Emiratisation: Economic and Labor Market Essay (Critical Writing)

SMEs, small and medium enterprises, are commonly referred to as pillars of Dubai’s company. As supported by Alijanahi (2017), SMEs represent 95% of all business establishments in the UAE, comprising 42% of the total workforce and adding approximately 40% of the value add of the Emirate’s economy. Engines of the country’s economic growth, SMEs are seen as vital aspects of the Gross domestic product, serving as primary sources of innovation, labor, and entrepreneurship.

With regards to the labor market, within the SMEs in the private sector, the productivity of medium-sized firms differs from small and micro firms. According to Alijanahi (2017), medium-sized companies at AED approximately 250 thousand per unit is significantly higher than that of a small business (estimated at 140 thousand per unit). Nevertheless, UAE’s SME average labor productivity rate (AED 112 thousand per unit) is lower than in Singapore (AED 400 thousand per unit) and South Korea (AED 215 thousand per unit) (Alijanahi, 2017).

As written in ‘Emiratisation can affect the SME growth’ (no date), countries with trading and service-oriented economies have generally higher productivity levels. However, with the introduction of Emiratisation, the issue of structural division in the labor market commands the inclusion of Emiratis in the private sector to increase employment creation and development-oriented economy.

The theoretical framework of the academic research identifies the three following challenges for SME growth in the context of Emiratisation. As acknowledged in ‘Emiratisation is here to stay’ (2019), previously, the UAE’s corporate culture put low focus on employees’ professional development, training, and transition of skills from seasonal to temporary workforce. In the vision of 2021 Emaritisation, the substantial increase in the youth activism will eliminate the challenge of adversarial lack of vocational training (Pupic, 2016). According to Forstenlechner, et al. (2011), inefficacy of SME business is also related to the low focus of business improvements.

With Emaritisation reengineering of business processes, more financial investments will be made in the sphere of technological advancements (Forstenlechner, et al., 2011). As stated by Shayah and Sun (2018), currently, there is a limited integration of advanced enterprise ICT systems. Yet, the scope of the 2021 Emiratisation program implements the incorporation of ERP and CRM as basic solutions for the issue.

Apart from having imminent effects on the labor market, the scope of Emiratisation vision of 2021 extends to the economic market of the UAE in terms of international global orientation. As argued by Rees, et al. (2007), the new economic program of the country aims at export orientation of the businesses since SEMs have 51% rate of revenues coming from regional and international markets. By integrating the mode of internalization, Emiratisation will likely lead to direct foreign investments, technical collaborations, and sub-contractions (Rees, et al., 2007).

With these goals in mind, the UAE government hopes to enter the top three international markets, raising the percentage share of shales from international markets in the total value added to the organization. As claimed by Rutledge and Alkaabi (2017), several challenges that might interfere with the SEMs growth include lack of dedicated employees/heads of departments for export and absence of a clearly defined strategic plan. Ultimately, both old and new research predicts a strongly positive correlation between SEMs development and integration of the Emiratisation incentive.

The outdated model of HRM strategies and practices in UAE calls for urgent changes in employee resourcing, training and development, performance appraisal and compensation, and employee-manager relationships. Taken into consideration the newly established Emiratisation protocols in terms of employee resourcing, by 2021, HR professionals should prioritize UAE nationals when recruiting through the usage of quota systems (Waxin and Bateman, 2016). Another outcome is reserving senior management positions to the Emirati applicants only and investigating the government’s incentive reductions for the work in the public sector (Rutledge and Alkaabi, 2017). Challenges to such solution refer to the lack of well-qualified and experienced Emariti to fulfill the duties.

A key aspect of HRM practices, employee training and development in the Emiratisation program facilitates competitive advantage in the novel model of the UAE’s economy. As noted in ‘UAE to monitor Emiratisation efforts at private sector firms’ (2017), the major emphasis will be put on training Emirati nationals to gain skills and competencies necessary for the work. As supported by Rutledge & Alkaabi (2017), the process can be executed via the local organization’s workforce in the context of development component. Overall, the guidelines of the Emiratisation program suggest that HR managers will start introducing career development options, including quality education, job-hunting, and life-long training.

The process of performance appraisal and compensation in UAE used to be undertaken formally at regular intervals with HR professionals systematically evaluating the performance of employees. According to Waxin and Bateman (2016), to increase Emirati motivation and job satisfaction, HRs should implement such performance appraisal schemes as higher compensations, rewards, promotion incentives, training and development suggestions.

The Emiratisation strategy also analyzes the issue of employee remuneration, suggesting complementing changes in performance-based pay challenges (Shayah and Sun, 2018). By openly communicating the key performance indicators of employees, HRDs will be able to develop and utilize measurement tools to assess employee performance within the accelerated promotion schemes (Pupic, 2016). Such a strategy would lead to a higher level of employee motivation and job satisfaction.

The employee-management relations is the last aspect influenced by HRM changes in the Emiratisation program. The critical reason for the deteriorating nature of the employment relationships in an Emirati organization previously is a limited scope of individual managers (Rees, et al., 2007). The vision of the 2021 governmental incentive extends to the need for the strategical coordination of commitment-based work-culture, wherein the prevalent values of the employee development strategy are related to the workers’ outlook and attitudes (Forstenlechner, et al., 2011).

Instead of building the organizational directives on high attrition levels on the basis of financial rewards, Emirati new developmental program addresses the need for an interpersonal collaboration between managers and employees. According to Forstenlechner, et al. (2011), such effect of the program constitutes both its biggest advantage and challenge. Since the nature of employee relations depends on the individual connection between the supervisor and the subordinate, little guarantee can be placed on the successful implementation of the theoretical guidelines.

Ultimately, the major focus of the Emiratisation program is put on the gradual, yet, continual enhancement of employee-manager relationships, as well as integration of the fair performance appraisal system. Moving from the formal, detached system of leadership, new HRM model of Emirati businesses is likely to create liberal person-centered relationships at the workplace. Recruitment of Emirati nationals, in return, will lead to the implementation of the quota system and encouragement of the local labor force to enter private sector.

Reference List

Alijanahi, M. H. (2017) ‘Challenges to the Emiratisation process: content analysis’, Human Resource Development International, 20(1), pp. 9-17. Web.

Emiratisation can affect the SME growth (no date). Web.

Emiratisation is here to stay (2019). Web.

Forstenlechner, I. et al. (2011) ‘Emiratisation: determining the factors that influence the recruitment decisions of employers in the UAE’,The International Journal of Human Resource Management, 23(2), pp. 406-421. Web.

Pupic, T. (2016) ‘Could Emiratisation help drive SME growth?’. Web.

Rees, C. J. et al. (2007) ‘Emiratization as a strategic HRM change initiative: case study evidence from a UAE petroleum company’, International Journal of Human Resource Management,18 (1), pp. 33-53. Web.

Rutledge, E. and Alkaabi, K. (2017) ‘”Private sector”’ Emaratisation: job satisfaction and sociocultural influences’, MPRA, pp. 1-31. Web.

Shayah, M. H. and Sun, Z-H. (2018) ‘Human resource management in China a UAE-a comparison’, Advances in Economics, Business and Management Research, 60, pp. 92-98.

UAE to monitor Emiratisation efforts at private sector firms (2017). Web.

Waxin, M-F., and Bateman, R. (2016) ‘Human resource management in the United Arab Emirates,’ in Budhwar, P. and Mellahi, K. (eds.) Handbook of Human Resource Management in the Middle East. Cheltenham: Edward Elgar Publishing Limited, pp. 123-140.