With the technologies of the Fourth Industrial Revolution raising expectations of efficiency and productivity - along with concerns of constant disruption - no entity can remain competitive with a business-as-usual approach. This applies to governments as well - perhaps even more so, given the critical element of public trust and public sector employment.
For countries in the Middle East, this is a particular challenge. As the largest employer (and often the employer of last resort) for a growing and youthful population, governments face a daunting scenario: efficiency gains through automation and artificial intelligence (AI), which will undoubtedly enhance their competitiveness on the world stage, versus the potential shrinking of the government workforce, with employment consequences for a key segment of the population.
The employer of choice
While artificially intelligent robots may not be descending on the Middle Eastern job market just yet, countries in the region are starting to contend with the challenges of automation and innovation brought on by the current global industrial revolution. Technology is rapidly pervading every aspect of the region’s business landscape, from automated immigration clearances to banking services, compliance and media programming.
The difference in the Middle Eastern business landscape compared to other regions is the role the public sector plays in the workforce. Government is by far the region’s main employer. Two thirds of Saudi workers are employed by the public sector, and Jordan’s public sector employs 55% of workers. These are two of the highest ratios in the world. What’s more, it is estimated that over two thirds of all young Gulf Arabs still look to governments for jobs.
But as countries are increasingly rated on the efficiency of doing business, an inflated public sector is no longer an option if states wish to compete - among themselves and for foreign direct investment - as well as avoid capital flight. And just as with private entities, governments are now under pressure to become more efficient by using Fourth Industrial Revolution technologies such as AI and automation.
That could mean fewer jobs. Consider what kinds of jobs are at a high risk for automation according to an Oxford University study: data entry, account clerks, inspectors, tax preparers, accountants, title searchers. The study names a range of office work, of the type often used in the public sector.
Add to this the growing population of young people now entering the workforce, and the pressure on the public sector will only increase. According to the International Monetary Fund, about five million workers are entering the Middle East job market annually. And the percentage of the population under the age of 25 ranges from 25% in Qatar to 50% in Oman.
Pivoting to the private sector
Clearly, governments in the Middle East must start finding ways to employ their workforce other than by public sector hiring. But recent efforts at nationalizing the workforce by instituting quotas on domestic hiring, which in some cases has led to the exit of more than one million expatriate employees, may potentially harm national and foreign businesses alike. And again, while this may offer a short-term solution, it does nothing to reduce a bloated public sector or address the impact of efficiency gains on the number of government jobs.
More promising is to encourage workers to seek out employment in the private sector. But as governments turn to the private sector, striking the right balance is key as challenges in this changing business landscape abound.
Educating and upskilling the population is one of these challenges. To pivot successfully to the private sector, education will need not only to emphasize innovation and the right skills for an automated future, it will also need to highlight the advantages of private sector work. Career advancement, creativity, rewards for inventiveness, and the potential to make more money are all possibilities in the private sector that can counteract the perceived stability of public sector work.
Another challenge is for governments to keep up to speed with technological innovation so that the private sector can create the jobs needed. The fact that technological advancement is outpacing the promulgation of laws and regulations to govern it is a universal issue, but is even more pronounced in the Middle East. One example is data protection. Current rules that ban enterprise information and data from leaving the physical boundaries of a country are just not tenable when information is stored in the cloud. Businesses need to be able to operate on a transregional and global scale without being hampered by outdated rules and regulations.
Ready to rebalance
None of this is to say that the Middle East is not eager to capitalize on advanced technologies. Dubai’s government recently announced its intention to be the world’s first blockchain-powered government by 2020. Vision 2030 in Saudi Arabia and mega-projects such as Neom and Al Qiddiya also point to the fact that the region is gearing up for the Fourth Industrial Revolution.
But any next steps in this technological journey must include a focus on how to balance the adoption of innovative technology and the overall welfare of the citizenry. With one of the youngest populations in the world looking for jobs, the region can’t afford not to.