Page 217 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Building Your Team: Human Capital Strategies for the GCC 199

Not surprisingly, the most robust nationalization policies
being pursued are those of Saudi Arabia, Oman, and Bahrain—the
countries that face the greatest unemployment challenge today. As
more young people come of age and enter the workforce, however,
no GCC state will be able to ignore the need for job creation.

THE BEST-LAID PLANS: CHALLENGES OF
NATIONALIZATION PROGRAMS

Despite the laudable objectives of nationalization programs, their
implementation, as already stated, has faced many difficult
challenges over the years. Insiders and astute observers point out
that, although quotas can force certain changes, they are a blunt tool,
and the issues underlying local unemployment remain unresolved.
While the private sector—and especially foreign companies—have
had limited say in the formation of nationalization policies, some
private firms have found creative solutions to the nationalization
challenge. Their concerns and objections are also now being
discussed more openly than before, which is a good sign of
increased policy dialogue in the region.
In an important 2007 paper on Gulf labor policy, consultants
from McKinsey & Co. gave voice to many of the concerns that
private-sector leaders have long had about nationalization quotas
but none dared to say publicly. Private-sector leaders have long
argued—behind closed doors—that the local education system
simply does not prepare many nationals for work in top-notch
professional environments. As McKinsey notes, the mathematical
skills of Saudi eighth-grade students are near the bottom of interna-
tional rankings, in the same league as Botswana and Ghana. 20
Private-sector leaders have repeatedly told me that they are happy
to hire local employees but can’t find the necessary caliber of talent
in the market and are unwilling to lower their hiring standards.
Local nationals also have significantly higher salary expectations
than do many expatriates, making the cost of hiring them
substantially greater.
Private-sector firms have managed compliance with national-
ization quotas in a number of ways. At times, exemptions can be
won from the government due to “exceptional” circumstances.
Some simply view the quotas as a form of taxation and therefore add