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The UAE Private Sector Development Research Paper

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Updated: Jun 24th, 2020

Introduction: Government Sector vs. Free Entrepreneurship. A UAE Dilemma

The significance of private sector development has become increasingly clear in the globalization environment of the XXI century. However, according to the existing records, in India, the development of the private sector is hindered by a variety of factors, which leads to unemployment and regress of the production process. Therefore, analyzing the problems of the UAE private entrepreneurship is crucial for the further development of the state and the well-being of its citizens.

Theory: What Stands Behind the UAE Private Sector Inefficiency

To analyze the specifics of the UAE private and public sector specifics, as well as solve the specified problem, it will be required to use such theories as to the theory of public administration (Pruthi, 2005) and motivation theory (Hoffman, 2007).

Hypothesis: Improving the Reputation of the UAE Private Entrepreneurship

According to the existing data, it can be assumed that by improving the skills of the native UAE residents, upgrading the standards of the private entrepreneurship and passing the reform that can fuel a change in the significance of the private sector, the UAE can make the private sector more powerful and set its further development.

Creating a system in which both the private and the public parts of the business vehicles are going to coexist in perfect harmony is hardly possible. However, by changing the policies towards public enterprises and taking better care of the private ones, the government of the UAE may expect the growth of the independent companies. There is no arguing that the given step might have a drastic effect on the state, as well as lead to a temporary crisis within the realm of public companies. However, once the effects of the changes are settled, it can be expected that the private sector will grow and the balance will finally be restored.

Research Methodology: Combining the Qualitative and Quantitative Analysis Techniques

Considering the case of the UAE entrepreneurship crisis, one must admit that a theoretical framework is crucial for nailing down the problem and working on the probable solutions, yet it is still required to see the future strategy in action to evaluate its effect and make sure that it is going to work properly. That being said, it is highly likable that in the course of the given research, both qualitative and quantitative data will be required. The latter will help specify the key features of the UAE situation and figure out the demand of the target market for the private enterprises in the UAE, as well as check whether the proposed solution is going to work. In its turn, the former will help provide a theoretical foil for the research.

Quantitative analysis: the process of questionnaire creation

The key goal of the quantitative analysis in the given case is to analyze the demands of the UAE market, as well as to consider the chances that the UAE private entrepreneurs have against the government sector. In addition, the questionnaire will help specify the key weaknesses of the existing private companies, which will lead to the analysis of the major weaknesses of the private companies and the strengths of the governmental ones. Therefore, a conclusion concerning the areas in the private sector that need further improvements will be specified.

Since the goal of the quantitative part of the research is to obtain unbiased results, honest answers and verified statistical data, it is desirable that the questionnaire should be designed for a random person, disregarding its position and field of work. The questionnaire will contain twelve questions of five different designs, which will help define the attitude of the UAE citizens towards both government and private sector, as well as figure out what makes people choose the former as their desired workplace.

It is important to mention that the questionnaire is going to consist of five types of questions and will include ten questions. These questions will help define the attitude towards private and public companies among the general public, as well as specify the reasons that make people choose public sphere instead of the private one. To start with, the open question will help figure out why people prefer the public sector. It is important that the open question should not restrict the answers to specific choices; thus, it will be possible to obtain an entire palette of explanations concerning people’s vision of the two sectors.

Further on, these answers will be split into four major categories, i.e., financial, economical, political and social reasons. With the help of the answers provided by the respondents, it will be possible to conduct a PEST analysis of the current state of affairs within the public sector from the perspective of an average citizen and, thus, define the possible means of improving the private sector.

The questions about attitudes will help check whether the respondents feel comfortable about the idea of working for a private company and whether they consider such possibility at all. In addition, the scale offered for the respondents will help define how well adjusted towards working for a private company the respondents are. By calculating the arithmetic and the standard mean of the numerical value of the answer provided by the respondents, one will be able to define whether the residents of the UAE can adapt to working in a private company. Thus, the questions that contain a scale of attitude evaluation will provide the statistical data of the intensity of people’s attitudes towards the private sector and its owners.

In addition, such type of questions will help figure out whether the residents of the UAE see working in a team with foreign employees as a possibility. Although xenophobia does not seem to be the issue in the modern UAE, it is still necessary to check the given aspect to avoid possible conflicts in the future. It can be expected, however, that people will not bother trying to analyze their feelings towards the private sector issues and will most likely check the boxes that represent the extremes (i.e., “fully agree” or “fully disagree”) or prefer to pick the middle (“indifferent”). Unfortunately, such variants of answers are probably going to be the most numerous, yet they have to be included for the sake of providing the participants with a full range of options. With the help of the given questions, as well as the rest of the questionnaire, the test results are likely to be very informative and provide important statistical data.

Qualitative analysis: data evaluation and the deduction process

The qualitative analysis for the given research is going to be based on the results of the questionnaire, as well as the analysis of the existing literature that sheds the light on the UAE employment problem. Although the questionnaire will provide mostly numeric data, this data will also help specify the current issues within the private companies, which will help conduct a comparative analysis of the existing issues, splitting them according to their relation to the financial, economical and political issues in UAE.

In addition, the questionnaire will help define the possible methods of the current problem solution. After the questionnaire results are obtained, it will be possible to nail down the key problem of the modern UAE private companies, which makes them look unreliable in the eyes of modern businessmen and, thus, suggest efficient means of upgrading the existing private enterprises.

Literature Review: What the Connoisseurs Have to Say about the UAE Employment Issue

Weirdly enough, the current issues concerning the regress of the UAE private sector have not been discussed considerably yet in academic papers; most of the available information comes from newspapers and magazines, which is quite understandable given that the news concerning the private entrepreneurship regress is comparatively recent. However, some of the existing academic sources have helped shed some light on the problem. Several attempts at explaining the root causes of the phenomenon must also be taken into account, seeing how the source of the problem defines the solution.

A general overview of the situation: learning more about the UAE problem

Before going into suggesting the solutions for the specified problem, one must evaluate its scale. In the given case, the work written by Al Abed et al. (2004) is bound to help; even though it was written almost a decade ago, it outlines the key factors that led to the regress of the private sector perfectly. As the authors explain, the fact that most UAE private enterprises are run by foreigners might be the reason for the native population to take government positions. Seeing that in 2004, the UAE was “perhaps, the only country in the world where foreigners dominate the private sector” (Al Abed et al., 2004), the dominance of foreigners in private sector is likely to be the key reason for the problem to appear. Whether the assumptions of Al-Abed et al. are right or wrong, they still provide an interesting perspective on the issue.

Al Azri (2010), however, offers a different perspective on the problem. According to what Al Azri says, the foreigner domination factor is no longer the primary obstacle; judging by the current state of affairs, the oversaturation of the public sector has become the key issue on the modern UAE employment agenda.

B. What owners can do: developing in a competitive environment

While the fact that the public sector lacks employees, whereas the public sphere seems to have become oversaturated with the workforce has been proven, the solutions for the given situation still require more elaboration. As it has been mentioned, two major reasons for the citizens of the UAE to choose the government sector as opposed to the private one is that the latter has been occupied by the foreigners and, thus, has turned completely in the foreigners’ domain.

Evaluating the major problems in the private sector apart from the obvious inclinations of the owners to prefer the immigrant workers to the native ones due to the low demands of the former, one must pay special attention to the fact that the private entrepreneurs rarely care about giving their employees proper motivation, which must also make private companies look like a second choice to the applicants. The research conducted by Hayton, Biron, Christiansen, and Kuvaas shows clearly that the UAE private entrepreneurship could be a bit less demanding on their motivation and discipline techniques: “UAE nationals are also generally unprepared for the levels of motivation and discipline that are required in the private sector” (Hayton, Biron, Christiansen & Kuvaas, 2012, p. 388).

It is worth mentioning, however, that the process known as “Emiratization,” which was supposed to “reduce the country’s dependence on an expatriate workforce” (Hayton, Biron, Christiansen & Kuvaas, 2012, p. 388), has already taken place, with little success, though. Hence, it must be admitted that either the entrepreneurs will have to be less demanding so that they could use more qualified workforce, or the applicants should take every opportunity to train their skills, namely, “thinking, mathematical reasoning, and writing” (Hayton, Biron, Christiansen & Kuvaas, 2012, p. 388). At best, each of the “opponents” should take the corresponding steps to meet each other’s requirements.

What the government can do: supporting private sector

Back to the fact that the private sector is mostly run by the immigrants from other countries, one has to do something to reduce the power of the foreigners, as well as their impact on the UAE labor force market. Although the chances that the government can reduce the percentage of immigrants among the UAE workforce in the private sphere are relatively low, it is important to mention that in the past few years, the attempts to offer the native population of the UAE ca change to enter the private sector have been made.

Among the possible reasons for so many residents of the UAE to reject the option of working in a private sector, the insultingly low wages must be in the top five issues. Since foreign employees, i.e., immigrant, or even migrant, workers make the bulk of the private sector labor force, they are likely to agree to work for a lower salary than the native residents. As a result, the suggested amount of money in private enterprises does not satisfy the needs of the native applicants, who choose the government sector with its superior salary, trustworthiness, and professional growth prospects.

Therefore, among the possible suggestions for the further steps that the UAE government could undertake to improve the existing situation with the decay of the private entrepreneurship might be introducing several reforms into the Emirati labor system. With the help of these changes, the standards in private companies are likely to rise a notch, therefore, making the positions more attractive to the native applicants. As the Human Rights Watch explains, the existing law on the wages of labor force is currently being reconsidered, which is more than reasonable, given the deplorable state of private entrepreneurship: “As for now, rules for workers in Kuwait differ according to sector – oil sector employees are governed by one set of rules, domestic by another and the rest by the common labor law, which will be replaced by the new law” (Oxford Business Group, 2011, p. 30).

Also, it would be a good idea to consider the introduction of a specific program aimed at boosting the UAE private entrepreneurship. To the credit of the state government, such program was already provided soon after it became clear that the public companies were taken by the foreign workforce and that the private sector needed help. Called the Entrepreneurship Development Program, the given measure was supposed to address the problems that the UAE private companies faced at the time and provide efficient solutions. When developing the given project, the UAE authorities seem to be considering the actual problems, which private entrepreneurs face. The given feature of the project made it very strong and helpful. As the Staff county report says, the programs that were created to improve the state of domestic entrepreneurship and the so-called SMEs, or small- and medium-sized enterprises, seemed quite efficient at the time:

Key benefits of these programs are a simple and streamlined application process, competitive interest rates, and favorable repayment terms. Also, a National Human Resource Development and Employment Authority was created to train nationals to ensure that they have adequate skills to be hired by the private sector. (Staff county report, 2004, n.p.)

Therefore, it is clear that the government can make an effort to ensure that the Nationals should have the opportunity to integrate into the private sector successfully. Researches show that several programs of the given kind were created to support the nationals in their endeavors at conquering the private sector. However, at present, the government seems to have abandoned such attempts, which means that the candidates for positions in private entrepreneurship should also make an effort so that the government could provide the required courses and other types of assistance.

What employees can do: taking chances and making choices

Even though the chances of getting a job in a private sector depend mostly on the owners of the enterprise, the local policies concerning human resource management and the specific needs and demands of a company in question, it would be wrong to claim that the efforts of the applicants do not count. As researches show, often the attempts of the applicants for the job tip the scales towards assigning them with a position in a company, no matter what kind of candidates the local policies prefer over the rest of the applicants. Therefore, it must be admitted that to change the current state of affairs within the sphere of private entrepreneurship, the residents of the UAE have to make decisive steps as well As the researches conducted in 2004 on the issue show, often the willingness to become a part of the company is what counts the most.

For example, the Labor Market Study of 2004 conducted by Caren Nelson shows that in 2004, the percentage of female labor force formed “a very small percentage of the overall labor force” (Nelson, 2004), mainly because foreign male employees were much more preferable to native female workers in the eyes of the foreign owners of the private UAE companies. However, the study also shows that the female native population of the UAE managed at some point to win impressive positions at several private companies: “Emirati women have made exceptional strides in terms of overcoming cultural and social barriers and are entering the labor market in increasing numbers. Indeed, they can be seen as potential cornerstones of the UAE economy in the future” (Nelson, 2004, p. 32). Therefore, it can be argued that the situation with unemployment in the private sector will remain an issue unless the native citizens of the UAE start taking actions.

The possible threats and the ways to overcome them

A couple of obstacles might appear in the way of private entrepreneurship development in the UAE. Given the high competition rates (OECD, 2013) and the fact that the private companies are primarily interested in their own profit, they might not be interested in waiting until the native candidates grow professionally. Therefore, a more rapid way of knowledge acquisition for the residents of the UAE should be provided. With the help of an efficient knowledge management approach, however, the problem can be solved (Dalkir, 2005).

Another threat that the attempts to solve the issue pose is the lack of enthusiasm. Truly, the idea that the government should fund the training of the nationals for the latter to be able to join the private companies is likely to fall flat unless the candidates for the positions in private companies want to learn more and acquire new skills. Otherwise, the money thrown on the education program will be wasted. The given problem has been researched thoroughly by Rojewski (2004). To give credit to where it belongs, one must admit that Rojewkski offers a very detailed account of not only the measures that have been undertaken so far by the UAE government to support the nationals in their fight for the positions in private sector but also evaluates these attempts honestly.

Thus, the existing researchers pose the question whether the government of the UAE has taken enough efforts to help employees integrate into the private entrepreneurship system, but also whether the employees themselves have done enough to gain the access to the specified field. By making the assumption that employees might have become the fifth wheel in their own career growth, the authors of the researches make it clear that both sides should make an effort for the private enterprises to become a more attractive option for the native population. Hence, it will be required to consider the means to boost the personal and professional growth of the candidates, as well as convince the owners of the private companies that professional residents of the UAE are as valuable as the migrant labor force.

Concerning the anticipated results: when the private market rises

The last, but definitely not the least, the anticipated results must be addressed. It can be expected that with the rise of the private sector, the public one could face similar problems, i.e., high unemployment rates and the lack of qualified labor force (Lienert, 2009). The given problem can be solved, however, by upgrading the quality standards by making them higher and providing a flexible employee motivation program (Lauby, 2005).

Judging by the results of the literature review, the UAE residents need help from the state and the entrepreneurs to have an opportunity to become a part of the private companies’ structure. By reconsidering their standards and raising the wages, as well as providing more reasonable company policy concerning the corporate climate and the relationships between employees, the entrepreneurs will be able to use high-quality help of the residents of the state instead of relying on the foreign labor force, who are rarely motivated to increase the company’s reputation and are usually driven by the need to get money. However, such a gesture from the employers will require a response from the candidates, i.e., an attempt to upgrade their knowledge and skills to the acceptable quality.

Reference List

Al Abed, I et al. 2004, UAE yearbook,: Trident Press Ltd., Abu Dhabi, UAE. Web.

Al Azri, S 2010, Uneployed youth in the UAE: Personal perceptions, DIANE Publishing, Darby, PA. Web.

Dalkir, K 2005, Knowledge management in theory and practice, Elsevier Butterworth–Heinemann, Burlington, MA. Web.

Hayton, J, Biron, M, Christiansen, LCC, & Kuvaas, B 2012, Global human resource management casebook, CRC Press, New York, NY. Web.

Hoffman, S 2007, Classical motivation theories, GRIN Verlag, Berlin. Web.

Lauby, S J 2005, Motivating employees: career planning & talent management, ASTD Press, Fort Lauderdale, LA. Web.

Lienert, I 2009, Where does the public sector and the private sector begin?, International Monetary Fund, Washington, DC. Web.

Nelson, C 2004, UAE national women at work in the private sector: conditions and constraints, Centre for Labour Market Research & Information, Dubai, UAE. Web.

OECD 2013, Competitiveness and private sector development renewable energies in the Middle East and North Africa policies to support investment: policies to support private investment, OECD, Paris. Web.

Oxford Business Group 2011, The report: Kuwait 2011. Kamco, Redding, CA. Web.

Pruthi, R 2005, Theory of public administration, Darya Ganj, New Delhi, India. Web.

Rojewski, J W 2004, International perspectives on workforce education and development, IAP, Charlotte, NC. Web.

Staff county report 2004, International Montary Fund, Washington, DC. Web.

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