Page 64 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

48 Dubai & Co.

has its share of millionaires, and some skilled expatriates have
substantial disposable income. At the same time, mid-market
propositions have a great deal of potential. It is not surprising,
therefore, that IKEA has enjoyed success in the GCC with its mod-
erately priced furniture, that Carrefour (the French equivalent of
Wal-Mart) is expanding substantially in the region, or that low-cost
Chinese-manufactured goods are highly popular.
Another humbling economic reality in the GCC is unemploy-
ment. Half the GCC states have unemployment figures in the dou-
ble digits despite their strong oil and gas income. These countries—
including the most populous one, Saudi Arabia—face the urgent
challenge of creating millions of new jobs and bringing large seg-
ments of their citizens into the workforce. Unemployment in some
GCC states, like unemployment anywhere, can be a cause of social
frustration and unrest. In fact, job creation has been a central goal
for GCC governments as they craft their economic diversification
strategies. Industry, manufacturing, and services jobs are seen as a
key requirement for ensuring widespread prosperity and contin-
ued social and economic stability and averting political extremism.
When it comes to unemployment, GCC states fall into two dis-
tinct categories—very high and very low. Bahrain, Oman, and
Saudi Arabia have unemployment rates between 13 and 15
percent—far above the rates for the United States and EU.
Kuwait, Qatar, and the UAE, by contrast, have remarkably low
unemployment rates—below 3 percent. Figure 2.3 illustrates this
phenomenon.
As the free flow of GCC citizen workers across borders
becomes more common, one can expect some shifts in the above
figures. The growing number of young nationals below the age of
20, however, has rightly concerned leaders in the GCC that large-
scale unemployment could hit the region in the years ahead.
Multinational firms that are sensitive to this pressing issue and play
an active role in creating local jobs can expect a favorable reception
from GCC governments and regulators.
Worse off than unemployed nationals, who typically receive
government benefits, are many low-skilled foreign workers, typi-
cally from Asia. Long hours, meager wages, and crowded living con-
ditions—often provided by their employers—result in a fairly poor
quality of life for these workers. Although their wages are