What the head of the IMF can teach us about Emiratization

The head of the IMF, Dominique Strauss-Kahn, is under arrest in New York on charges of attempted rape. DSK, as he is known in his native France, was denied bail today. The judge was convinced by the prosecution's argument that it would be next to impossible to extradite him from France, and therefore he was a flight risk. So, the man who is alleged to have attempted to rape a maid in his $3,000 a night Times Square hotel penthouse, remains in a Harlem Rikers Island jail cell.

Were DSK the same in every way except that he was an American, I suspect he'd be out on bail, and back in a cushy hotel room. It is because it is difficult to extradite someone who has the means to fight it, that he remains in jail without bail. Rights can make you worse off.

I've written the same thing here about the disadvantage Emiratis face in the private sector labor market. As one example, an expat does not have labor market mobility within the UAE. Their visa is tied to the company that employs them. But Emiratis are free to change jobs, which makes firms reluctant to hire and train them. Or if the ex pat does not perform, there is nothing stopping the firm from terminating them. But firms fear that it will be difficult to fire an Emirati, so they are reluctant to hire them in the first place.

Rights can make you worse off.

A few more nights in jail, and I suspect DSK would willing give up his right to fight extradition. The trouble is, there's no way for him to make that a credible promise.

If the UAE is going to make it easier for nationals to find work in the private sector, then it's going to have to either give ex pats more rights or nationals fewer rights.

DSK reminds me of Saudi taxi drivers. You can be harmed by your own rights.

Unemployment in the UAE

As reported in Gulf News, according to Frederic Sicre, executive director of Abraaj Capital,

"The GCC countries need to create 100 million jobs up to the year 2020 to sustain the current rate of unemployment of 15 per cent.

"Such rates have never been achieved before by any country."

Such definitions of unemployment have never been used to measure unemployment.

The fifteen percent includes those who are not actively looking for work because the wage is below the wage they are willing to accept. That group is not unemployed, they prefer not to work at the prevailing market wage. And the 15% also includes those who would not be looking for work except that the government pays more than it needs to to fill its requirements. The government could solve that part of the unemployment "problem" by reducing the wages it pays.

The evidence is right there in other news articles from the same day (today):

* Skills shortage threatens to stall oil and gas boom
* 25pc salary increase for UAE University national professors

That is, (1) there are jobs that are going begging and (2) the government pays more than market. Thus, natural questions to ask are: why don't young GCC residents train for work in the oil and gas sector, and should we be surprised that there are queues that form for government jobs (which distorts the unemployment numbers).

Unemployed Saudi youth sad lot :: Arab News

Quote:

I have a vision: A vision that sets the stage for the creation of generation two of Saudi Arabia’s Dynamic Leaders of Tomorrow (SADLOT). It is a vision that calls for a top down, and a bottom up approach to youth integration.
...
If each chamber of commerce was mandated by policy to establish a “Youth Economic Council” as the formal economic voice of our nation’s SADLOT, then I am sure that the fresh young blood will not be lacking in providing us with new ideas for resolving old issues of unemployment, economic diversification, and entrepreneurial support.

In other news,

- Hairdressing: A Trade Looked Down Upon in Saudi Society
- 14% of Madinah Residents Live in Poverty: Survey
- Employers Skirting Saudization Quota Pledged Iron Fist
- Need for Educational Reform Stressed
- Website Provides Forum for Unemployed to Voice Their Concerns