Christopher Davidson - After the Sheikhs - The Coming Collapse of the Gulf Monarchies

Although the poorer Gulf monarchies — which have fewer resources to finance public sector jobs for nationals or to provide incentives for their private sector employment — tend to have a more balanced workforce, the wealthier monarchies are increasingly faced with high levels of voluntary unemployment among their young national populations. In many ways, although there are some exceptions, the described cultivation of a national elite over the past four decades by these states has led to citizenries that are now not only accustomed to material benefits and to no forms of extraction, but are also — with all the various sponsorship systems, soft loans, and public sector employment opportunities — being deprived of any motivation to gain meaningful qualifications or enter into a more competitive job market, or even any form of private sector job. In other words, there is an increasingly significant drawback to the political benefits derived from cosseting the national population, and in many ways this is already leading to nationals in the Gulf monarchies’ largest cities becoming little more than bystanders on the sidelines of their countries’ development. Furthermore, there is evidence that this may be leading to a generation of Gulf nationals that are frustrated, bored, restless, and on occasion even delinquent.

In the mid-1990s even the ruler of Abu Dhabi warned of the phenomenon — seemingly oblivious that it was a problem partly of his government’s creation — by criticising the inactivity of young nationals who should be gainfully employed. He stated that he ‘could not understand how physically fit young men can sit idle and accept the humiliation of depending on others for their livelihood’. [487] 26. Wilson, Graeme, Rashid’s Legacy: The Genesis of the Maktoum Family and the History of Dubai (Dubai: Media Prima, 2006), p. 528. Similarly, in the late 1990s the crown prince of Dubai seemed unaware of the root causes of the problem when he complained of ‘voluntary unemployment’ in his emirate, stating that ‘unemployment is a waste of natural resources and is wrong when the UAE is providing all its sons and daughters with opportunities that were unattainable a generation ago’. [488] 27. Ibid., p. 529. Writing in his memoires at about the same time, one of Dubai’s veteran merchants predicted that ‘…of Dubai’s young nationals, probably only 20 per cent will be worthwhile, becoming academics and professionals, and businessmen. About 60 per cent can probably be written off, the consequences of the all-too-easy acceptance of the pleasures which will be handed out to them’. [489] 28. Al-Gurg, Easa Saleh, The Wells of Memory (London: John Murray, 1998), p. 219. Similarly realistic, when the former ruler of Qatar [490] 29. Khalifa bin Hamad Al-Thani. fell ill in the mid-1990s he reportedly expressed more shock at the fact that his paramedic was actually a Qatari national than over the actual heart attack he had just suffered. [491] 30. Reuters, 21 October 2010.

Although a number of labour nationalisation strategies have been implemented in the more resource-rich monarchies—‘Saudification’, ‘Emiratisation’, ‘Kuwaitification’, and ‘Qatarisation’—they have in many ways only compounded the problem. In most cases they have avoided addressing the structural problem of most citizens being dependent on a distributive economy, and have served only to keep pricing nationals out of the market, which in turn has made them even less attractive employees. In particular, labour laws guaranteeing access to special pension funds and limiting working hours have greatly increased the cost of hiring nationals. [492] 31. A labour law was introduced in 2002 in an effort to regulate the employment of nationals in the private sector. As part of the law, nationals were to benefit from a special pensions fund and were to be ‘guaranteed better rights as employees’ including a maximum number of working hours per week and a guaranteed finishing time of four o’clock in the afternoon for women with children of school age. Even more heavy handed have been the aforementioned quota systems and job protection schemes for nationals imposed on certain industries. [493] 32. Notably banking and insurance companies. Gulf News , 23 September 2004; Gulf News , 8 December 2006. These have often made expatriate colleagues resentful of their Gulf national counterparts and have made employers increasingly wary. As one recent report observed ‘…across the Gulf, and especially in states where rapid growth is driven by oil and gas, locals rarely have hands-on jobs in health — or anywhere in the private sector. In an unspoken pact between rulers and ruled, Gulf citizens seem all too happy to fill plush government jobs, where the pay is high, the hours short, and the work sometimes nonexistent. In the private sector, job after job is filled by South Asians, non-Gulf Arabs and Westerners’. [494] 33. Reuters, 21 October 2010.

In the UAE’s case, conservative estimates according to Tanmia are that nationals make up only 9 per cent of the total workforce [495] 34. Oxford Business Group , ‘Abu Dhabi: The Report 2007’. p. 51. and just 1 per cent of the private sector workforce, [496] 35. Reuters, 21 October 2010. and that there are currently 17,000 unemployed UAE national adults. [497] 36. The National , 27 July 2008. Other estimates have put the figure as high as 35,000, [498] 37. Gulf News , 8 December 2006. with many of these being degree holders. [499] 38. Gulf News , 28 July 2008. The majority of these are likely to be in Abu Dhabi and probably fit into the category of voluntary unemployment. Indeed, latest official reports claim that the UAE has an unemployment rate of 23 per cent, with the government simply stating that the majority are ‘jobless by choice’. [500] 39. Reuters, 21 October 2010. More broadly, it is thought that at least half of those nationals in receipt of generous social security benefits are able-bodied and capable of work. [501] 40. Oxford Analytica , February 2007. Interviewed by Reuters in 2010, one young UAE national explained that he ‘couldn’t not see the obvious’ and was willing to ‘hold out for up to a year for a government post rather than take a job with a private firm’. He also claimed that ‘I can work in a bank from at least 8am to 5pm, and get half the salary that I would get in a government job working 8pm to 2pm. Anyone would choose the better option’. Similarly, another national stated that ‘I will move to the government sector, I see it as a duty to my country’ before explaining that ‘You tell me, who wouldn’t wish to just sit there and get paid lots of money?’ [502] 41. Reuters, 21 October 2010.

The same comprehensive Reuters report estimated the situation to be little better in other Gulf monarchies, with only 10 per cent of Saudi nationals and 5 per cent of Qatari nationals being employed in the private sector, [503] 42. Ibid. despite the Saudification programme aiming to replace 10 per cent of the expatriate workforce with unemployed nationals [504] 43. Arabian Business , 30 December 2010. and the Qatarisation programme aiming for 40 per cent labour nationalisation. Speaking in late 2010 the Saudi minister for the interior (and up until recently the crown prince) [505] 44. Nayef bin Abdul-Aziz Al-Saud. made it clear that ‘…the government could not keep providing jobs for everyone’ and, according to a Financial Times report, he ‘signalled an impatience with businesses that hire only foreigners and urged the private sector to employ more Saudis’. [506] 45. Financial Times , 7 September 2010. Speaking a few months later the chairman of the Council of Saudi Chambers of Commerce and Industry [507] 46. Saleh Kamel. agreed with the urgency of the situation, calling on the government to ‘appoint an international consultancy firm to help implement the Saudification program more effectively’ and arguing that ‘the problem… is that while [the government] has been relatively successful in creating a very good education sector, they are still not delivering people that are capable of working in the private sector’. [508] 47. Arabian Business , 30 December 2010. As with the UAE, it seems that the problem will be very difficult to solve, with the average expatriate’s earnings in Saudi Arabia’s private sector being about $200 per month compared to over $800 for Saudi nationals. [509] 48. Financial Times , 7 September 2010. Understandably, the Financial Times ’ report concluded pessimistically that ‘many young Saudis fresh out of college [still] feel entitled to a managerial post by virtue of their nationality, and complain that foreign bosses order them around’ and that ‘the government is grappling with the challenge of creating highly paid jobs for a young population with a strong sense of entitlement, poor education and, often, a weak worth ethic’. Similarly negative, and further hinting at the deep-rooted, structural nature of the problem, have been the recent views of chief economists at Saudi-based banks who have explained that ‘the government has to work on changing nationals’ attitudes, which were pretty much cultivated during the first oil boom in the 1970s’ and have questioned ‘how can you create jobs for Saudis if they do not want to join the private sector, and the private sector does not want them?’ [510] 49. Financial Times , 7 September 2010. Quoting Jarmo Kotilaine, an economist at NCB Capital (a Saudi investment bank) and John Sfakianakis, chief economist at Banque Saudi Fransi.