Recent policy initiatives in the GCC have once again highlighted the fact that a significant proportion of the abundant and rapidly growing human capital of the regional economies remains underutilized, said Jarmo Kotilaine, NCB chief economist.

Indeed, the GCC countries are all to varying degrees characterized by idiosyncrasies that set their labor markets apart from much of the rest of the world, he noted.

In particular, overall employment levels (proportion of working age people actually employed) are internationally low. UAE total employment is 53 percent while the corresponding figure in Saudi Arabia has tended to be just below 50 percent. Qatar, by contrast, boasts a much high rate of 75 percent, partly reflecting the dominance of expatriate residing in the country on work visas.

This state of affairs is partly the result of low labor force participation by women. Due to cultural reasons and the persistent norm of large families, labor force participation by women tends to be significantly lower than that of men across the GCC region, he said.

According to official data, Saudi women make up 16.5 percent of the total national labor force (Saudi citizens). Similarly, while 62.5 percent of UAE male citizens were economically active in 2009, the corresponding figure for women was only 27.5 percent. These figures stand in an increasingly stark contrast to the dominance of women at institutions of tertiary education they increasingly outnumber men.

There are dramatic differences in the sector-level labor market participation by nationals who tend to have a very strong bias in favor of public sector employment.

In Saudi Arabia, 92.0 percent of public sector employment in 2011 was made up of nationals who occupied a total of 919,108 positions. By contrast, their share of the private sector labor force in 2010 was only 10.4 percent with nationals holding a total of 724,655 positions. In the UAE, Emirati nationals occupy only 43,000 of the 2.2mn private sector jobs in the country whereas the public sector employs 495,000 Emiratis. In Qatar, the private sector labor force in 2010 numbered 952,653. Only 6,279 of them (0.7 percent) were Qatari nationals whereas their share of the 101,565 government jobs was 55,170 (54.3 percent). Kuwaiti nationals made up just under three-quarters (73.1 percent) of the total public sector employment of 313,500 as of June 2011. While the total Kuwaiti labor force in 2011 was 2.2 million, only 31,700 nationals worked in the private sector as of 2008, although the number is subsequently estimated to have risen to 80,000.

Recent years have once again seen an increase in the number of new initiatives designed to boost labor market participation by GCC nationals. This is in large part reflective of the relative failure of the pre-2008 boom to meaningfully translate faster economic growth into greater relative employment of nationals. For instance, the IMF recently estimated that, although the GCC countries created a total of 7mn new employment opportunities over the past decade, fewer than 2 million of them went to nationals. This was largely to rapid growth in the traditionally expatriate dominated construction and service sectors.

This reality has resulted in a significant policy overhaul. At the same time, education remains a key priority area for government spending.

But successful sustainable change in the regional employment patter will likely require much more than policy redesign.

"At a time when educational attainment levels and the quality of education are improving, there needs to be a cultural paradigm shift in the corporate sphere. Regional private companies must be encouraged and incentivized to change their default modus operandi from ’import the employer you need’ to ’develop the talent you require.’ Given the limited resources of many companies, not least in the area of human capital management, the government may need to facilitate the process where appropriate and reward companies that properly engage and develop their national employees." I
In view of widespread skill shortages in certain areas, the authorities - possibly with private sector participation - can offer more centralized training solution to many companies at the same time.