationals, while insulating labour markets against economic shocks," explained Mona Hammami, an associate at Booz & Company.
However, Balakumar, Director, Dulsco HR Solutions, told Emirates Business: "There are already various efforts underway across the region to rationalise the job market, which remains highly vibrant by the way. We can observe quota schemes and special training and recruitment programmes aimed at slowly weaning dependence from expatriates in key positions and industries and promoting more local participation in nation building. At the same time, the Gulf has made significant progress in adopting regulatory mechanisms that protect the interests of foreign labour.
"The current financial crisis is affecting these initiatives to a minimal degree only, and with projected developments such as a surge in service sector job openings throughout the region we can expect the market to eventually balance out.
"When you talk about the immunity to economic fluctuations, the fact remains that the whole world did not expect this kind of magnitude, so we are all actually learning valuable lessons on how to handle the labour markets. Governments and industries are in fact in the process of assessing practices and policies to better manage labour resources and protect them from all kinds of adverse regional and global conditions."
The report says that policymakers must assess market performance, set objectives, articulate policies, and select and design new programmes to address these issues.
There is a need to gauge market performance and wages, income distribution, and hourly compensation costs, the ratio of employment to population, labour productivity, working hours, unemployment duration and benefits and the educational levels of the labour force are some indicators used to assess market performance. These are then mapped against the market's key objectives to attain employment, create income security, and allow for wage and work flexibility.
The report states that setting objectives for the labour market is a balancing act between creating new jobs and infusing the market with a sense of energy and opportunity, while protecting those already employed.
Labour market policies must rest on three pillars: active, passive and protective. An ideal policy portfolio balances all three - for a country's specific security and flexibility objectives.
Active policies work to create jobs and improve the quality of the labor market by providing the unemployed with work and creating a more robust and skilled labor pool, which in turn increases productivity and earnings.
Passive policies are aimed at providing a safety net for workers during periods of unemployment and downturns.
Protective policies that set labour standards and conditions, typically take the form of legislation and regulations. These govern health and safety measures, wage setting, contract conditions, training requirements, and other issues that are essential to a fair and safe workplace.
"The GCC needs more active labour policies to create positive incentives in the market," Samer Bohsali, a principal at Booz & Company said.
The report states that despite the global financial crisis, the long-term growth prospects for the Gulf remain solid and the region's economies are less likely than those in much of the world to experience deep recession. As such, they will continue to have the same challenges as before the downturn in terms of labour demand: double-digit levels of unemployment among the citizens and a need for foreign labour.
Talking about how a solution to this issue could be found without anyone's interests getting hurt Balakumar said: "We have to start with highly-focused, open and productive discussions among the public and private sectors. Labour conditions are unique for each country, so there has to be a proper assessment at the national level before any viable solutions can be formulated. There is definitely no silver bullet to solving national unemployment and the high expat labour. Solutions must be based on dissemination, regulations and reforms grounded on a comprehensive assessment, to safeguard the interest of all. Efforts to enlighten nationals on their crucial role in government and industry stewardship have to be intensified and backed up by realistic and sustainable government programs. Laws must be scrutinised and overhauled if needed to ensure that policies align with the specific conditions, needs and goals of a country's economy and labour market."
The report says that job creation programmes increase the number of employment opportunities and are most valuable during cyclical economic downturns. They include creating job pools, to promote public sector positions for the unemployed; establish wage subsidies; and implement trial employment programmes.
Training and retraining programmes are also needed, which focus on equipping workers with the skills they need to compete in the marketplace and the global economy by addressing structural problems underlying unemployment.
Patrick Luby, Managing Director, Manpower Middle East, agreed: "Education is the key, and that means education of companies as well as the citizens. Many governments and other organisations are already taking steps to help the education process by inviting companies into colleges and universities to speak to young students about what to expect in the world of work. The local populace is also given the opportunity to express its needs and desires in the workplace. This process of discussion needs to start as early as possible, and continue throughout the working life of natives. Nationals should have access to impartial, honest advice and guidance about how they can better integrate into the private sector workforce. Companies need to have flexibility in their workforce practices, with assistance from the government, to allow them to effectively train and mentor native staff."
The report goes on to say: "As GCC countries seek a natural balance and alignment between the skills of their workforce and the opportunities available within their market, policymakers need to determine an adequate mix of labour market policies to achieve labour market objectives. Policymakers can focus on achieving a security-flexibility balance through a blend of active, passive, and protective programmes that are customised for their countries' specific needs and challenges. "GCC countries must also weigh the benefits and costs associated with labour policies, testing a mix of several programmes and evaluating and streamlining along the way," concluded Bohsali.
By Reena Amos Dyes
© Emirates Business 24/7 2009
