Cre­at­ing a pri­vate sec­tor in the GCC

Mo­hamed Ebrahim says Gulf economies must teach en­trepreneurs and in­spire work­ers to get res­i­dents off the gov­ern­ment pay­roll

Gulf Business - - CONTENTS - Mo­hamed Ebrahim

A COU­PLE of years ago, Gulf Co­op­er­a­tion Coun­cil (GCC) of­fi­cials were shocked to dis­cover some­thing few be­lieved could even ex­ist lo­cally: bud­get deficits.

Gov­ern­ment spend­ing and low oil prices cre­ated a deficit of $28bn in 2016, at which time the In­ter­na­tional Mone­tary Fund (IMF) pro­jected it would grow to $350bn by 2021. Oil prices have since risen and gov­ern­ments have re­duced spend­ing, so the IMF has ad­justed short­fall ex­pec­ta­tions down to $240bn in 2021. Still, the IMF be­lieves 4.4 per cent in the United Arab Emi­rates (UAE) will be on the high end of GCC eco­nomic growth in the re­gion this year, and $240bn is a lot of money.

Many lead­ers in the GCC ( par­tic­u­larly in Saudi Ara­bia, UAE and Bahrain) have de­cided that this is no way to run an econ­omy and are tak­ing ac­tive mea­sures to slim down – push­ing for more in­no­va­tion, en­trepreneur­ship and pri­vate sec­tor di­ver­si­fi­ca­tion. Busi­nesses are en­cour­aged to cre­ate new jobs, and stu­dents are urged to take them or open their own busi­nesses.

Thanks, but no thanks

It’s a good plan, but there is a wrin­kle: too few work­ers want pri­vate sec­tor jobs. Ac­cord­ing to Gallup’s lat­est Sta­te­ofthe

Glob­alWork­place re­port, 60 per cent or more of res­i­dents in the GCC – ex­cept for Oman where data was not col­lected in 2017 – pre­fer a gov­ern­ment job. By way of com­par­i­son, so do 30 per cent in the US and Canada, and 26 per cent in Western Europe. Gov­ern­ment jobs are thought to pro­vide more job se­cu­rity, fewer work­ing hours, bet­ter perks and higher pay than pri­vate sec­tor work.

Work­ers may pre­fer gov­ern­ment jobs, but few of those work­ers are mak­ing par­tic­u­larly good use of their po­ten­tial. Gallup has con­tin­u­ously found a strong con­nec­tion be­tween em­ployee en­gage­ment and higher per­for­mance – dis­en­gaged work­ers are less pro­duc­tive, less prof­itable, less safe, even less healthy than en­gaged work­ers – and Gallup finds that only 14 per cent of work­ers in the Mid­dle East and North Africa (MENA) are en­gaged in their jobs, while more than one in five work­ers (22 per cent) are ac­tively dis­en­gaged.

So for the GCC in par­tic­u­lar pay­rolls are bloated and they’re fund­ing lower-qual­ity work than they should be, but with too few pri­vate sec­tor op­por­tu­ni­ties, peo­ple make the easy choice and get a gov­ern­ment job. And the gov­ern­ment pays for it.

There is a so­lu­tion. To get work­ers off the gov­ern­ment books and into pri­vate sec­tor jobs, lead­er­ship needs to make these pri­vate sec­tor jobs more ap­peal­ing, the ed­u­ca­tion sys­tem must in­spire a growth-mind­set in stu­dents, and work­place cul­tures have to as­pire to­ward higher per­for­mance.

That may sound daunt­ing, but it’s eas­ier than cov­er­ing a $240bn short­fall. And if GCC lead­ers com­mit to in­vig­o­rat­ing the pri­vate sec­tor, they’ll cre­ate a self-sus­tain­ing sys­tem on which they can rely. But it’s go­ing to take se­ri­ous, in­no­va­tive at­ten­tion in two key ar­eas: nudg­ing our ed­u­ca­tion sys­tem for­ward and push­ing for good, pri­vate sec­tor jobs.

Nudg­ing our ed­u­ca­tion sys­tem

The UAE’s min­is­ter of for­eign af­fairs and In­ter­na­tional Co­op­er­a­tion, Sheikh Abdullah bin Zayed, ad­dressed col­lege stu­dents in the spring of 2017 say­ing: “If you want to par­tic­i­pate in shap­ing the fu­ture, then you need to stop think­ing of a gov­ern­ment job.” Clearly, GCC lead­ers know we need more grad­u­ates who can join the pri­vate sec­tor. Ac­com­plish­ing this re­quires nudg­ing the ed­u­ca­tion sys­tem to­ward en­trepreneur­ship with three proven strate­gies: Find and nur­ture stu­dents with en­tre­pre­neur­ial tal­ent. Of­fer ba­sic en­tre­pre­neur­ial ed­u­ca­tion to all stu­dents. Ad­just stu­dents’ per­cep­tions about the pri­vate sec­tor. There are bur­geon­ing en­trepreneurs in ev­ery class­room. To cre­ate pri­vate sec­tor busi­nesses, they need some­one to spot their tal­ent and in­vest in it. Gallup an­a­lyt­ics finds that suc­cess­ful en­trepreneurs tend to have a com­bi­na­tion of tal­ents


for risk-tak­ing, per­sis­tence and re­silience. Those tal­ents can be sci­en­tif­i­cally se­lected for; in fact, Gallup has worked with mul­ti­ple coun­tries to iden­tify high school stu­dents with the great­est po­ten­tial to be suc­cess­ful en­trepreneurs.

In ad­di­tion to find­ing the busi­ness builders, our ed­u­ca­tional sys­tem, pri­mary to univer­sity, must be in­jected with en­tre­pre­neur­ial train­ing. Young builders need classes that teach them how to cre­ate and run com­pa­nies, with cul­tur­ally spe­cific en­cour­age­ment that em­pha­sises the value of en­tre­pre­neur­ial tal­ent.

To that end, of­fi­cials should pub­licly pro­mote the idea that pri­vate sec­tor work is high-sta­tus work, per­haps even pa­tri­otic work. Some pub­lic pol­icy ex­perts have even floated the idea of re­serv­ing gov­ern­ment jobs for peo­ple who have worked in the pri­vate sec­tor for a cer­tain num­ber of years. That may be a work­able plan, but only if peo­ple can take pride in a pri­vate sec­tor job.

If lead­ers want to nudge peo­ple off the gov­ern­ment pay­roll, they must take ev­ery op­por­tu­nity to show that en­trepreneurs can of­fer a bet­ter job to their po­ten­tial em­ploy­ees – ide­ally, a ‘good job’.

Good jobs

Only 24 per cent of peo­ple in MENA work a full-time job for an em­ployer. That doesn’t nec­es­sar­ily mean only 24 per cent of res­i­dents in this re­gion work – though it’s true that half of the Mid­dle East is out of the work­force en­tirely – it means very few have good jobs.

Too few good jobs, ob­vi­ously, is the whole prob­lem. And it’s a snake that eats its own tail. Too few good jobs means too few en­gaged work­ers, which di­min­ishes the net­work that con­nects peo­ple, com­pa­nies and op­por­tu­nity, thus hin­der­ing the cre­ation of good jobs.

Iron­i­cally, it’ll take new gov­ern­ment jobs to cre­ate these new, good jobs. GCC lead­ers must de­velop out­reach pro­grammes to teach busi­ness peo­ple and en­trepreneurs how to build, grow and in­no­vate. Schools will al­ways need to help bud­ding en­trepreneurs reach their full po­ten­tial.

Ob­vi­ously, this is a cul­ture change, and Mid­dle East­ern busi­ness cul­tures are al­most as old as civ­i­liza­tion it­self. Old so­ci­eties don’t al­ways wel­come new ap­proaches. But there’s an as­pect of tra­di­tional Mid­dle East­ern busi­ness cul­ture that lead­ers can cap­i­talise on: per­sonal re­la­tion­ships.

Lead­ers at ev­ery level have tremen­dous in­flu­ence over oth­ers – fam­ily mem­bers, friends and neigh­bours – and if they say gov­ern­ment jobs may be com­fort­able, but pri­vate sec­tor jobs are mean­ing­ful, peo­ple will lis­ten. These con­duits need to be slightly re­pur­posed, but they’re a re­source that can grow the num­ber of good jobs in the GCC.

The GCC doesn’t need pri­vate sec­tor jobs; it needs good pri­vate sec­tor jobs. Jobs in ar­eas of growth, with man­agers who fos­ter tal­ent, en­gage work­ers and cap­i­talise on the strengths of en­trepreneurs. Jobs that make gov­ern­ment work seem much less ap­peal­ing.

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