Social and Economic Aspects of Unemployment in the UAE

Introduction

The rate of unemployment is one of the elements that determine how well or poor a country is performing about the established global average levels. Joblessness is a multifaceted social and economic aspect that influences the performance of other sectors such as health and education. In this regard, an economy that has high rates of unemployment is likely to have a bigger number of its citizens living below the poverty line.

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Consequently, the population would be struggling to access basic services such as education, food, shelter, and even education. This awareness has triggered the move by governments to ensure that their respective populations are employed. Here, wages and salaries earned can be deployed to cater to the above basic needs. This study focuses on the unemployment situation in the UAE, which is one of the richest oil-exporting countries around the globe.

As revealed by the World Population Review, based on the 2016 figures, the UAE’s population stood at roughly 9.2 people, including foreigners. According to the International Labour Organisation, a close examination of the level of joblessness among the UAE’s citizens aged more than 15 years indicates that almost 80% of the country’s nationals have access to reasonably paying jobs in the public sector. As it will be revealed in this paper, despite efforts by the country to implement Emiratisation policies that encourage fair employment of the UAE citizens in the public and private industry, it is alarming that the plan has not been effective in reducing unemployment levels in the country.

Unemployment in the United Arab Emirates

In every country, the level of unemployment is determined by the extent to which the private and public sectors are willing to absorb jobless individuals. In this study, the level of joblessness is gauged based on the number of individuals, as a fraction of those who lie under the working category, who have failed to secure employment positions, despite their vigorous search for vacancies and their desire to be hired based on the set salary rates.

Upon gauging from the situation in the United Arab Emirates, it is crucial to point out that both the private sector and the government are expected to equally support the advancement of the nation’s financial system through the creation of job opportunities to the population. In this regard, the private wing comes in because the UAE government has no potential of giving job opportunities to all its citizens.

Therefore, the other sector is mandated by offering employment positions to the section left unassisted by the government. Such a move results not only in the reduction of the level of joblessness but also enhancing the UAE’s Gross Domestic Product. According to Marchon and Toledo, the country registered a Gross Domestic Product growth of roughly 4% in 2011, a situation that is attributable to the then low employment rates in the country (2254).

Although the United Arab Emirates is ranked among nations that have the lowest levels of joblessness globally, standing at approximately 3.5% in 2017 and being expected to drop further to less than 1% before 2021 (“UAE Unemployment Trends and Issues”), it is worrying that more than 20% of the country’s native citizens continue to be jobless (Marchon and Toledo 2255). One may wish to find out whether expatriates in the private sector have been contributing to this level of unemployment among the UAE’s native citizens. This issue will be discussed later in the Emiratisation section.

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Approximately 80% of the jobless category consists of young citizens aged 20 to 24 years, a situation that is partly attributed to their preference for particular job positions in specific sectors and partly to the entry of foreigners into the country’s job industry (“UAE Unemployment Trends and Issues”). Some of these foreign workers are illegally employed. Such illegitimate employment of foreigners (expatriates) implies that the actual figure representing the rate of joblessness among the country’s native citizens may be higher compared to what has been recorded.

A study conducted by Croucher presents alarming figures of the UAE’s youthful citizens whereby their level of unemployment continued to rise from roughly 6.5% as of 2011 to more than 8% in the succeeding year and probably to beyond 15% in 2018. This rise in youth unemployment levels is witnessed at a time when expatriates are flooding the country’s private sector. Youth unemployment in any country is usually linked to their lack of the required skills or poor educational qualifications, an unstable political environment, and a probable deterioration regarding economic developments. In this case, examining unemployment in the UAE may call for a discussion of elements that have triggered joblessness among the country’s youthful population.

Youth Unemployment in the UAE

In a study by Dilshad, youth unemployment in the UAE is depicted as a huge problem that has contributed substantially to the overall rate of joblessness in the country. The level of joblessness among the young population in the entire Middle Eastern zone stands at almost 30% where approximately 11% of youth represented here come from the United Arab Emirates (Dilshad). Figure 1 below represents the trend regarding youth joblessness from 1996 to 2016.

Youth (15-24 years) unemployment from 1996 to 2016.
Figure 1. Youth (15-24 years) unemployment from 1996 to 2016 (Dilshad).

Assessing from the findings above, it is apparent that the level of joblessness among the youthful category has been rising gradually for the last two decades. The situation may be worse because Figure 1 above does not capture information concerning underemployed young people or even those who are not involved in any form of schooling. Some of the issues that Dilshad identifies as fuelling youth unemployment include poor quality education and the discriminative private sector.

Regarding education, many young people in the United Arab Emirates have raised concerns that their lack of employment is triggered by the low-standard education they get in their respective learning institutions. As a result, potential employers find such individuals unfit for any job position. Bearing in mind that many students are graduating, the level of unemployment among young people may rise significantly if the UAE government fails to intervene in time.

The author points out a possible link between political and social instability and joblessness among youths in the country. In a study by Herb, young people’s strict choice of wishing to secure job positions in the government, as opposed to the private sector, is also another trigger of unemployment among this category of the UAE’s citizens (21). In particular, Herb reveals, “80% of UAE college students reported that they hoped to find work in the public sector” (22).

However, whether this issue is a major factor contributing to youth unemployment in the United Arab Emirates or not is yet to be determined, owing to the understanding that the public sector is already flooded with workers. According to Dilshad, the current rapidly increasing population of the 15-24-year-old class in the UAE may reach almost 60 million before 2025, implying that the number of jobless individuals in this segment may double if urgent measures are not executed.

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Backing up the argument that young people have been left unemployed in the UAE, Alshehhi presents issues such as poor working terms and discriminatory practices in the private sector as among the triggers of joblessness in the country (148). In particular, based on the 2013 data, only 0.5% of the UAE’s citizens had secured positions in the country’s private wing, contrary to a staggering 60% that was employed by the government (Alshehhi 148).

This finding points to a situation whereby most of those in the labor force are foreigners who make up almost 65% of the country’s total working class. Table 1 below shows that indeed foreigners have taken over most of the available job positions in the UAE.

Foreigners vs. native citizens’ employment rates in the UAE.
Table 1. Foreigners vs. native citizens’ employment rates in the UAE (Alshehhi 149).

Also, the huge number of expatriates, as opposed to natives, in the private sector is worrying upon considering that nationals only prefer being employed by the government. Issues such as working for six days in a week and poor remuneration packages are viewed as key factors that have pushed UAE nationals away from the private sector. Further, Marchon and Toledo reveal other discriminatory practices whereby the private sector does not welcome the country’s citizens to secure job positions following the claim that they are not as profitable as their foreign counterparts are (2254).

Specifically, the authors assert, “private sector favors expatriate workers, whom they view as relatively more productive than native workers” (Marchon and Toledo 2254). As a result, this observation confirms the earlier definition of joblessness in the UAE whereby the country’s native citizens end up remaining jobless, despite their qualifications and eagerness to be hired at the private sector’s rates. Consequently, the UAE may be losing more than 41,000 AED per year, an amount it should be getting as returns if its total number of unemployed citizens could secure positions within the government or in the private sector (Alshehhi 148).

Here, since this loss can significantly ruin the country’s economy in the long term, it suffices to examine various strategies that the UAE has put in place to protect the employment rights of its native citizens in both sectors. Hence, it is crucial to investigate the effectiveness of Emiratisation policies in addressing the issue of unemployment rates in the United Arab Emirates.

The Effectiveness of the Emiratisation Policy

Emiratisation is a directive passed by the UAE administration to address the employment disparity between nationals and foreigners in the country’s private and public industries. The goal of the policy was to increase the involvement of nationals in the employment sector by 50% before 2021 (“Emiratisation Integral to UAE’s Vision”). According to Marchon and Toledo, the directive was meant to attain its agenda by embracing the application of employment quotas targeting the country’s natives who are primarily hired in the public sector (2253).

As Riyami et al. assert, the Emiratisation law was established principally to promote the equitable share of the UAE nationals’ job positions in both capitalist and government sectors (65). The policy was endorsed more than 10 years ago as a call to discourage discriminatory practices in the private sector whereby nationals were denied positions, despite their credentials, contrary to foreigners who could take vacancies not only illegal but also without the required academic standing. Riyami et al. paint another worrying trend whereby the introduction of the policy led to the emergence of ghost employees who had flooded the country’s capitalist sector at the expense of native citizens (65).

Hence, the establishment of the directive emphasized the need for availing sustainable employment prospects for natives in the United Arab Emirates. The execution of the Emiratisation initiative targets the entire UAE, although more emphasis has been placed on the country’s different private industries, semi-public, and government agencies. Since its endorsement, the directive has not been effective in ensuring that natives in the United Arab Emirates are integrated into the country’s labor force without any form of favoritism as witnessed during the pre-Emiratisation era.

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The Emiratisation policy is founded on the awareness that many native college graduates are currently raising concerns about a few job chances that are accorded to them in both the private and government sectors. Even the available positions given to them do not match their education standards and expertise. Hence, following the possibility of expatriates with low qualifications securing jobs in the private sector and various government agencies at the expense of learned and proficient natives, the Emiratisation plan introduced the quota system (Marchon and Toledo 2254).

This employment approach followed a call by the UAE administration to have some specified industries absorb a particular percentage of the country’s nationals into the available job openings. The plan has minimally reduced cases of discrimination witnessed earlier in line with Marchon and Toledo’s observation that although the strategy may not be popular from a global perspective, it has the potential of realizing exemplary outcomes if executed in particular sectors (2255).

However, the level of its effectiveness in helping a substantial number of native citizens remains a mystery because the plan has been associated with other challenges, including the employment of ghost employees, who have been used to represent the UAE nationals. This practice is meant to mask the fact that nationals have not yet benefited from the program, despite figures indicating a contradicting observation.

In fact, as Riyami et al. observe, a huge share of the proposed and executed Emiratisation projects are yet to “achieve the desired outcome even after years of implementation, and can only be successful when accompanied by wage reforms, and skill match up by locals” (69). Hence, despite efforts by the government to deploy the Emiratisation strategy as a way of discouraging the outsourcing of foreign workers, such expatriates continue to benefit from these gaps.

In fact, according to Aletta, a dossier presented by the Federal National Commission indicates that the capitalist sector has close to 4 million employment opportunities whereby approximately 1 million of them are usually set aside for the country’s natives. However, currently, an average of 25000 UAE citizens (2.5%) has been absorbed as part of the private sector’s workforce. This finding reveals the extent of the ineffectiveness of the Emiratisation initiative because it has so far not fulfilled its core agenda of raising this figure (2.5%) to the expected 50%, despite having been established almost 15 years ago.

Conclusion

From the findings presented in this paper, despite the UAE having the lowest level of unemployment in the world, the country continues to experience a unique challenge whereby the number of foreign workers exceeds its native employees. Some of such expatriate employees have been hired illegally in the country’s private sector. This paper has revealed various issues, for instance, poor remuneration packages, long working hours, discrimination, and natives’ desire to seek jobs strictly in the government as key factors that have fuelled joblessness in the UAE.

Also, the paper has painted another disturbing trend whereby most of the country’s native young people, especially those who graduate from learning institutions, have raised concerns of being undervalued and, consequently, denied the opportunity of joining the working class, despite their academic qualifications, expertise, and willingness to accept the prevailing job offer rates. The private sector has been depicted as playing a major role in fuelling the issue of joblessness in the UAE following the demonstrated instances of favoritism among other vices that have paved the way for outsourcing workers from overseas countries at the expense of natives who have been depicted as unsuitable substitutes of expatriates.

As a result, the UAE government implemented the Emiratisation directive that emphasized the need for equitable employment of natives in some agencies in its private and public sectors. However, despite the initiative has been in place for almost 15 years, this paper has revealed that it has been ineffective in accomplishing its goal of raising the percentage of employed natives to 50% before 2021. This conclusion has been made because only an average of 2.5% of UAE nationals has been given job positions in the private sector alone.

Works Cited

Aleter, Abdulla. “Emiratisation, the Road Ahead for Private Sector.” Gulf News, 2016. Web.

Alshehhi, Yahya. “Demand and Supply of Labour Market: A Case of UAE.” Applied Studies in Agribusiness and Commerce, vol. 10, no. 4-5, 2016, pp. 145-154.

Croucher, Martin. “Unemployment Rates among Young Emiratis has Increased but National Service can Help.The National. 2014. Web.

Dilshad, Tooba. “The Youth Unemployment Problem: Why it Matters & What You Can Do.” Internsme. 2017. Web.

Emiratisation Integral to UAE’s Vision.” Gulf News. 2018. Web.

Herb, Michael. The Wages of Oil: Parliament and Economic Development in Kuwait and the UAE. Cornell University Press, 2014.

Marchon, Cassia, and Hugo Toledo. “Re-thinking Employment Quotas in the UAE.” International Journal of Human Resource Management, vol. 25, no. 16, 2014, pp. 2253-2274.

Riyami, Awatef, et al. “Ghost Employees: The Impact of Emiratisation Quotas.” Middle East Journal of Business, vol. 10, no. 4, 2015, pp. 65-70.

UAE Unemployment Trends and Issues.Dubai Forum. 2018. Web.

World Population Review. “United Arab Emirates Population 2018.” WPR. 2018. Web.

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StudyCorgi. (2021, January 26). Social and Economic Aspects of Unemployment in the UAE. Retrieved from https://studycorgi.com/social-and-economic-aspects-of-unemployment-in-the-uae/

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"Social and Economic Aspects of Unemployment in the UAE." StudyCorgi, 26 Jan. 2021, studycorgi.com/social-and-economic-aspects-of-unemployment-in-the-uae/.

1. StudyCorgi. "Social and Economic Aspects of Unemployment in the UAE." January 26, 2021. https://studycorgi.com/social-and-economic-aspects-of-unemployment-in-the-uae/.


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StudyCorgi. "Social and Economic Aspects of Unemployment in the UAE." January 26, 2021. https://studycorgi.com/social-and-economic-aspects-of-unemployment-in-the-uae/.

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StudyCorgi. 2021. "Social and Economic Aspects of Unemployment in the UAE." January 26, 2021. https://studycorgi.com/social-and-economic-aspects-of-unemployment-in-the-uae/.

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StudyCorgi. (2021) 'Social and Economic Aspects of Unemployment in the UAE'. 26 January.

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