With the rising trend of strong dominance of expatriates in business and other economic activities in Qatar and other GCC states, there an urgent need to take strategic initiatives, including nationalisation of jobs, to ensure consistent growth in future, said a report by EY.
According to the ‘GCC Growth drivers’ report, GCC citizens account for a low of 1 percent of the private sector workforce in Qatar and the UAE and 18 percent in Saudi Arabia.
“There is a strong dominance of expatriates in businesses and youth unemployment has been on the rise. Unemployment rates vary widely across the region, but everywhere, female unemployment rates are five to seven times higher than those of men,” said a statement issued by the auditing and consulting firm.
The report identifies the four biggest drivers of policy, common across the GCC states. Nationalisation, diversification, global positioning and stability are key areas for governments and businesses in the region to consider for the future of GCC growth.
Gerard Gallagher, MENA Advisory Managing Partner, EY, said: “In a global economy, where so many developed and emerging markets are struggling to maintain solid growth, businesses see strong and growing demand in the GCC. Governments in the region are using oil and gas revenues to develop new industries and set up the foundations of a knowledge economy. However, companies operating in the GCC are facing challenges with regulations and hiring and retaining local talent. These barriers to realising the potential they see, mean that global companies have concerns about their sustainability in the GCC.”
Will Cooper, Partner, Advisory, EY, added: “Educational reform is vital. Improving the quality of outcomes from the education and training system for nationals is imperative for creating a local workforce. The focus must be on developing the right skills for young nationals and encouraging an enterprise mindset as they progress from education to work. This is a call to action to develop closer links between employers, educational institutions, jobseekers and policymakers.”
Governments are increasingly viewing entrepreneurship and SME development as a solution to youth unemployment and sustainable economic growth. With majority of new jobs coming from small businesses, supporting entrepreneurship is essential. Now is the time to establish coordinated programmes at a national level to join in activities to promote and support entrepreneurs and small and medium business owners. Government ministries, entrepreneurship organisations and investors need to work together rather than in isolation to achieve the greatest impact, and there is a strong case for greater cooperation across the GCC.
Managing risks of oil dependence is one of the region’s biggest challenges. However, progress to reduce GCC dependence on oil has been mixed.
“Each of the Gulf states has developed long-term strategies, using different combinations of vertical and horizontal diversification. But the region has yet to take advantage of coordinated diversification to leverage each other’s strengths and maximise the power and attractiveness of the economic bloc. Better coordination would lead to greater efficiencies and reduce the duplication of economic activities,” said Michael Hasbani, Partner, Advisory, EY.
High potential industries in the region such as metals production, aviation, sea trade, tourism and financial services are paving the way for more diversified revenue sources. GCC governments need to commit to supporting new sectors and creating innovative and competitive industries to help diversify their economies.
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