The GCC skills gap

The Gulf states need to get more locals into private sector jobs, but this will not happen without better education and training. Published in MEED, 11 March 2014

Stuck on to the panels of a bus stop in downtown Kuwait City are a series of half-torn adverts urging people to sign up for courses teaching computer skills. “Learn web designing. Create your own website. Just in 3 months,” says one of the ads.

It is easy to see who the target audience is for these scrappy promotions. Alongside the training courses are offers of rooms to rent “for Filipinos only” and, in any case, it would be a rare Kuwaiti national that chose to commute by bus. The fact that locals are unlikely to be noting down the phone numbers on these ads hints at some of the problems facing Gulf countries in terms of education, training and employment.

The Gulf labour market is dominated by expatriate workers, particularly in the private sector. Locals, if they work at all, overwhelmingly prefer to do so for public sector employers. Foreigners are often well-trained and willing to work for relatively little money, while nationals tend to be raised with an expectation that a government job will be waiting for them with good pay and benefits.

Unsustainable model

The model is just about workable when populations are small and oil revenues high, but in the long term it creates unsustainable pressures on government budgets. The need to fix this broken model is something all governments are aware of, but it is not an easy task.

Among other things, it requires some fundamental changes to education systems, better training for locals after they leave school, an overhaul of labour market policies and the promotion of a more entrepreneurial culture.

“Most countries know now that the model of simply employing GCC nationals in the public sector is not a model that is sustainable, because the public sector is running out of jobs to provide,” said Masood Ahmed, director of the IMF’s Middle East & Central Asia department, at the launch of the fund’s review of Middle East economies in November. “As part of diversification, you really want to be finding opportunities for nationals in the private sector.”

Many of the problems start in the early years of life. Enrolment rates at primary and secondary school are relatively high, but the same is not always true of the standard of teaching. According to the Executive Opinion Survey by the World Economic Forum (WEF), Qatar has the fourth-best education system in the world, while Kuwait is ranked 106th.

This matters because without a decent education system it is hard for economies to prosper in the long term, and for societies and individuals to make the most of their potential. The weakness of education systems is a problem across the Middle East, but it is surprising just how badly some GCC states fare given their wealth.

Learning crisis

In the Arab World Learning Barometer report, released in February, the US’ Brookings Institution points out that many of the region’s children are failing to pick up the most basic skills at school. In Kuwait, 70 per cent of students fail basic numeracy tests in primary school, while in Oman 53 per cent cannot manage simple literacy tasks.

As children progress through school, other skills are also overlooked. “Students in the region do not learn what we call 21st century skills, like working in teams, problem solving, being innovative, risk taking,” said Hafez Ghanem, senior fellow in the Global Economy & Development Programme at Brookings, at the launch of the report. “There is a problem with the curriculum: it is too traditional, too much based on rote learning.”

Setting the right curriculums is certainly important, but there are also issues around the speed at which the school-age population is increasing. Dubai-based Alpen Capital estimates the number of students in the GCC education sector is growing by 2.7 per cent a year and should reach 11.6 million by 2016. Finding enough skilled teachers is a challenge, it says.

The situation adds up to what the Brookings Institution calls “a learning crisis”. In Saudi Arabia, 48.9 per cent of children at primary-school age are either out of school, in school but expected to drop out, or in school but not learning, according to Brookings. In Qatar, the figure is 48.1 per cent. When it comes to secondary-school students the figures are 57.4 per cent for Saudi Arabia and 53.8 per cent for Qatar.

Improving schooling

In response to such problems, governments have drawn up various strategies to improve their school systems. For example, the Abu Dhabi Economic Vision 2030 cites “premium education” as one of the pillars of the emirate’s future and identifies a need to revise school curriculums, improve vocational education and encourage students to take on part-time and summer jobs.

Similarly, Bahrain’s Vision 2030 acknowledges its education system “does not yet provide young people with the skills and knowledge needed to succeed in our labour market”. It outlines plans to improve the recruitment and training of teachers, and set quality standards across the education sector.

Qatar’s National Vision 2030 includes a target to create a “world-class educational system” and Oman has vowed to improve the quality of its education system in a series of five-year plans.

Money is rarely an issue here. In its Ninth Development Plan, which runs from 2010 to 2014, Riyadh plans to spend SR731.5bn ($195bn) on human resource development, which includes schools, higher education and technical and vocational training.

Yet even if all the investments are made and the reforms brought in, it will still take a generation before the full impact is felt. In the meantime, many students share the scepticism of employers about the education they receive.

A survey by US consultancy firm Booz & Co, published in 2011, found that 12 per cent of GCC youth answered “not at all” when asked if their national education system had prepared them to find a job, and a further 20 per cent said “to a lesser extent”. About half said “to some extent” and only 19 per cent replied “to a large extent”.

The poor quality of school education helps to explain the emergence of courses for those wanting to make the jump from secondary to tertiary education. Qatar Foundation launched its Academic Bridge Programme in 2001 and has since helped several thousand pupils move on to university. Qatar University itself runs a foundation programme in maths and English for its students. In Saudi Arabia, state oil company Saudi Aramco runs a similar, one-year College Preparatory Programme.

In some ways, the situation is better once students reach third-level education because the amount of money being poured into universities is matched, to some extent at least, by a willingness to bring in international best practices. The Education City complex on the edge of Doha is perhaps the most high-profile example of this. Developed by the Qatar Foundation, the site is home to numerous international institutions including Weill Cornell Medical College and Carnegie Mellon. Alongside it is the Qatar Science & Technology Park. But Education City is far from being alone.

The UAE has also lured high-profile institutions, with branches of the London Business School, Paris-Sorbonne University and New York University alongside the local UAE University and Zayed University. Bahrain too has a mix of local and international institutions, including the University of Bahrain and outposts of the Royal College of Surgeons in Ireland and the University of Wales Bangor.

Other governments have taken a different approach. Saudi Arabia has invested heavily in developing new universities such as the King Abdullah University for Science & Technology (Kaust) in Jeddah and has been generous in its sponsorship of locals wanting to study abroad. The King Abdullah Scholarship Programme was set up in 2006 and pays for about 150,000 Saudi nationals at any one time.

For those staying in the country, King Fahd University for Petroleum & Minerals and Kaust both have good reputations among employers for developing the sort of skills needed in the workplace. In general, the country’s private universities are more focused on developing employable skills in areas such as medicine, IT, management and engineering, according to Alpen Capital. Eighty per cent of students in private Saudi universities and colleges pursue such courses. In contrast, more than half the students in public universities study more traditional subjects not so closely aligned to potential careers, such as science and the humanities.

Despite the rapid expansion of third-level education over the past decade, quality remains an issue. There is scepticism that standards at some international universities are not as rigorous as in their parent campuses in Europe or North America, and local universities have failed to make inroads into the main international league tables. The only GCC institutions in the latest Times Higher Education global rankings are Saudi Arabia’s King Abdulaziz University and King Saud University, which are placed joint 351st in the world.

Skills crunch

The net result of all this is too many students emerging from school or university without the skills employers are looking for. Given the youthful demographics of the region, it means there could soon be a jobs and skills crunch.

The IMF estimates 1.6 million locals will join the GCC labour force between now and 2018, but the private sector will only create 600,000 new jobs in that time. Even if every job went to a local, there would still be another 1 million people who have to be hired by the public sector, join the ranks of the unemployed or emigrate. The reality is, in fact, worse as many of the jobs, perhaps the majority, will go to expatriate workers. Changing this is a daunting challenge.

The policies governments have been adopting to address these issues are many and varied. They include setting quotas for nationals in the workforce, excluding expatriates from some areas and offering wage subsidies to private firms to employ more nationals. The IMF says that if these wage subsidies are to be cost-effective they need to be carefully targeted, transparent and temporary, but incentives for public sector work should also be scaled back.

“One element of expanding opportunities in the private sector is to limit public-sector wage and job growth,” said Ahmed. “All the evidence shows that when you increase public-sector employment, you actually don’t reduce unemployment so much as you reduce private-sector employment.”

The best long-term solution is undoubtedly to ensure locals meet the needs of employers. That is not just a matter of reforming the education system; it also requires better on-the-job training for those already in work.

Nationalisation drive

Saudi Arabia has taken perhaps the toughest line on replacing expatriate workers with locals in recent years. A much-publicised campaign to force illegal workers out of the country led to about 1 million foreign nationals leaving the kingdom in 2013, according to local media reports. But other, less high-profile initiatives are also being undertaken.

In 2000, the government set up the Human Resources Development Fund. It offers grants to those involved in training and pays part of the salary of new trainees hired by private firms. It has also developed a network of employment centres around the country, which offer career and training advice, and runs the Takat scheme, which attempts to match private-sector employers with those looking for work.

In Oman, the Manpower Ministry also tries to match employers with potential new recruits through the Directorate General of Employment. In addition, it runs training institutes aimed at school-leavers, and provides grants and scholarships for those training in private institutions. Entrepreneurism is also promoted through the Self-Employment & National Autonomous Development (Sanad) scheme, which offers loans to locals developing small businesses.

In Bahrain, the main government body in this area is the Labour Fund (Tamkeen), which was set up in 2006. It runs several schemes for individuals and employers, and claims to have helped more than 3,000 Bahrainis find jobs in its first five years. Among its most recent initiatives is the Tamkeen Professional Certifications Scheme that encourages locals to seek professional qualifications by paying their course fees. More than 200 courses offered by awarding bodies worldwide are covered in the programme, such as accountancy, yoga teacher training, commercial diving, engineering and IT courses.

Qatar has developed a national e-learning portal, which provides access to more than 2,500 online courses on topics such as IT, marketing and management. Doha’s Supreme Education Council is in the process of developing a broader national training scheme as part of the National Development Strategy.

Among its goals are the development of a national qualifications framework (NQF) and the establishment of a supervisory body for technical and vocational education and training. In June 2013, education company Pearson and the University of London’s Institute of Education (IOE) produced a report on how the country should go about developing an NQF that would encompass everything from basic literacy and numeracy qualifications to advanced vocational diplomas and doctoral degrees.

In Qatar, as in other GCC countries, large employers also often establish their own training programmes, including Qatar Petroleum and Qatar Airways. However, as the Pearson-IOE report makes clear, these schemes are often not regulated and, therefore, not always recognised by other potential employers.

Training courses

The UAE has a raft of state schemes, including the Emirates National Development Programme which, among other aims, offers training to nationals and works with firms to identify suitable new recruits. There is also the National Human Resource Development & Employment Authority (Tanmia), which offers career guidance and develops training programmes. In a similar way, the Absher Initiative offers training and career guidance and seeks to create more job opportunities for citizens and to encourage the private sector to hire more locals.

There are also some organisations operating within individual emirates, such as the Abu Dhabi Centre for Technical & Vocational Education & Training and the Knowledge & Human Development Authority in Dubai.

In Kuwait, the most active body is the Public Authority for Applied Education & Training, which offers a wide range of vocational and academic courses. The Kuwait Investment Authority (KIA) also provides a 13-month course to prepare recent graduates to work in the financial sector.

Most of these Gulf programmes are being implemented across the economy, but there is a case for designing more sector-specific measures in the future, as with the KIA course, and doing more to encourage entrepreneurs.

GCC governments do at least have the benefit of oil wealth to help develop these training and education schemes. A bigger challenge will be convincing locals they should look for private-sector jobs at all, particularly when so many have been conditioned to expect the state to provide for them in so many aspects of their lives.