Complex Made Simple

Workforce transformation is essential to the success of national agendas in the GCC

A holistic approach can help promote private sector employment amongst citizens in the GCC and rebalance the workforce between the public and private sectors

Policymakers and firms are looking to re-balance the workforce to diversify the economy. Saudi Arabia, sees 67% of Saudi nationals working in the public sector Average monthly compensations are $3,000 for Saudis in the public sector but just $2,000 in the private

A holistic approach can help promote private sector employment amongst citizens in the GCC and rebalance the workforce between the public and private sectors, according to a new Oliver Wyman report.

Titled, ‘Is Money All That Matters: The Three Lenses of Value to Drive a Workforce Transformation’, the report indicates that a nation’s human-capital policies must account for extrinsic, intrinsic, and cultural factors to drive successful national-scale transformation, and recommends a holistic five-step framework to achieve this. The framework is designed to address labor market barriers and allow GCC countries to attract talent from the national pool towards the private sector or plug employment gaps. 

Commenting on the insights, Abhishek Sharma, Partner in the Public Sector and Policy Practice at Oliver Wyman, said: “The Gulf countries have a relatively young economy where historically, the public sector provided jobs for citizens while the private sector was still under development. Now, with a rapidly maturing private sector, policymakers and firms are looking to re-balance the workforce and bolster the region’s national agendas to diversify the economy.” 

“By combining traditional policy and program management tools, it will be possible to design more attractive, efficient, and effective systems for drawing talent into different sectors of the economy and to firms that have particular needs. Through this approach, governments can break down their most complex labor market challenges, re-examine them through a new set of lenses, and discover solutions that they may not have explored before.” 

According to the report, there remains a significant imbalance between the private and public sectors workforce shares in the GCC region. For example, the largest economy, Saudi Arabia, sees 67% of Saudi nationals working in the public sector, compared to an average of just 18% for OECD countries. The report suggests that this imbalance is often attributed to extrinsic rewards. Recent data shows average monthly compensation of around $3,000 for Saudis in the public sector but just $2,000 in the private sector. Similar imbalances exist in non-wage financial benefits and ancillary benefits such as working hours and holidays, although the differences vary according to factors such as type of work and seniority. But there are other lenses to consider as well – the intrinsic motivation and the cultural context.

According to the report, workforce transformation is essential to encouraging citizens to take up private-sector roles in countries where the public sector is particularly attractive, such as in parts of the Middle East. The framework will also enhance the regions’ ability to incubate a productive private or non-oil economy, as skilled labor is a key production factor.  

Sharma added, “Historically, there are numerous instances in which governments have overcome labor market barriers by employing structured and creative approaches. The bold transformation agendas currently underway in the GCC provide a basis for the framework to be implemented.” 

“A cross-sectoral collaboration between private industry, government, and other key labor market stakeholders is also essential to ensure the long-term sustainability of the framework and with the cohesive and politically streamlined polities such as the GCC states, this type of collaboration may be relatively feasible.”