Unemployment is a serious social and economic predicament in urbanized and developing countries. As many expatriates keep coming to the UAE looking for a better job opportunity and standard of living, the numbers of jobs have decreased. People from all over the world flock to the Emirates due to its rich oil based economy. Nevertheless as more and more expatriates migrate here, the chances for newly graduates and UAE nationals to find a job is becoming more difficult.
Prior to UAE's independence, its economy was dominated by basic economic activities such as fishing and little agriculture. But with the discovery of oil the economy expanded and the oil accounts for 80% of UAE revenue and 70% of UAE exports. Abu Dhabi, the capital city produces almost 60% of the oil revenue (i.e., more than 4 million barrels per day). This revenue makes it possible for the government to spend generously on infrastructure, education, and job creation.
The rise of oil prices in the 1970s provided the Gulf Cooperation Council (GCC) countries with the financial resources which allowed for vast economic development programs that required influx of non-national labor. However, the plunge in oil cost in the mid 1980s and the population growth made unemployment an issue in GCC countries.
In 1970s when oil was discovered it resulted in vast economic development programs in the UAE meaning shortage in labor (as most nationals were employed in the public sector). This led to more reliance on imported labor.
In the mid-1980s, the expatriates represented more than 80% of the total labor force. The fall in oil prices in 1986 caused the share of expatriate labor to decline, and an increase in the numbers of nationals looking for jobs. This trend continued in the 1990s and the following years because of the demographic pressures.
If you compare the unemployment rate of Algeria (28.7%) to UAE's which is only at 2.4%. Due to the increase in population and the expansion in the number of national graduates from universities and high schools, unemployment among nationals became an acute problem in recent years. Of the UAE's total population of 4.32 million, 18.5 per cent or 800,000 people are UAE nationals. Their share of the total job market is about 10 per cent. Expatriates make up 99 per cent of the UAE's private sector employment. (Nadim, 2002)
Unemployment in the UAE has serious negative effects on both the society and the economy. The government will be under political pressure and will spend more on social benefits. The economy will be unstable and resources misallocated.
As a result, the government set a new labor policy to place locals in government as well as non government division jobs, which were before filled by expatriates. This rule paying attention on a meticulous sector, such as finance, in order to attain a target of 30 percent nationalization.
According to the Ministry of Planning, the number of employed nationals did not exceed 9% of the total labor force in 2003. This shows the lack of the proper qualifications of UAE nationals to match labor market requirements. To overcome such a structural problem in the labor market, the government should ask the educational institutions to close the gap between academic programs and labor market through practical and specialized training. (Ministry of planning, 2004)
Unemployment in UAE is concentrated among youth, where more than 50 percent of total unemployment is between those with an intermediate level of education and low level of skills.
Moreover most of the nationals prefer to work in the public sector and would not even dream of a work in the private sector. Even if they did, they would expect a higher salary in comparison to their fellow non-local colleagues. This is also a reason for the high rate of unemployment.
The UAE Government has set up a scheme called Emiratisation which has been planned to help UAE nationals, particularly local graduates, interested in work. Every business division has been given targets on the number of UAE nationals they should employ. They even set up organizations such as Tawteen that helps UAE nationals find a job. Government companies such as ADNOC Group of Companies, and Financial organizations set up an annual percentage of nationals to be employed in the sector. On the job training should also be provided so that they are well equipped to handle different aspects of the job. Having professional expatriates teach these young local nationals is beneficial both to the trainee as well as the company and knowledge/experience is not lost. Pairing young UAE nationals with expatriate the age limit for retirement is 60 for expatriates whereas nationals can retire early and benefit from the pension plan.
If the qualifications needed by the labor market are lacked by the nationals, then they will never get a job no matter what quota is set for them in the organization. Unemployment is higher among high school graduates and women, which implies some social ramification and the need to reform the educational system.
By civilizing the instructive and preparation scheme that shape labor market requirements. English language supposed to be instructed at a senior level in high schools. It is also suggested to create more precise and efficient data on the work market including (job finders, employers, and job opportunities), and for more information to be provided. Educational campaign such as (Najah) to be participated as that will change the approach of the UAE youthful people in the direction of working at the non governmental division.
Instead of hiring employees from abroad, why not hire from the people staying in the country who are looking for a job. Most of them are registered with recruitment agencies and this will further help to reduce the population of the country. There is no point in bringing people from outside when there are already qualified people unemployed and looking for a job. At the same time, expatriates who reach the age 60 should also leave the country to pave the way for the new work force.
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