How can the GCC create a labour market that can meet the region's demand and help shield it against the repercussions of economic fluctuation?
The question is pressing. Given the GCC's heavy reliance on foreign labour to fill the jobs that the region's growing economies create, and the GCC's rising unemployment rate among nationals, the profound mismatch between the needs of the market and the skills of nationals can no longer be ignored.
For the longest time, booming oil prices created a sense of endless prosperity in the GCC. Governments spent generously and used surplus oil revenues to subsidise public services and employ nationals in the public sector.
At the same time, in order to satisfy the growing demands for labour in the private sector, GCC governments threw their doors open to foreign workers. This created a labour market dichotomy: nationals largely clustered in the public sector while non-nationals dominated the private sector. Over time, a tremendous gap developed between the needs of the marketplace and the skills of nationals. This dynamic - commonly referred to as "structural unemployment" - is a pervasive problem throughout the region.
Today, the unemployment rate of nationals in the GCC ranges between 11 and 12 per cent. Exacerbating this mounting structural problem is an educational system that has not kept pace with the needs of the GCC economies. To address such structural problems, some GCC governments have shifted to restricted quantitative labour market policies such as imposing quotas on the private sector as part of their nationalisation policies. However, most of these policies have not yet proven to be effective in addressing the real causes behind unemployment, thus requiring a shift towards a more formalised labour strategy with set objectives and articulated policies.
Setting objectives for the labour market is always a balancing act. On the one hand, policymakers want to maintain flexibility, create jobs and infuse the labour market with a sense of energy and opportunity. On the other hand, there is a real desire to protect those who are already employed.
Flexibility objectives focus on avoiding institutional wage arrangements such as minimum wage and collective bargaining. Security objectives involve protecting workers against arbitrary dismissal, the establishment of health and safety regulations in the workplace, and providing benefits during periods of unemployment.
Almost all the GCC labour policies promote security over flexibility, protecting nationals - even when they lack adequate skills - by placing quantitative restrictions on the number of foreigners who are allowed to work in a specific field. However, this dynamic is a double-edged sword; while it increases security, it does little to promote competitiveness.
Labour market policies ultimately need to rest on three pillars: active, passive and protective. In the case of GCC countries, a balance of active and passive labour policies is needed to create work incentives that will ensure sustainable opportunities for nationals and decrease dependence on the state, as well as ensure robustness against economic shocks. Active labour market policies include job creation programmes, training and retraining initiatives, and public employment services. They are designed to create jobs and improve the quality of the labour market. In addition to providing the unemployed with work, active policies attempt to create a more robust and skilled labour pool.
By improving the matching of workers and jobs, active policies increase productivity and earnings. At the moment, strikingly few active policies are implemented in GCC countries. However, the GCC desperately needs more of these policies. These programmes, which create positive incentives in the market, can ultimately replace the restrictive nationalisation policies currently in place in the GCC that are responsible for a great deal of the labour market's rigidities.
Passive policies in the form of financial assistance are aimed a providing a safety net for workers during periods of unemployment and potential downturns (similar to the latest financial crises). There are two types of passive programmes: unemployment insurance and unemployment assistance. Insurance programmes are mandatory in most countries in the world and tend to be jointly funded by employers and employees. With the exception of Bahrain, there are currently no unemployment insurance programmes in the GCC, either mandatory or voluntary. Governments typically support such policies out of social responsibility, along with the desire to ease people's financial distress during unemployment spells. While abandoning these programmes entirely is not recommended - especially since they are needed in time of crises - universal reliance on welfare will diminish once more active policies are put into place.
Protective policies, which govern fair and appropriate labour standards and conditions, typically take the form of legislation and regulations. The GCC's heavy reliance on foreign labour creates a need for measures to protect the rights of non-nationals, and will allow the region to remain attractive as a labour destination in coming years.
As such, a clear articulation of objectives and adequate mix of labour policies will go a long way in addressing labour-market inflexibilities, fragmentations and mismatches.
Rabih Abouchakra is a partner, Samer Bohsali a principal and Mona Hammami an associate at the Booz & Company management consultancy
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Roll of honour: Who won what in 2018/19?
West Asia Premiership: Winners – Bahrain; Runners-up – Dubai Exiles
UAE Premiership: Winners – Abu Dhabi Harlequins; Runners-up – Jebel Ali Dragons
Dubai Rugby Sevens: Winners – Dubai Hurricanes; Runners-up – Abu Dhabi Harlequins
UAE Conference: Winners – Dubai Tigers; Runners-up – Al Ain Amblers
APPLE IPAD MINI (A17 PRO)
Display: 21cm Liquid Retina Display, 2266 x 1488, 326ppi, 500 nits
Chip: Apple A17 Pro, 6-core CPU, 5-core GPU, 16-core Neural Engine
Storage: 128/256/512GB
Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4
Front camera: 12MP ultra-wide, f/2.4, Smart HDR 4, full-HD @ 25/30/60fps
Biometrics: Touch ID, Face ID
Colours: Blue, purple, space grey, starlight
In the box: iPad mini, USB-C cable, 20W USB-C power adapter
Price: From Dh2,099
UAE v Ireland
1st ODI, UAE win by 6 wickets
2nd ODI, January 12
3rd ODI, January 14
4th ODI, January 16
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
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Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The Pope's itinerary
Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport
Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial
Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
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MATCH INFO
Uefa Champions League, last 16, first leg
Liverpool v Bayern Munich, midnight (Wednesday), BeIN Sports
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Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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