After the Sheikhs: The Coming Collapse of the Gulf Monarchies (22 page)

The UAE offers even clearer examples, not least because it is usually perceived as a wealthy state. After several summers of blackouts in Sharjah, due to increased demand and its government’s inability to meet electricity costs, the Sharjah Electricity and Water Authority announced in 2009 that electricity charges were to be increased by 50 per cent—including those levied on UAE nationals. This led to much complaint, mainly from nationals, who claimed that the authorities were unable to cope with an expanding population. Since then blackouts have continued in the emirate, often forcing businesses to close due to lack of air-conditioning.
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The Dubai and Abu Dhabi governments have also begun to falter, especially with regards to subsidising state-backed retail petrol companies such as the Emirates National Oil Company and the Emirates Petroleum Products Company (both owned by Dubai) and Emarat (owned by Abu Dhabi). In 2010 these companies’ roadside petrol stations began to experience fuel shortages—a situation that continued well into 2011. Initially the shortages were blamed on logistical problems, but it later transpired that deliveries were not being made due to the companies’
inability to make payments. Although fuel price hikes have taken place in recent years, most of which proved extremely unpopular with UAE nationals, there appeared to be no alternative as the various emirate-level governments had begun to phase out fuel subsidies on the grounds that they were costing the country hundreds of millions of dollars per year.
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Indeed, at a secret meeting with Ministry for Finance and Industry officials both ENOC and EPPCO recommended removing the cap on fuel prices completely, which would have led to an immediate tripling of petrol prices from nearly $2 per gallon to nearly $6 per gallon. In 2011, however, due to the perceived political backlash of further price hikes in the wake of the Arab Spring, and the rising popularity of various opposition groups in the UAE, the Abu Dhabi authorities performed a u-turn by providing Emarat with even more capital. Meanwhile the federal government cancelled the licences of both ENOC and EPPCO given the Dubai government’s inability to provide a comparable bailout, with the Abu Dhabi National Oil Company eventually taking over the running of their petrol stations.
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Moreover, ministry officials even suggested introducing a new $550 fuel allowance specifically for UAE national families in order to cover future increases.

Voluntary unemployment

Although the poorer Gulf monarchies—which have fewer resources to finance public sector jobs for nationals or to provide incentives for their private sector employment—tend to have a more balanced workforce, the wealthier monarchies are increasingly faced with high levels of voluntary unemployment among their young national populations. In many ways, although there are some exceptions, the described cultivation of a national elite over the past four decades by these states has led to citizenries that are now not only accustomed to material benefits and to no forms of extraction, but are also—with all the various sponsorship systems, soft loans, and public sector employment opportunities—being deprived of any motivation to gain meaningful qualifications or enter into a more competitive job market, or even any form of private sector job. In other words, there is an increasingly significant drawback to the political benefits derived from cosseting the national population, and in many ways this is already leading to nationals in the Gulf monarchies’ largest cities becoming little more than bystanders on the sidelines of
their countries’ development. Furthermore, there is evidence that this may be leading to a generation of Gulf nationals that are frustrated, bored, restless, and on occasion even delinquent.

In the mid-1990s even the ruler of Abu Dhabi warned of the phenomenon—seemingly oblivious that it was a problem partly of his government’s creation—by criticising the inactivity of young nationals who should be gainfully employed. He stated that he ‘could not understand how physically fit young men can sit idle and accept the humiliation of depending on others for their livelihood’.
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Similarly, in the late 1990s the crown prince of Dubai seemed unaware of the root causes of the problem when he complained of ‘voluntary unemployment’ in his emirate, stating that ‘unemployment is a waste of natural resources and is wrong when the UAE is providing all its sons and daughters with opportunities that were unattainable a generation ago’.
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Writing in his memoires at about the same time, one of Dubai’s veteran merchants predicted that ‘…of Dubai’s young nationals, probably only 20 per cent will be worthwhile, becoming academics and professionals, and businessmen. About 60 per cent can probably be written off, the consequences of the all-too-easy acceptance of the pleasures which will be handed out to them’.
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Similarly realistic, when the former ruler of Qatar
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fell ill in the mid-1990s he reportedly expressed more shock at the fact that his paramedic was actually a Qatari national than over the actual heart attack he had just suffered.
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Although a number of labour nationalisation strategies have been implemented in the more resource-rich monarchies—‘Saudification’, ‘Emiratisation’, ‘Kuwaitification’, and ‘Qatarisation’—they have in many ways only compounded the problem. In most cases they have avoided addressing the structural problem of most citizens being dependent on a distributive economy, and have served only to keep pricing nationals out of the market, which in turn has made them even less attractive employees. In particular, labour laws guaranteeing access to special pension funds and limiting working hours have greatly increased the cost of hiring nationals.
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Even more heavy handed have been the aforementioned quota systems and job protection schemes for nationals imposed on certain industries.
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These have often made expatriate colleagues resentful of their Gulf national counterparts and have made employers increasingly wary. As one recent report observed ‘…across the Gulf, and especially in states where rapid growth is driven by oil and gas, locals
rarely have hands-on jobs in health—or anywhere in the private sector. In an unspoken pact between rulers and ruled, Gulf citizens seem all too happy to fill plush government jobs, where the pay is high, the hours short, and the work sometimes nonexistent. In the private sector, job after job is filled by South Asians, non-Gulf Arabs and Westerners’.
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In the UAE’s case, conservative estimates according to Tanmia are that nationals make up only 9 per cent of the total workforce
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and just 1 per cent of the private sector workforce,
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and that there are currently 17,000 unemployed UAE national adults.
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Other estimates have put the figure as high as 35,000,
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with many of these being degree holders.
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The majority of these are likely to be in Abu Dhabi and probably fit into the category of voluntary unemployment. Indeed, latest official reports claim that the UAE has an unemployment rate of 23 per cent, with the government simply stating that the majority are ‘jobless by choice’.
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More broadly, it is thought that at least half of those nationals in receipt of generous social security benefits are able-bodied and capable of work.
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Interviewed by Reuters in 2010, one young UAE national explained that he ‘couldn’t not see the obvious’ and was willing to ‘hold out for up to a year for a government post rather than take a job with a private firm’. He also claimed that ‘I can work in a bank from at least 8am to 5pm, and get half the salary that I would get in a government job working 8pm to 2pm. Anyone would choose the better option’. Similarly, another national stated that ‘I will move to the government sector, I see it as a duty to my country’ before explaining that ‘You tell me, who wouldn’t wish to just sit there and get paid lots of money?’
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The same comprehensive Reuters report estimated the situation to be little better in other Gulf monarchies, with only 10 per cent of Saudi nationals and 5 per cent of Qatari nationals being employed in the private sector,
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despite the Saudification programme aiming to replace 10 per cent of the expatriate workforce with unemployed nationals
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and the Qatarisation programme aiming for 40 per cent labour nationalisation. Speaking in late 2010 the Saudi minister for the interior (and up until recently the crown prince)
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made it clear that ‘…the government could not keep providing jobs for everyone’ and, according to a
Financial Times
report, he ‘signalled an impatience with businesses that hire only foreigners and urged the private sector to employ more Saudis’.
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Speaking a few months later the chairman of the Council of Saudi Chambers of Commerce and Industry
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agreed with the urgency of the situation, calling
on the government to ‘appoint an international consultancy firm to help implement the Saudification program more effectively’ and arguing that ‘the problem… is that while [the government] has been relatively successful in creating a very good education sector, they are still not delivering people that are capable of working in the private sector’.
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As with the UAE, it seems that the problem will be very difficult to solve, with the average expatriate’s earnings in Saudi Arabia’s private sector being about $200 per month compared to over $800 for Saudi nationals.
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Understandably, the
Financial Times
’ report concluded pessimistically that ‘many young Saudis fresh out of college [still] feel entitled to a managerial post by virtue of their nationality, and complain that foreign bosses order them around’ and that ‘the government is grappling with the challenge of creating highly paid jobs for a young population with a strong sense of entitlement, poor education and, often, a weak worth ethic’. Similarly negative, and further hinting at the deep-rooted, structural nature of the problem, have been the recent views of chief economists at Saudi-based banks who have explained that ‘the government has to work on changing nationals’ attitudes, which were pretty much cultivated during the first oil boom in the 1970s’ and have questioned ‘how can you create jobs for Saudis if they do not want to join the private sector, and the private sector does not want them?’
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In Kuwait, over 12,000 nationals are believed to be waiting for public sector positions, preferring to remain unemployed in the meantime rather than work in the private sector.
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Bahrain and Oman have suffered much less, but in part this is due to the increase in real unemployment in these states, as discussed later in this chapter. Moreover, there have been some relatively novel labour nationalisation schemes in these countries which have had some success, albeit still quite limited. In 2009, for example, Bahrain increased the charge on visas for foreign workers in an effort to make Bahraini workers more attractive to employers. In the end, however, too many businesses lobbied to protect the status quo and the visa charge was only raised to $27—which was deemed merely a minor obstacle to hiring expatriates. In Oman, the government has required taxi drivers and hotel reception workers to be nationals since the 1980s. This gives visitors to the country the impression that Oman’s labour force is far more nationalised than in the other Gulf monarchies. Nevertheless it is still a narrow example.

Apart from the long term economic consequences of having almost no nationals engaged in the public sector, with many remaining unemployed,
and in receipt of (often generous) social security benefits, there are also growing symptoms of the social and political problems in store for the Gulf monarchies. In summer 2010, for example, several hundred frustrated Saudi national university graduates reportedly gathered outside the Ministry for Education carrying posters demanding government jobs and carrying posters with slogans such as ‘Enough Injustice’.
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The problem is also increasingly being linked to terrorism and security concerns, with some analysts remarking that ‘…the Saudi government believes that the question of unemployment is a major problem with huge implications on security… and the great majority of those recruited for terrorist activities are the unemployed’.
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Crime rates among Gulf nationals have also soared over the past few decades—mostly connected to acts of delinquency such as joyriding and shoplifting. Although official statistics are unavailable, given the sensitivities prevalent in conservative societies, alcohol and drug abuse have risen dramatically among the indigenous populations, despite the harsh penalties associated with narcotics. Most Gulf monarchies now have extensive rehabilitation centres. In Dubai, for example, the emirate’s Training and Rehabilitation Centre—available only to nationals—has been described by the
New York Times
as ‘a lush facility complete with swimming, art classes and a gym, deep in the desert’. In Saudi Arabia there are now television programmes that openly discuss drug abuse, while in Bahrain and Kuwait clerics increasingly preach about the dangers of narcotics. As a representative of Mentor Arabia—an organisation that aims to help regional governments formulate anti-drug policies—has claimed ‘the taboo around drug addiction is fading because the problem is becoming too scary’ and that ‘there are many indicators that suggest this is going to be a big problem… what shows it is that the governments are beginning to ask for help’. Meanwhile, a former UAE national drug user has explained that ‘…the drug problem here is really an invasion… there is money, the place is open, so it’s bound to happen here’.
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