Thursday, September 04, 2008

The pitfalls of ethnic selection

The UAE has a long way to go correct its "demographic imbalance" -- 50 percent of those living in the country are from India and Pakistan, more than 90 percent of the private sector workforce is foreign, more than 80 percent of the population is foreign, there is about one foreign household servant for every local living in the country, a disproportionate percentage of the foreign workforce is male. The demographic imbalance has bemoaned by locals, but most also are conscious that (1) the oil-fueled building boom in country would not be possible without the foreign workers, (2) few locals are willing to work menial jobs that predominate in the economy nor prepared for many of the few positions requiring specialized skills.

Gulf News today
:
Advanced construction techniques that will call for a significantly fewer number of labourers and a scheme under which expatriate students are allowed to take up part-time jobs are among initiatives expected to better shape the demographic structure of the country, a top official said on Monday.

“His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, approved a number of policies submitted by the National Authority for Demographic Structure,” said Lieutenant General Shaikh Saif Bin Zayed Al Nahyan, Minister of Interior.

Under the new policies, expatriate students will be allowed to take up part-time jobs and a committee will be formed to moot new construction techniques to replace traditional, labour-intensive systems, Shaikh Saif said in a statement issued yesterday.

Shaikh Saif said the government is making serious efforts to address demographic issues and to strike a balance between requirements of development and the national interest and "our right to a safe and promising future which embodies the vision of our leadership and ambitions of the Cabinet."
The Economist is on target in its analysis:
Governments in the booming Gulf Arab states are becoming increasingly anxious at the erosion of their national cultures, as their growing economies suck in ever-larger numbers of expatriate workers. They are now devising a range of measures to limit the growth of segments of the expatriate population—in particular those at the less skilled end of the spectrum—while not impinging on the continued expansion of their economies. The concerns call into question the entire basis of the Gulf development model, entailing ambitious targets for economic growth and diversification, which cannot feasibly be achieved without a substantial increase in the expatriate population.

The problem is most clearly evident in the United Arab Emirates, where expatriates account for more than 90% of the private-sector labour force, and where the population is thought to have grown by almost one-third over the past three-four years. According to the most recent census, whose results were published in 2005, the UAE's population was 4.3m; it is now generally estimated to be about 6m. The UAE government announced in early September that it is setting up a national demographic agency that will be tasked with finding ways to slow down the growth of expatriate labour imports. Among the initial measures that have been proposed is a scheme to allow students who are enrolled in UAE universities and who are the children of foreign residents to take up part-time jobs. This measure appears to be targeted at children of long-term residents from other Arab countries, who have more cultural affinities with Emiratis than do Asian and European residents, who predominate in the expatriate community. The students would be expected to gravitate towards semi-skilled jobs in the services sector that tend to be performed by Asians.

The government is also considering the establishment of ethnic and cultural diversity quotas within companies, so as to prevent certain national groups predominating. Other ideas include changing building codes so as to reduce reliance on foreign construction workers and introducing much more automation into the services sector, for example at petrol filling stations.

However, these measures will have only a marginal impact on the overall size and make-up of the expatriate population. There is no sign of any let-up in the construction activity associated with investment in infrastructure, real estate, tourism, financial services and industry, which suggests that the current total of some 1.5m expatriate building workers is only likely to increase. Once this wave of construction is completed, there will be growing demand for imported services and factory workers to operate and maintain the new hotels, offices, apartment buildings, leisure and cultural centres, transport facilities and industrial plants. The businesses importing the labour are likely to continue to insist on their freedom to recruit from whatever market suits their needs best.

Elsewhere in the Gulf, Bahrain and Kuwait provide examples of the pitfalls of trying to impose ethnic selection in structuring the labour force.
Thanks to The EclectEcon for the pointer to The Economist.

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