|
Dubai: Productivity outside the oil and gas sectors has decreased across the Gulf states during the petrodollar windfalls this decade, threatening sustainable economic growth, research reveals.
Soaring oil prices have sparked average growth of 5.1 per cent since 2000, but the oil boom has only triggered employment growth at the expense of productivity, with the amount of output per hours worked outside the hydrocarbons sector falling by 0.2 per cent.
"Currently, much of the oil and gas revenues are being spent on low-productivity construction and real estate which give only a superficial impression of affluence," says the report by the Conference Group, a business research organisation, and the Gulf Investment Corporation.
The report says the region needs to modernise labour markets to tackle poor productivity, which it describes as the "ultimate source of sustainable growth".
The public sector, where most nationals work, is better paid than the more productive private sector, which is at risk of losing talent because of its lower wages.
Gulf states lag behind developed economies in productivity and trail far behind emerging market giants, with output per hours worked, including the oil and gas sectors, rising by only one per cent a year since 2000 in the six-member Gulf Co-operation Council, compared with 1.5 per cent in Europe, five per cent in India and 10.5 per cent in China.
Some regional states are improving faster than others: those with modest oil reserves, such as Bahrain at five per cent and Oman at four per cent, are outpacing more resource-dependent states.
The report says manufacturing and finance are two non-oil sectors that show signs of competitiveness on the global stage.
Unit labour costs in manufacturing, for example, compare favourably with central Europe and Mexico, while banking productivity is on a par with that of East Asian banks.
The lack of skilled workers in the region is the main threat to longer-term economic development, with operational and labour market inefficiencies offsetting technological gains.
Segmentation of labour
Labour market segmentation, in which nationals largely work in the public sector and expatriates in the private sector, is "seriously affecting" the flow of the most productive resources into the most productive areas of the economy. Moreover, the region's two million skilled expatriates, who make up less than one-fifth of the expatriate labour force, are mobile and attractive to other markets.
In China, skilled workers received pay rises of seven to nine per cent in 2007; in India the rise was six to seven per cent. In contrast, Saudi Arabia's wages for the same workers rose four per cent. Inflation-hit UAE saw highly skilled workers' real wages decline two per cent.
|
