DUBAI // Many private companies are choosing to pay a fine rather than meet government targets for hiring Emiratis.
The Ministry of Labour requires employers in some sectors to increase the number of Emiratis they employ by a set percentage each year.
"There is quota for the banking sector, for the trade sector and for the insurance sector," said Essa Al Mulla, executive director of the Emirates Nationals Development Programme (ENDP). "The quota system has worked very well with the banking sector, but it's failed big-time with the trade and insurance sectors.
"In the insurance sector, they have to pay approximately 0.01 per cent of their net profit if they have not achieved the minimum quota required. A lot of insurance companies are saying, 'OK, we'll pay the amount the government is asking us for, and we will not recruit Emiratis'."
The banking sector target is an increase of 4 per cent a year until between 40 and 45 per cent of staff are Emirati.
Abu Dhabi Islamic Bank leads the sector for Emiratisation and has already exceeded the quota. Last year 48 per cent of its staff were Emirati, and it aims to pass 50 per cent by the end of this year.
"The banking sector can afford to have this type of system," Mr Al Mulla said. "The return on investment in the banking sector is always much higher than in other sectors. For example, retail is a low-margin, high-volume sector."
The ENDP was set up in 2005 to help nationals to find jobs in the private sector. Emiratis generally prefer to work for the government, and in particular avoid careers in hospitality and retail.
Mr Al Mulla believes the key to changing this mindset is the introduction of career guidance in public schools. Last November the Ministry of Education announced plans to appoint specialist career counsellors in every government high school in Dubai and the Northern Emirates by 2015, starting with 20 schools this year.
Mr Al Mulla said if such an initiative had been introduced in 2000 an entire generation would by now have grown up with the attitude that working in hotels and retail was acceptable.
"If we had started to focus on career guidance earlier, today we'd be in much better shape because the Emirati mindset would be open to joining any sector, not only the government," he said.
"I want to have a very strong career guidance system in schools, because that is what's missing. We should open the minds of Emiratis from a very early stage by linking the education system with the job market's requirements."
One Emirati who did receive careers guidance is Mohammed Al Serkal, 23, who works in the finance section of Sharjah Airports Authority. He said: "I studied at the Sharjah American International School and we had a career counsellor from grade 11. So for two years we actually had someone helping us to decide where we wanted to go. They helped us to understand what a CV was.
"But I think the Higher Colleges of Technology, where I graduated, actually made me who I am today because they helped me develop an excellent CV that I'm getting a lot of praise for."
Kristian Ulrichsen, a Gulf specialist at the London School of Economics, said it might not be possible for the UAE and other Gulf states to continue operating nationalisation programmes in the private sector.
"In the modern era of global governance and multiple jurisdictions it may become harder to achieve outright nationalisation measures outside the purely public sector, as private companies and multilateral corporations become bound by international frameworks of governance," he said. "This could be a clash that grows sharper in the years ahead."
csimpson@thenational.ae
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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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How to register as a donor
1) Organ donors can register on the Hayat app, run by the Ministry of Health and Prevention
2) There are about 11,000 patients in the country in need of organ transplants
3) People must be over 21. Emiratis and residents can register.
4) The campaign uses the hashtag #donate_hope
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