The Impact of Nationalisation on GDP

The Impact of Nationalisation on GDP

by Mark Nancarrow in career
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Integrating more nationals into the labour market is an issue that countries in the GCC have faced for many years. 

Due to rapid and sustained growth, the region had no choice but to rely on overseas labour, a move which, while successful in terms of business development, threatened the identity of many GCC countries. 

To redress this balance, nationalisation was introduced, with the sole purpose of helping local people move into local jobs. The move was not only about helping strengthen national identity; it aimed to create an infrastructure which would serve the generations to come. 

The issue of nationalisation is a complex and multifaceted one, with positives and negatives in terms of both foreign labour and local employment.  

The region continues to expand and still has a long way to go. In today’s article, we look at the positive impact that nationalisation has had on GDP in the UAE and the wider Middle East. 

‘Cheap’ Overseas Labour 


The Middle East has relied on overseas labour for decades; during the region’s initial growth period, the population could not meet the demand. 

As the region grew, initially supported by wealth from the oil sector, it attracted plenty of overseas workers for a variety of reasons – high wages, low tax, non-wage benefits such as lifestyle. However, as more non-oil industries have taken over, cheap labour from predominantly Asian countries has continued to flood into the area, resulting in excess labour.  

In a recent study of nationalisation in the GCC, Steffen Hertog writes “All across the GCC, at least some segments of the leadership are aware that governments will not be able to absorb new cohorts of national labour market entrants forever.” 

With two concurrent problems – the excess of ‘cheap’ overseas labour and a lack of employment and development opportunities for locals, the governments in the region were worried about the long-term damage this was doing the region’s infrastructure. 
 
As we all know, cheap isn’t always best. The concept of nationalisation was then born, to enrichen and enhance the region’s ability to create and support its employment infrastructure. 

Redressing the Balance – Increasing Opportunities for Nationals

 
The concept of nationalisation – to reduce expatriate employment by creating more opportunities and bringing more local citizens into the workplace, has been a pertinent H.R. management strategy for years, becoming more popular recently with the UAE’s Vision 2021 drive. 

As these programmes have proved successful for both employees and employers, they have gained traction. 
Each year, GCC countries secure an increased number of jobs for national citizens.  

As of last year, the UAE allocated 40% of all banking jobs to national citizens. Post-Covid, tens of thousands of Indian expatriates have been repatriated due to Saudisation, as job losses have occurred in some sectors, the GCC countries are keeping hold of jobs for locals.  

This is in contrast to the past, where foreign labour was seen as essential. Now, countries in the region realise the importance of investing in nationals, rather than outsourcing.  
Finally, let’s look at the real benefits of nationalisation on GDP and in other areas. 

Increased Jobs for Locals = Increased GDP 


So let’s take a look at the evidence that nationalisation has positively impacted GDP. 

Before Covid-19, the UAEs GDP was predicted to increase from 1.7% in 2018 to 3% by 2021, on a similar trajectory to nationalisation.  

Nationalisation doesn’t just directly influence GDP in this way; there are many other benefits enjoyed by local people and local business which continue to strengthen the country’s infrastructure.  

In a study into the effects of nationalisation in the GCC, it was found that nationalisation programmes are associated with a wide range of considerations such as competitiveness, globalisation, economic growth and social reform. 

Nationalisation has had its challenges, but it continues to be a success. The biggest challenge employers in the GCC and the UAE face is finding national talent with the right skills. 
 

What Next? 


The hiring of nationals strengthens both individual organisations and the countries as a whole.  

For nationalisation to continue to be a success, the region must focus on education and employers must focus on robust training, as well as hiring diverse talent with a wide range of soft and hard skills. 

If you have failed to attract the national talent you need with the ‘right’ skills, we can help.  
 
We work with organisations to help them place the very best national tech talent in business-critical roles, such as fintech, payment technology and cybersecurity. 

To find out how we can help you find the national talent you need, get in contact with us here.  


Thanks 

Mark  

 

About Flow  


The Middle East is a dynamic and growing market where identifying top talent and world-class professionals for the information technology and cyber security industry is highly competitive.   
 
Flow provides an executive search service led by industry experts, geared to any level of role within the cyber security industry. This service is driven by innovative, established and proven research teams who customise each requirement from our clients.    

Importantly at Flow, we meet with all our candidates face to face to gain an understanding of their requirements, ensuring we guide them in finding their ideal role.   

To find out more get in contact with one of our team today.
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