Over the next decade, finding suitable employment for thousands of Emiratis is going to be highly taxing for the Government as it seeks to build the private sector.
Creating work for UAE's youth will not be child's play
Sheikha Lubna Al Qasimi, the UAE's Minister of Foreign Trade, reminisced at a recent conference in Dubai about one of her first businesses, a small flower shop she set up at the free zone in Jebel Ali.
The idea ultimately failed, she said - she was the store's biggest customer, as it turned out - but she learnt some lessons in the process: entrepreneurs cannot expect all their ventures to come out roses; and selling products you love does not guarantee equally lovely profits.
The UAE's young entrepreneurs will need to learn those kinds of lessons quickly - and create thousands of jobs in the process - if the country is to handle a huge influx of young people into the labour force in the next decade. About three-quarters of the 400,000 or so Emiratis in Abu Dhabi were 29 or younger as of the middle of last year, according to official statistics, and more than half were 19 or younger. While age distributions differ somewhat among the emirates, one thing is clear everywhere: an enormous population of young locals is at or nearing working age and some are already struggling to find jobs.
"The students right now are in the schools and they're graduating," says Soraya Salti, the regional director of Injaz al Arab, a business mentoring initiative, in Jordan. "We're starting already to see unemployment going up. It's happening every day and already these population numbers are being reflected in the youth unemployment numbers. So already youth unemployment in Saudi Arabia is at 28 per cent, in Bahrain 27 per cent and in the UAE 12 per cent."
The challenge now for policymakers is twofold: educating the young populace; and creating jobs for them. It is a monumental task, one the Government is trying to tackle through new educational institutions and organisations such as the Khalifa Fund to Support and Develop Small and Medium Enterprises in Abu Dhabi, which says its main aim is "to offer good business opportunities for young Emiratis in both industrial and service sectors" that give them "employment through their own businesses".
The undercurrent running through all these efforts - be they New York University and the Sorbonne in Abu Dhabi or job-creation and entrepreneurial initiatives - is the implication that government employment for all Emiratis no longer fits within the country's economic development plans.
Furthermore, many observers believe education in Gulf countries needs to shift from a system that equips students for the public sector to one that will help them to flourish in the private economy.
"An education system without teaching the skills to get students ready for the job market to be either job seekers or creators - entrepreneurs - is a continuation of failed policies that lead our youth to join government jobs that are not necessarily available nor productive, leading to further unemployment creating all sorts of social challenges," says Fadi Ghandour, the founder and chief executive of Aramex, the region's largest shipping and logistics company.
Sorting out education is, of course, a complex problem. But Ms Salti says it is not one that policymakers have the luxury of time to solve, even in the Gulf. The UAE may not have it as rough as populous north African countries with broken educational systems, she says, but there are still questions about using education to get more women into the workforce and putting more Emirati teachers in the schools.
"In the GCC the biggest challenge is that you don't have a core of qualified national teachers to equip your schools with, so you rely on expatriates," she says. "It raises questions about whether they are culturally compatible or do they care enough?"
Creating an environment where starting new businesses - and creating jobs - is easy presents another set of challenges, observers say. What is needed most, they say, are regulatory and legal reforms that would cut through a tangle of red tape and remove financial disincentives to business formation. Obstacles include restrictions on foreign ownership, tariffs on exports, fees for start-ups, a lack of small-business financing and even insolvency laws that make shutting down a failed business and starting a new one arduous.
"You can create companies but then you need a business environment that allows them to succeed," says Fabio Scaciavillani, an economist at the Dubai International Financial Centre. "It's not that people don't form companies because they're lazy or they're not entrepreneurial, it's because often the regulatory environment is so confusing and penalising that setting up a company becomes an ordeal."
Building better educational institutions, in particular, is not likely to happen overnight or without serious initiative from the hundreds of thousands of Emirati students who will enter the workforce in the next decade, Mr Scaciavillani says.
"Sometimes people have the impression that education is like a car," he says. "You put money down and you buy a great car and you don't have to do anything other than drive it. Education is not like that. Education is something you have to make an effort to get."
The region struggles with youth unemployment: