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Economy 4.0

The costs of Arab economic security

David Brancaccio Jun 22, 2011
Economy 4.0

The costs of Arab economic security

David Brancaccio Jun 22, 2011

Kai Ryssdal: A severe fuel shortage continues In the United Arab Emirates this week. Severe as in gas stations actually running dry. Kind of surprising, one could say, for a country that pumps two and a half million barrels of oil a day. It’s refining capacity they lack. The Emirates do pretty well, though, in terms of oil revenues. Prosperity has given the UAE a cushion against some of the worst of the protests in the Middle East this spring. But that cushion doesn’t come without some discomfort.

Our special correspondent David Brancaccio continues our series, Economy 4.0, from Abu Dhabi.

Ali Salem Ebdowa: This is the new, new dish. This is called [Arabic for “Fried Meat.”] We need to do this with lamb and also with camel.

Ali Salem Ebdowa is executive chef at Mezlai, said to be the only fine dining experience anywhere inspired by the native Emirates cuisine. For a citizen here — an Emirati — to become a chef just isn’t done.

Salem Ebdowa speaking in Arabic.

This is the type of job Emiratis are embarrassed to get into, he says. As opposed to, say, a government desk job. One time when Chef Ali was in training he sliced onions dawn to dusk.

Salem Ebdowa: Chopping, chopping, chopping, chopping.

But he had to tell his mother, nah, he was in an office just sipping coffee so she wouldn’t think he was slumming. This is one of the problems the Emirates’ government wants to fix in a hurry: getting UAE citizens into the private sector workforce and along the way, encouraging Emiratis to get entrepreneurial. Fact is, educated people who feel unchallenged at a government desk job can get dangerously restless, which is something countries throughout the Gulf region worried about even before the Arab Spring.

Most of the UAE private sector economy is staffed by the four-fifths of the population who are foreigners. The tried-and-true path for UAE citizens is the public sector.

Tarik Yousef: That’s where you get economic security.

Tarik Yousef is Dean of the Dubai School of Government.

Yousef: That’s where you get the high salaries. That’s where you get the incentives that insure a high standard of living with job guarantees for life.

For Emirati workers, things aren’t as secure in the private sector.

Yousef: That’s where you are forced to compete with ex-pats. There are a lot of them. That’s an open market. There is an unlimited supply of them.

Brancaccio: And many of them are much cheaper to employ.

Yousef: Much cheaper to employ, much easier to hire and much easier to fire.

One proposed antidote: The UAE government recently put up $120 million to use subsidies to boost what’s called the “Emiratisation” of the workforce.

At this club in Dubai, 20-something Emirati guys chill with their water pipes checking out a game on a buddy’s smartphone. But life is not fulfilling for all: While the UAE’s overall jobless rate last year was just over 4 percent, unemployment among Emiratis hit 14 percent. Which is another argument for getting more people engaged with their country’s economic future through private sector work. Perhaps even by starting a business.

Khalid al Amari: I think we have a hunger inside us to really build something special in this country.

This is the guy who’s making it his sworn duty to get fellow Emiratis to take the plunge and invent new businesses of their own. Khalid al Ameri has the charisma and the good looks of, say, a star ball player. He writes a column that often touches on entrepreneurship in the daily newspaper here, “The National.” First of all, he disputes a stereotype that Emiratis are like trust funders from Connecticut.

Al Amari: Look, I think it’s a statement and it’s a view that a lot of the West have of the Gulf countries. That, you know, if I go in my backyard a dig a hole, oil will pump out. The reality of the matter is, we live a country that’s quite competitive. Slackers aren’t welcomed here.

He tells everyone he can find about what started as a government fund now backed by private venture capital that’s given out $111 million so far in big start-up loans to young Emirati entrepreneurs, interest free. But more work is needed. Often around the Gulf, failure is taboo. You’re disgraced if you try a business that doesn’t work out. Also, bankruptcy laws here can make it a nightmare to wind down a venture.

As for Khalid al Amari himself, he not just talking entrepreneurship, he’s doing, along with some Emirati pals.

Al Amari: Well, with these three friends, it started off as an idea. The funny thing is when we traveled to New York, when we traveled to London — You look up at these concepts and you go, why don’t we have this in Abu Dhabi?! And it’s the simplest thing!

They’re proud of the venture capital they’ve raised, 90 percent of the money to launch convenience stores that replace junk food with something homegrown and organic. Think maybe 7-Eleven meets Whole Foods.

In Abu Dhabi, I’m David Brancaccio for Marketplace.

Search out Marketplace’s Economy 4.0 blog for the tale of the UAE guy studying business who had never before seen the concept of tax, as such.

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