Banks still turning to expat expertise in the Gulf as localisation quotas failing

If you’re an expat working in a Gulf state, localisation initiatives should be a concern. Most financial services organisations, along with every other private sector firm, is looking to hit a quota, ensuring that around 40-45% of the workforce comprises nationals. In order to do this, banks are not averse to ousting foreigners, particularly those in executive positions who can be replaced by a talented national candidate.

And yet, for all the pomp around hiring intentions and localisation initiatives, over 40% of firms in the financial sector are still failing to achieve their quotas. At least that’s the conclusion of 355 financial services professionals polled by eFinancialCareers on their companies’ attempts to hire locals.

42% of respondents said that their firm had yet to reach their quotas, while 45% said that Emiratisation is not adding any value to the business.

Localisation quotas are a headache for financial services organisations, which have to compete against cushy, high-paying public sector jobs for a limited supply of candidates. The findings of the survey once again open up the debate as to whether recruiting locals is akin to box ticking – without the relevant training schemes and development opportunities in place, many Emiratis and Qataris are likely to drop out of the sector.

In the past, banks have thrown cash at the problem, offering big pay rises to locals in order to convince them to either join or stick around, which resulted in job-hopping. National candidates want more: “The banking sector isn’t as appealing to Emiratis – job numbers have shrunk, pay rises are less common and the negative perception has turned many off from the industry,” AbdulMuttalib Al Hashimi, managing director of Emiratisation consultancy Next Level, told us previously. “Emiratis don’t want to be part of a quota, they want to be given a sense of empowerment.”

At an Emiratisation Summit in Abu Dhabi yesterday, HR experts spoke of the need to offer Emiratis clear career paths in order to convince them to stick around. Many enter organisations and are given opportunities in various roles without really being offered any guidance on what direction to take their career. The result is a high drop out rate, they said.

Hamda Al Shamali, senior manager of Emiritisation and local talent at HSBC in the Middle East, said: “You have to talk to them. You have to make time to sit with them and discuss their issues, how their training progression is going on, what they need the HR team to do. Often they feel there is no one there to listen to us and by the time they decide to resign it is too late to try and retain them. He has already made his mind up.”

Most Emiratis end up in retail banking jobs, which often offer inflated salaries in order to lure them into the sector. Standard Chartered, for instance, has 42% Emiratis working for its UAE operation, but 100% of branch managers are locals, as is the case at regional firm Mashreq. It’s possible for branch managers in the UAE to earn up to $200k if they are Emiratis.

The UAE government recently announced plans to increase Emiratisation in the private sector ‘tenfold’ by 2021, which presents more of a challenge to firms competing for a limited supply of local talent. The result is that much of the recruitment is targeted at a graduate level; 53% of survey respondents said their company was trying to meet the localisation quotas through graduate recruitment.

However, another potential stumbling block is the fact that UAE and Qatar are also looking to introduce compulsory military service for 18-30 year olds, so reducing this pool of talent further will add to the recruitment headache.

49% of people responding to the eFinancialCareers survey said that localisation initiatives were focused on retail banking, 39% on Islamic banking and just 7% on front office trading positions.

In spite of the perception that banks are not meeting their localisation quotas, 66% of respondents to the survey believed that schemes aimed at encouraging more nationals into the sector were working.