Middle East 2010 – Building the Future Middle Class

Middle East 2010 – Building the Future Middle Class

Good morning to everybody. I was quite instrumental working with
the team from the World Economic Forum to put this issue on the agenda. And in fact, it’s arguably the most
important issue for the next 10 to 20 years, one would say, for the Middle
East and North Africa, and that is building the future middle class. The best form of security, if you
think about it, is economic prosperity not for a chosen few or an elite in the society but inclusive growth that
is viable on its own merits despite the revenues that come in from,
for example, hydrocarbons and that over-dependence that we often hear
about, particularly within the Gulf Cooperation Council states.
Now, a common and accepted yardstick is the pressure to create a certain level
of jobs between now and 2020. I’ve covered this issue going back to
2003, when the Arab Business Council, the World Economic Forum got very
involved with the issue of job creation. For the purposes of this debate,
I’d like to include Turkey in our measurement as well for the broader
Middle East and North Africa and bring it all the way here to the host country
of Morocco. So I’m going to use a benchmark, it’s a high benchmark but the need to create
100 million jobs by the year 2020 to tread water, to not add to the
unemployment rate. Also, to use the benchmark for purposes of our discussion, the latest numbers from the Middle East North
Africa economic snapshot from International Monetary Fund which puts the unemployment rate in the Middle
East and North Africa at 11% and again, another common benchmark that we use in
this region when covering it is that the youth unemployment level is at
least double that. It’s actually much higher in some countries, well into the 40 to 50%
range, depending on what you’re looking at.
It’s not surprising to find youth unemployment at 20 to 25%. Just to lay the groundwork for the
discussion here, we’re going to have a roundtable discussion for about 35 to
40 minutes, and I want to open the floor to questions.
When we do get to the questions, I ask you, because we’re taping this for our
CNN program Marketplace Middle East, that you keep your questions very direct, identify who you are, and allocate that question to one person on the panel.
Welcome to everybody on the panel. I appreciate you joining us.
We intentionally brought two people from the Gulf States, one minister from
our host country Morocco and a business leader looking at the pan-regional basis and it’s a real pleasure to have
Lubna Olayan, who is a highly respected business leader from Saudi Arabia. What I’d like to do to start in terms
of the panel, let’s spend, if we can, a minute or two on how you see the intensity, the pressure, the building of the future middle class. Let’s frame the debate first that way.
Joe, do you want to start us that way? Sure, yes. Thank you,
John. I would start by saying that the emergence of a strong and vibrant middle class in the MENA region is in the national interest of most
governments in the region. And starting from that point, when you
think about it, there are 100 million people today roughly between ages 15
and 29 in our region, again, in the MENA definition, many of whom will come
to the workforce in the coming years, and this is often seen as a — it can be seen as a liability in the short
term, but in fact, it holds great potential for all these countries in the long term.
If you remember yesterday, one of the panelists was commenting on the
negative implication of an aging population in Japan. And so my belief is that again, this youth bulge, if you want, of 100
million people within this age structure holds great potential for the region. Now, having said that, if you couple this observation with the unemployment
observation that you’ve made that youth unemployment stands at twice the national average in most of these
countries, you couple this with still strong population growth in our part of
the world compared, for instance, to OECD countries, if left unaddressed, this potential will go to waste and I would call it almost like a ticking time bomb, economic time bomb.
So this is something that we’ve got to get right and it’s the national self
interest of everyone in the region. So in the big picture, if you’re defining this region and you’re trying
to attract foreign direct investment, we have to move the conversation from
this fast-growth population from a liability to an asset and that’s not
happening today, in your view, Joe? No, it is starting to happen. The problem is this is an awfully
complex issue. There is no magic stick to just
decrease the emergence or the rise of middle income tier or middle income class.
And so it’s really about lots of things, lots of policies coming
together at the same time. That’s where the complexity frankly
lies. There is no silver bullet. Thank you.
Sheikh Ahmed, there is a number of different measurements and that’s part of the challenge when framing the
debate here. But if I look at purchasing power
parity, Bahrain ranks 32, according to the IMF 2009 survey, with the per
capita income around $27,000, again, depending on how you measure that.
What’s the progress made? What’s been the concrete progress for Bahrain in this effort of a redistribution of wealth in the island state?
Well, I’ll pick up from a point that Joe just mentioned, and it is looking at no on solution works for all
countries. There are many different tools in our toolkit to tackle the problem of
building the middle income or maybe even middle income and higher. The challenge for us has always been
what is needed for each country? For us, it was creating a vision. Our Vision 2030 document is a vision that took time and consultation with many different bodies around Bahrain to
understand what the country wants, what can we do, and what we want to do as
a nation. And I think that’s the important
challenge. Once we built that vision document, we were able to develop six-year plans for different ministries that then were incorporated in our budget cycles. It’s a consultation process with many different bodies.
It’s understanding what we want to do and then to take us forward. But what we felt was important was providing access to capital, investing even further in education, and making sure we have the infrastructure to support business at the lower end. Small enterprises, small businesses, development bank, even smaller banks to
get micro loans and creating the chain that will help an individual from micro
business all the way to small business until they are ready to be taken over
by commercial banking. That was an important thing.
And creating the training facilities through some of the programs we
introduced that allowed money for investment and trading to make sure that our people are ready for the jobs that are actually out there. The challenge now is no longer thinking
within a country. It is the ability to think how can we
compete as a nation regionally and globally?
And that’s how we see the world evolving.
How you benchmark in Bahrain, and Mr. Baraka, I’d like to post that question from Morocco, but internally, how you
benchmark in your countries to say we are making progress on the development
of a middle class? First, Bahrain.
We look, first of all, at benchmarking to the region and to the world in terms of what is best practice
out there. We have no room for local laws or
local regulations. We’ve got to see what is out there in
terms of benchmarking. We follow what the World Economic Forum does in terms of research. We look at the World Bank-IMF work. We definitely follow what the G20 does
in terms of how the new structures in finance and other bodies are actually
evolving. I think that’s very important in how
the world will look in the next 10 years. And we need to understand how the world is changing and what our role needs to
change to so that we are ready for the challenge.
Education definitely is key. Access to finance, training are two
other important things. I’m not saying these are the only ones. For us in Bahrain, we saw this as very important.
But as I said, for every country, there is a different set of policy elements
that are needed to be implemented to make sure that that country can keep
the challenge. You brought up a number of things I want to come back to after our opening
comments with regards to education as well and the broader influence of the
G20 on the Middle East and North Africa.
Mr. Baraka, how are you benchmarking in Morocco?
I know the efforts that’s been underway by King Mohammed VI to broaden out the
economy, to attract foreign direct investment, and to build a tourism sector.
There’s been an effort over the last 10 years to broaden the base of foreign
direct investment and broaden the sectors that can create wealth.
How are you benchmarking yourselves in Morocco?
I think that for our country, the most important is to maintain very higher rate of growth.
And as you know, we had average rate of growth is about 5% a year. And how to have better wealth for our
population is, first of all, to know that this growth, the beneficiaries of
growth are the poor. Then we reduce poverty and we reduce the poverty from 2004 until 2008 from
14% to 9%. Second thing is to have a better middle class.
And now, I would like to explain that middle class is not only problem of revenue.
As you know, Morocco had revenue per capita increase 12% a year.
But we think that the most important is to have this feeling of to be into this middle class because that means that we have hope to have a better life
and to have a better future for our people. And the statistics say that the middle class in Morocco have been enlarged to
about 50% of our population. Fifty percent working from a baseline
of what before 10 years ago? They said it was about 40%. That means there is an increase, a very important increase, thanks to,
first of all, to creating jobs because in the ’90s, the rate of unemployment,
it was about 14%. Now, the rate of unemployment in July
2010 is about 8%. Second thing is to have better skills.
And as you know, Morocco have been diversified his economy with new sectors like electronics,
like aeronautics, like nanotechnology now, and of course, automotive with
investments of Renault, who will produce about 400,000 vehicles, cars
a year in 2012. All that give us the opportunity to have better productivity and of course,
a better growth. Good.
Lubna Olayan, what do you think is at the onset here of this debate, what
is the most important thing today? Is it defining what we want to see within a middle class, whether it’s
Saudi Arabia or a country like Morocco or Egypt?
Well, I think it will be good to define the middle class, and some people don’t like middle class.
They like middle income rather than middle class.
But if we — and I think we’ve all looked into the definition of the
middle class and it’s numerous ones we have seen.
But one of for us to say is I think for a society is the middle class
is the one nowadays with at least university education. This is what I would — and this takes us to the value of education and training and the quality of education.
The ability to access funds, having a good job and an opportunity to
contribute to the sector. Access to health care, I think,
is very important. So whether through insurance and in particular, this is important so in
case of a serious illness, they don’t fall back to poverty.
So there are many definitions of what constitute a middle person in the middle class. And to be able — also home ownership is an important category of middle
class. Good. So let’s drill into various subjects
that have been brought in this first round of opening comments.
One of those things that stands out in the broader Middle East and North
Africa is that the poverty rate is still extraordinarily high at nearly
40%. That’s not acceptable in 2010 with the sort of wealth that we have throughout
the region. And again, depending on the
measurement, that’s a very high poverty rate that is not in each one of the different countries.
But if you look at the totality of the Middle East and North Africa, a poverty
rate of up to 40% in some markets is very high. Joe, do you want to jump in on why
that still is so persistent today? Well, if you think about it, take the
example of China recently, in recent years, it does take several years in
a row of sustained economic growth at levels of 8, 10, and 12% year in, year out to have a chance to lift people out
of poverty. And if you think about the traits of our economies, of regional economies, for a long time, for instance, if you
take some of the GCC countries, the state of the economy was very much linked to oil prices in the ’80s
and ’90s and the economies went up and down together with oil prices. So economic diversification was one
reason why, for instance, over the decades, if you want, this has not
happened or this emergence of the middle class has not happened.
But that’s not the only reason. Another reason has been historically,
in many of these countries, the lack of private sector participation or strong
participation in the local economies, the fact that entrepreneurship was not
only frowned upon but entrepreneurs do not have access to financing,
for instance, which is the point that you made, Sheikh Ahmed.
There are other reasons as well that I think if you can drill into education,
education is probably the major, in my eyes, the most important factor in
turning this situation around and we could probably go down there.
Well, let’s interject here. There is not a lack of will on education. If you look at the amount of money
being spent in some markets, it’s as high as 30% of GDP in education, but is it the right education? Lubna, do you want to start?
Yes. I think with our youth and the huge
youth and the population growth, governments are focusing on education.
Private sector is focusing on education.
But what I would like to focus on is I think we all recognize that we should focus on the quality of education, on teachers’ training, on getting the right teachers, concentrate more on the curriculum and the teacher rather than
the infrastructure surrounding the education.
And we’ve seen recently focus on centers of excellence, and universities in the Arab world do not rank among the top 400 universities in the world.
And Saudi Arabia have done one attempt in KAUST University, which is a research institute.
We need a lot more centers of excellence.
Would we say we’re starting at the top in the Middle East and North Africa and worrying about higher education where that actually has to get to the grassroots?
You have to start somewhere and maybe it’s easier to start at the top in some
countries. Easier but is it more effective is the question.
But it is effective if, for you to get into a very good university, you would
have to have a good standing from school so you slowly will force the —
you will naturally force the schools, the high schools, to try to meet more entrance into university. So it’s a natural way of forcing the
change. What’s the approach in Morocco, Minister?
I would like, first of all, to say that I agree with Mrs. Olayan that it’s very
important to invest in software and of course, in human capital and in
training. But I think that we have, at the same
time, to link the education and the program, the higher education and the
sectoral strategies because we all know that for example, in Morocco, we know exactly what kind of sectors we would like to promote and to invest into
and what kind of training we need to have the skills, to have a better productivity, and to bring into our labor markets. Then with the strategies we put, we have strategy industry, in services, in agriculture, in fishery, and all these strategies, we know exactly what kind of people can work in 2020, 2015, and we are preparing people for that. Second thing we did I think is very important. It’s about when we have a big foreign investment in Morocco, like Renault,
we decided to invest with Renault in training. We will have Renault Academy to train
people for automotive construction. And I think it’s this kind of work we
can do for the future. Good.
Joe, before I go to you, I wanted to bring in Sheikh Ahmed here. I know there has been a great effort
within Bahrain to match the skill set at the high end of the market to the
demand of those investors who have chosen Bahrain to use as their base for
the Gulf and the broader Middle East. Are you matching correctly at this
stage to create the middle class? When we started the process, our unemployment rate was very high. It was double digit. Today, it’s 3.6%, even though we have
gone through the worst economic crisis that the world has seen. The challenge was very simple, how to match the skills and how to improve education. The mandate was taken over by our Economic Development Board and the
process was very straightforward. Again, consulting with the people on the ground and looking at best practice around the world.
And building a process where we can encourage people to learn and give them the skills on how to further learn on
two tracks. One is academic learning, which
is very important, for people who are still in schools, and the second is to
make sure that we are building the capacity for people to learn on the job to improve themselves and to be able to
match those training programs and skills with the jobs on the ground,
whether present jobs or future-created jobs, because of the capacity that’s on the ground.
And I think we have seen the change in unemployment rate.
Of course, that and economic growth that we’ve had because of the oil crisis have helped reduced our
unemployment rate. Joe, you wanted to make a point on education. Where did you want to point to? I just wanted to add that while it was the right thing to do start with modernizing the education system at the higher educational level for the reasons that were cited, I think now we
are the stage, John, where we need to work on both ends of the spectrum.
Turning around an entire education system is a matter of a generation or two at least.
It doesn’t get done in two or three years. And so things like computer literacy, English fluency, mathematics, encouraging a mind to be inquisitive, so the method of teaching are best
ingrained in the early stages of schooling.
And so now, I don’t think we have the luxury to just focus on higher
education. We really got to work at both ends. Good. I want to bring in the political element because we can’t ignore it.
We have elections coming up in Egypt. We have elections in Jordan. We had parliamentary elections in Bahrain.
What are those elections pointing to and which role does job creation
and the creation of the middle class play into the election cycle now and the results that we saw in Bahrain,
for example, Sheikh Ahmed? Well, the elections is a process of
democracy where we have a legislative body that we work with as an executive branch in government on getting the budget discussed and passed and the process of creating laws.
But my question is a little bit different, if I can pinpoint because
this is important. The development of a middle class, is it played out in the election result,
for example, in Bahrain? That sort of pressure that’s leading to the results that we’re seeing within
the legislative body. I think it is our government’s interest and any government’s interest
to make sure that the economic prosperity actually reaches every
citizen in the country. We see this today in Western countries
where the challenge of creating economic growth is there, creating jobs are there.
We’ve been tackling this for many years. When I mentioned earlier that we’ve dealt with the unemployment,
we maintained trend and growth at about 6.5%. Through the crisis, we went down last
year to 3.1%. We’re back to about 4 as our expectation for 2010.
We believe that it is our mandate as a government to make sure that we
continue the process, the process of growth.
The people on the ground definitely are looking to improve themselves. It is our job with them to consult
them how. And I remember my opening remarks,
I mentioned in developing economic theory, one has got to consult on what
is capable and what is needed by a country to grow. There might be some social, some other
restrictions within a country of what they want to do as a people.
Consultation has become a very important part of what we do. We need to make sure that the people are on board in the new ideas.
Yes, there are ideas that are tough sell.
But it is important that we create this forum for debate and discussion between government and the people through our
legislative body, which is the parliament, to make sure that we come with the right laws, the right tools,
and the right set of ideas to continue economic growth. And our goal is to reach that economic growth rate, which is our trend. Good.
In fact, the IMF was suggesting, and Minister, I’ll come back to you, the IMF was suggesting that you need at least 6.5% growth regionwide to make a serious dent in the creation of the
middle class and a serious dent on the unemployment rate. That’s a very tough benchmark to hit.
Yes. About this point, I would like to say that with the crisis, as we know, our partners, like Europe, for example, for Morocco, had the reduction of their
potential of growth to about 4.5% of all the countries of the OECD.
That means that of course, there is an impact in our potential of growth. But I think, and to have and to have the possibility to maintain and to have
the rate of growth about 6% or 7%, integration of our countries, of the
MENA region is very important. I will give you one point.
First of all, the non-Maghreb, the non-construction of the Maghreb costs
two points of GDP a year for our countries. That means that if we
to open the border with Algeria and to have this Maghreb created, we can double the income per capita for our people in seven years. That’s why I think that integration,
economic integration for our countries are very important and can give us the
opportunity to have a better internal demand, domestic demand, and thanks to
that, to have a better rate of growth because we all know that, for example,
for Europe, we can’t have a rate of growth more than 2% in two, three, in
a few years after. So this is one thing I do want to pick up on, the ability to have inter-Arab
trade both within the GCC and the broader Middle East and North Africa.
Can we move beyond the rhetoric, as the building blocks are there, Lubna, to action to remove non-tariff barriers to trade?
Yes, I think there is a lot of interest in moving into regional trade.
I don’t get the sense of urgency. Let me ask you a little bit differently. 2005, the creation of the Greater Free — I’m sorry. In 2005, you saw the creation of the Greater Arab Free Trade Association
and this market potential that was there. If we’re going to measure that in 2010, one would say we haven’t seen
a lot of progress. No, you’re right, we haven’t seen too much progress and there is a lot of
obstacles we have to remove, a lot of bureaucracy that stays in the way.
And these are things we do have to handle.
And trade, as we all know, does create jobs and does improve the — I mean we’ll bring more people to the middle
class. But what we really hear and what I
would like to say here, if I may, is entrepreneurship really can add also to the middle class.
If we look and we learn from other countries, if we learn from Brazil,
what Brazil has done, they have added 30 million people to the middle class
and reduced the poverty level quite a bit, and that’s due to entrepreneurship. If we try to learn from other countries how they have tackled their middle class, if we try to learn from Korea, for example, Korea increased and bolstered its middle class by
education. So we have spoken quite extensively about education, about training, and we
do — I mean Singapore has one of the, some of the best training schools, non-government, and the time spend and the money spent into these training schools and the quality of the training is phenomenal, and this is what we need, is to bring that type of a job.
And of course, foreign direct investments coming in, encouraging high level foreign direct investment to the
countries can have — Saudi Arabia has climbed the ranks in terms of attracting foreign direct investment.
Is it making a difference in the creation of the middle class in the
country? It is making a difference in job creation.
To measure whether it’s making a difference in the middle class and the
actual measurements would be for us to see.
But definitely, we see, I mean we see some of the joint ventures of SABIC
coming in. Exxon and Shell are one of the largest
investors in the country and I guess the technical knowledge and the improvements and the requirements of job training has improved quite a bit
in there. I want to go to this point of the building blocks that we have available to enhance the middle class.
And one would argue, at least within the Gulf States, having a single
currency would lower some of the non-tariff barriers to trade. Sheikh Ahmed, we’ve been talking about
a single currency. The UAE is not part of that process.
Can we get past those barriers between the countries to get something done at the core of the Gulf that could perhaps be spread throughout the Middle East as
single currency? We are committed to the single
currency and working towards it as four states that are committed to the single
currency. Not very encouraging, four out of six,
which doesn’t lead us to believe it’s going to be a broader initiative over the next 10 to 20 years.
Well, I think the door is always open for the other two.
What is important to note is to see that today, we understand the
challenges that countries are dealing with and monetary and fiscal policies.
One angle maybe we should tackle upon and maybe it’s my chance to plug my field is when even looking at building middle income or middle class, we should look at monetary policy.
We should look at fiscal policy. Single currency is part of that
process. But what is important is there is an increased need and an effort to
understand better how to position our monetary policy and fiscal policy to help economic growth.
We understood that in our budget cycle of ’09-’10 by going counter-cyclical
and spending like some other countries to make sure that we maintain growth,
and that’s why we kept positive growth in our economy in the last year
and this year. And we are looking to fix that over
the next — I’m having to deal with a fly here but the challenge of that. I thought you pulled out a magic wand there.
But basically, the challenge for every country now is how to develop
monetary policy tools and fiscal policy tools to make sure that we understand how to deal with the challenges and also help create the middle income
class, if we like, because that is certainly a part of the process.
Joe, to create the opportunity for foreign direct investors, one would like to look at this market, say, 250 to 300 million people in the broader
Middle East and North Africa. We’re well off that concept of looking
at this region as a single market. What needs to happen to do so?
I think moving beyond the rhetoric, everyone has been talking about
integration. I remember, for instance, and if you
remember, Sheikh, about the discussion on electricity interconnection within the GCC that was first talked about in the ’70s. So there are lots of the ideas. It’s the political will that frankly needs to translate those ideas into
actions and initiatives. I don’t think this needs to be studied a lot or overanalyzed.
I think everyone knows what needs to be done. It’s just a matter of picking up a few things and running with them. Good.
So let’s go around the table on this one because I think this is an
essential question. Are we tackling this creating of the
middle class with a sense of urgency that is needed, knowing the competitive
landscape within the G20 structure, for example?
Should we be doing more? Yes.
But are we tackling it? Yes. I think I mean both the private sector
and the government sector have realized the urgency of tackling this problem,
tackling the youth bulge employment, education. If I may sidetrack here, I think when we talk about unemployment, we talk
about the overall average. But women unemployment throughout the whole Arab world is much larger
and that is something recent statistics have had throughout the MENA region, not only in the Gulf, is I mean the
average is around 40, and maybe here, Joe, you can help out.
That is a large number of the sector that we . And there is attention being put on job creations or maybe should be there,
some — I’m not too much of a quota person but should be there incentives
for companies to hire more women. Yes.
I’d like to come back to that as a separate subject because it’s a very important one, is the role of women in
the workforce, particularly in the Gulf States.
But let’s go to the issue of the urgency.
You addressed it briefly here, but are we taking that sense of the unemployment rate in the region
and applying all the policy tools that are necessary, knowing how competitive the
landscape is outside the Middle East as well? Let’s start with you and I’d like to go right across the table on that
particular topic. But the unemployment of women is very
important for this. We shouldn’t put it aside.
No, but I want to come back to it. Okay.
Yes, I think we are all aware of the necessity of creating jobs, and all
efforts are being done to do. Should we be doing more?
Most definitely. And job creation is what is important to keep us prosperous in the long term.
We also have to make sure we don’t fall back from where we are because we
can see how middle income can be really decimated due to political — for example, Lebanon, the war in Lebanon
has really hit terribly the middle class.
And we also can see if there is a recession or that — so we have also to
guard against factors that can take us back. So there is concern in your part that we’re backsliding with that lack of a sense of urgency in some markets? Backsliding, I am not sure we are
backsliding. I think we should do more than that,
yes, I would agree with that. Good. Minister Baraka?
I think that, first of all, we all know and we think that the middle class is very important for us.
First of all, middle class represents social stability.
It represents economic efficiency. It represents hope for the future,
and more than that, that means that if we have good middle class, that means that for the young people, they can and the
social lift works that they can have a better life, a better level of life. That’s why the King gave us to work in
the government to enlarge the middle class. And we put a strategy with two big
measures. The first is to enhance middle class and to maintain the purchase of the
middle class and to have better revenue thanks to reduction of the income tax,
thanks to having more social guarantees and protection.
And the third thing is to have, of course, to create more jobs.
And the second point of this strategy is to fight poverty.
And thanks to the initiative National Initiative of Human Development leaders
led by the king, we could and all the public policies are, have the same
goals, is to work to have better human development in our country and of
course, to fight poverty. Good. How do you define the safety net?
And I’d like to ask Sheikh Ahmed the same because this is the important in the protection of the middle class.
What would you say are the two to three key essential tools within the
safety net of Morocco today to develop that middle class?
Yes. About the safety, what we have now in Morocco, we have now — what is it’s name — it’s instruments, medical instruments for the people. We have it.
We just began this year for poor people, give them the opportunity to have social protection,. And we are working for people who lose
her work, her job, their job. We can give them the opportunity to maintain their revenue during six months.
Then we re working on enhancing this social protection for our people and to maintain the level of the middle class in our country.
Good. Sheikh Ahmed, has it been necessary to
put the tools or ingredients in place for a safety net within Bahrain as
well? I think that’s critically important,
but for me, I’d take just a minute to talk about the G20. The G20 represents countries with a GDP of 85% of the GDP of the world.
But today, we have 187 countries as members of the World Bank.
So if we take out 20 countries, we’re left with 167 countries with about 15%
of the GDP of the world. But 15% of GDP of the world,
167 countries, they need to be more included in the process. I think that’s a very important message and the point.
So what sort of pressures are applying to those that don’t represent 85% of the economy? What are you looking at to say within
Bahrain, “To develop the middle class, I see what the G20 is doing. This is what I’d like to do within our
country?” The challenge that I am trying to
explain is as the G20 is introducing changes in how things are done, whether fiscal, monetary, looking at fuel subsidy or other programs that they are
trying to tackle, it’s important also to understand how the other smaller countries will be affected by any changes in regulations or any changes
at the institutions the other institutions are looking at. I think that’s critically important.
Looking at the safety net in Bahrain, we’ve created unemployment benefits, which we felt is important. That was the first element in actually
tackling unemployment, is getting the right numbers. To make sure we get the right numbers,
we started paying people who are unemployed and offering them job opportunities. This way, we can actually state that we know the true unemployed because we paid them money if they are unemployed and we give them job opportunities
and we offer them training. So making sure you have unemployment benefits, making sure that you can
actually train the people and offer them jobs to make sure that you create
a safety net. For people who are unable to work, there is, of course, social services and programs related to that to make
sure that maybe within the family, they could help them come up with better means to improve their capacity. Most important program I think that would help people who are earning less
money, low income, is a program we call temping , which is actually a program that was introduced by His Royal Highness, the Crown Prince, through a law, of course, that went through our judicial system and legislative body. The law is very straightforward. Basically, there is a fee for every foreign worker that goes into our fund. That fund is actually spent on training and enabling people,
local people to be able to get better skill sets to earn more through better jobs.
And I think that’s a very important program in enabling the middle class.
We saw the process in Singapore. It was implemented in Bahrain a few years ago and the process is working very well with companies and with
individuals to increase the skills that the currently have today to get better
jobs. Good.
Joe, if I can have you bring your mic a little bit closer. I wanted to pick up here, and Sheikh Ahmed makes a very interesting point.
What are the best examples, a Singapore, a South Korea, a U.S. or
European model that would apply to the Middle East on accelerating the creation of the middle class?
I don’t think, as usual, the easy answer is there is no single model that the Middle Eastern countries can learn from, but it’s rather looking at
various models and picking up what’s best.
And it is a combination of all the elements that we’ve talked about. There is the social safety net aspect
that some countries have built, and Sheikh Ahmed I think listed most of
those. There is the aspect of letting the private capital or private sector loose
and creating jobs, SME creation, SME, small and medium enterprises support.
Access to financing for entrepreneurs is absolutely key.
And so you see different countries experimenting with different pieces of
that puzzle. The trick, John, is to stay the course on those.
It is easy to not backslide but not press on when the economies are in
trouble or growing less or less of a fiscal surplus.
The real key is to stay the course for a sustained period of time under this really, and again, China brings a great
example of lifting, I’ve read somewhere, between 40 and 50 million
people out of poverty every single year.
And the reason they’re able to do that is sustained strong growth of 9 to 10% 10 years in a row. I totally agree with everything Joe
said, but just to add one more point, is retraining. We have a lot of jobs, sometimes too
many jobs, whether teachers or administrative workers, that we would
really have to take them and retrain them so they can contribute more to the sector.
And I think other than training is maybe we should look at retraining to have them more fit into what is required into the economy. So you are suggesting that modernizing the current workforce by retraining
those who are in specific areas of the economy?
Yes. I mean we have a lot, abundance of
school teachers and a lot of school teachers are not finding jobs. Should we try to retrain them to see — I mean there are more need maybe for
financial analysts to try to see what the society needs and retrain and that’s an opportunity that also should
be looked at. Good. I promised you I’d come back to this
role of the female in the workforce, and this is a huge issue within the Gulf States in particular.
You are removing at least half of your economic development or potential
economic development by not having women in some markets work.
Let’s tackle it head on. What’s being done to readdress this cultural barrier to females in the
workforce? And I’ll approach Sheikh Ahmed
afterwards. Please.
Well, I mean it is very obvious that if 50% of the population are not allowed
to contribute, you’re already at a disadvantage and you can’t get to where
you want to go. So there is a role for the females
and opportunities to work. Historically in my country, in Saudi Arabia, the old job opportunities have
been in education and the health care. And so now, we are expanding to open
more the job opportunity outside these areas.
And we are seeing tremendous change in the last, I would say, five, six years of women participation.
We are seeing the private sector are hiring women in Saudi Arabia.
Of course, we have to abide by certain restrictions.
But overall, I see — I think one of the challenges also we see is that
women are, in Saudi Arabia and other countries I think in the Arab world, more into university degrees than men, so that also, you have a higher
education for women and that we would have to create more jobs for.
And there was one study I was reading that some of the unemployment maybe is for a higher — because of a higher
education. The higher school, the more unemployment. So we’re educating the women in our work — to be prepared for the work but we’re just not using it.
So they’re getting the high education. They’re going abroad in many instances but we’re just not tapping into that resource.
Yes. But I mean steps are being taken.
And if we look throughout the GCC countries, the percentage of non-nationals working there vis-à-vis the women available, I think we can
look at it and see there is a natural fit here.
Good. Sheikh Ahmed, you had your hand up. Do you want to address it? And I’ll come back to Minister Baraka. I don’t think a nation can succeed with 50% of its capacity underutilized.
There are two elements to this. In Bahrain, we have 37% of the workforce in the financial services as
women, 25% of the total workforce. I still think we can do more. We are examining and looking very
closely at gender-based budgeting, and that’s a politically correct term, I guess, that we can use that says the budget will look at issues related to
women and men to specifically target programs that will serve both women
and men within the government budget. It’s an important element to enable
the economy to even produce more through utilizing women more in the workforce. But I just wanted to echo the message that we need to empower women and make
sure that they are actually out there working. The grades we see in schools now,
in universities, women are much higher than men.
And I remember when I was governor of the central bank, we sent a delegation
for a training course of nine women, and the person on the other side called me and said, “I thought you were joking, but when I saw them
participate, they’re all very capable.” And I see no reason to distinguish based on gender in jobs and in
promotion. I think that actually makes the society stronger, much stronger. How does that play out in Morocco,
Minister? I think that the most important thing
is to rehabilitate women in society. And I think in Morocco, we began with Moudawana, the change of, the law of —
the Moudawana, and we give women more rights and we have now women in
politics, in economics, in entrepreneurship.
We have women studying and of course, we promote women thanks to the
education. Like they said, it’s very important I think and if we — in Morocco, what we
are trying to do is to have women in all the aspects of the life.
And we can talk about, for example, in the local elections, in 2009, we had
12%, 45% who are women. In 2003, there was only 0.5%. That means that women are more present in society, in politics, and of course,
in other areas. Good. There is a couple of things I wanted to touch upon and then I’d like to go to the audience for some questions. I’ll ask the lights to go up when we
do so. But the role of Big Brother, there
is a tendency, particularly in the Gulf States where the energy wealth is,
to look over the shoulder and say, “Well, Big Brother will provide the job for me
in government and not the private sector.” And this has always been a tap since the 1970’s. Are we getting past this trap that the
government or Big Brother will look after us and provide a government job
just to make sure the employment numbers look better? Well, I think yes, in Saudi Arabia,
job creation has been more in the private sector in the last 10 years than in the government sector.
But the mentality is there that the government will look for us in terms
maybe of health care, but not in terms of job creation, in terms of housing and helping in house loans and all this.
But job creation, I would say, mostly is coming from the private sector. And this change in mentality that it’s not going to be the government
providing the job not just in Saudi Arabia, and I’m thinking in the broader
region as well? Yes, I think that is the fact that
really it is entrepreneurship. It’s new companies coming up and creation and it’s mostly private sector.
But I don’t think it is mostly relying on the government in job creation.
Good. Minister?
And Sheikh Ahmed after. Of course, that is the problem.
We know that people and young people want to work in administration.
And that’s why it’s very important for us, as you know, that job creation
is more in the private sector than in public sector.
The administration represents only about 10% of the job creation in all the country. That means that of course, we can’t
provide all the people who want to work in administration, and that’s why we
are trying, first of all, to change mentality, to change the program of education in universities to prepare
people to work in private sector and not to work in administration.
That’s I think the big change. And of course, we are working with —
we have some experiences to promote entrepreneurship and entrepreneurship
in our country. And we begin in primary education because we think it’s at school what we have to change the mind of our people.
So the seeds have changed or planted at the primary school level now? Exactly.
Within Morocco to change that mentality? Yes. We try to explain that it’s very important to be responsible and to have
their job, their creating of their enterprise.
Good. Sheikh Ahmed, you wanted to address this issue yourself. Thank you. Yes. Just very briefly, at the lower end jobs, I think the challenge is still
that the government jobs are more appealing.
We are seeing a trend beginning of change but we are definitely not there
yet. I think what is important is focusing on productivity, and I think that’s
what His Excellency, the Minister was referring to. As we focus more and more on
productivity within government and private sector, as an economy starts
looking at how can we be more productive, I think jobs, whether in government or private sector, will start looking more and more similar. Good. I’d like to touch upon this issue which I think is a very important one,
and that is the role of the sovereign wealth funds between the Gulf States because of the blessing of, in the last 18 months, $70 to $80 oil. But there’s been a tendency to take
the oil wealth and splash it out on trophy properties and not focus on regional or even domestic development of the middle class. Is that starting to change,
the strategies, the sovereign wealth funds starting to change with the money staying closer to home but targeted at development?
Joe? Again, countries are acting quite differently.
I mean in Abu Dhabi, for instance, you are seeing some of those foreign
investments really aimed at transferring back some key technologies that can benefit the economic
development of the country of origin. In other cases, it is really — you can look at it from a financial investment perspective and maybe
acquiring some trophy properties but with the goal of generating financial returns that can be used as a buffer or
a fund for future generations. So I think the situation is quite,
the starting point is quite different. From what we see now, the trend
is evolving more towards the domestic and not economic development. There are more investments being made with the aim of generating wealth and job creation, technology transfers
within. So that will be, I think,
increasing with the trend. Good.
It’s through the downturn Saudi Arabia was quite proud of the way it handled
its investments in terms of the international portfolio and the lack of
losses within this portfolio. What’s been the strategy not just for
Saudi Arabia but your views, Lubna, on this issue of the sovereign wealth
funds and how we see the change of strategy over the last four to five years? Well, Saudi Arabia is, I guess, one of a few countries that really didn’t have a sovereign wealth fund to invest
outside. Most of the funds are invested under SAMA and . But I mean we have a couple of funds, PIF and other funds, which their
investments have been mostly locally and supporting local industry, and I
think more and more activities are happening. Recently, we’ve seen PIF investing in, and it was all announced, with Aramco project.
It’s a huge investment. And the focus has been and continues to be to create jobs. The difference is dynamics, is because
among the GCC countries, Saudi Arabia is the most populous of all the GCC
countries and we have, and it’s one of the highest population growths. So there has to be focus on job creation and investments from the government and it’s truly a government/private sector partnership in trying to see and invest in jobs that do create. And I think the government is very sensitive about that issue in particular. Good. So what’s the most effective way, and we target to this to the Gulf,
what’s the most effective way to take the blessing of the natural resources and that revenue and apply it to developing the middle class at a faster pace?
Sheikh Ahmed? I go back to my vision comment. We’ve got to know where we are, where we want to go, and how do we want to
get there. And there are different policy levers
and policy tools that could be used. We just talked about sovereign wealth funds.
Fiscal policy is very important. Private sector enablement is very
important. How do we manage all those different
policies together to make sure that we are targeting a growth rate that is in line with what is needed to create full employment or near full employment,
making sure also that we are not overdoing it and getting inflation in the way and creating a lot of challenges in that area. And I think one area we haven’t maybe tackled enough, again, I go back to monetary and fiscal, and I think that’s what is critically important to make
sure that there is stability medium and long term in any economy. It’s to make sure that the policy levers are managed well. There is more coordination within the
different bodies within a country. And no longer you could set a budget
without understanding what your monetary levers are, what your — the banking systems, the quality of assets,
and how they are managing their business. Are they keeping up with the best practice and potential regulation
and so on and so on. So making sure that you’ve got that
coordinating body or communications strategy within a country to control all these different policy levers is critically important. Okay. I want to follow up, and this is a very
important issue and let’s see if I can get very candid answers as a result of this. When does the slower creation of
a middle class and a very high unemployment rate amongst the youth become a security issue?
Minister? Or is it already a security issue? I mean if you don’t have an active
youth population that’s going to be the next generation of your middle class, if you don’t deal with it with a sense of urgency, does it become a problem in
the next five to 10 years? Of course, I think it’s, as you know, it’s very important for us, for our
countries to have better middle class, to enlarge the middle class, and to give our young people hope to have a better life and a better level of life. I think about these points that middle
class is very important, like I said, for our social stability. But more than that, we have to have this middle class to be involved in
democracy because middle class is very important to modernize the society and to have democracy in our country and to have more democracy in our countries.
And the third thing is, as you know, we have — there are a lot of problems in our region. Then we think then, because the middle
class is, first of all, to be involved in some and to creating some values,
values of stability, values of tolerance, values of opening, and values of productivity and efficiency. And we think that we have to invest more in human capital and to do our
best to have better and to enlarge middle class to give stability to our
countries but to modernize and to have better rates of growth for our countries.
Good. Lubna, do you want to jump on this? Yes, I think — You need to have that mic a little bit
closer. Thanks. Yes, I think the concern whether
unemployment for the youth is there and will it lead to social instability,
of course, it will. And if the question is are the
governments aware and focusing on this, most definitely because it’s a very
sensitive area. So definitely, this is an area of concern for all.
One point we did not touch on is creating middle class across the Arab world. For example, I mean it just dawned on
me, a lot of jobs have been created, middle class jobs in Dubai for other Arab nationals.
So we are seeing job inter-regional middle class job creations taking place and that is something that is really helping the Arab world overall. But that’s changed a lot in the last four to five years specifically. Sheikh Ahmed, back to my original
point about security, obviously, you’re a member of the cabinet. You see this as a real issue in which
to maintain that sort of vision you have in Bahrain to create the middle class wealth as a security issue. And it is as political need to give
every citizen the chance for employment to improve themselves or to create
a family and to see economic growth trickle down to that individual.
Economic growth that doesn’t trickle down to every individual does not mean
anything to the people that don’t get any benefits from that wealth.
It is an important challenge for us to make sure that whatever we do actually trickles down to the average individual
on the street. To us, dealing with parliament and dealing with the public in a democracy
means that understanding what society wants and how to put it in a policy
tool that achieves that. There are challenges from time to time where long-term discipline,
fiscal discipline, and making sure that we are thinking medium and long term versus
very short term policies, that’s where the debate is.
It’s usually a very lively debate. But usually, we tend to reach an agreement to what is good for the long term of the country.
But definitely, all we have to do has to trickle down to every citizen. They’ve got to see what it means to them and their own family. Good. Let’s turn the lights on, if we can,
because it’s hard to see and we’ve got a lot of hands that are going up.
If we can get the microphones. I do need to see people. I ask you, because we have about 15 minutes for this area of discussion, identify yourself and then direct it to
one of the panel members, if I may. Who has a microphone there? Okay, please.
You can stand up so the camera can capture you as well. My name is Mohammed Buchdir
Sorry, Mohammed, . If we can get more lights on the front if it’s possible, that would be great.
If not, we’ll live with it. Thanks.
Please. My name is Mohammed Buchdir.
I’m a Moroccan from New York City, U.S.A.
My question is for all the panel. Everybody in the panel seems to agree that education is a key component in
the economical growth, enhancing the narrowing of the gap between the classes.
My question is in the MENA region and in Morocco in particular, the education
is provided by two different systems, the for-profit private sector and the
public sector. The challenge here is that we created
a system with two speeds and two skills outcomes.
I’d like to know what are the governments doing to provide the
opportunity for the and the privileged population to have access to the private sector, assuming that the
private sector provides additional skills, such as soft skills that they can’t provide in the public. Thank you very much. Joe, can I have you tackle it and then
maybe Sheikh Ahmed. But is there a danger of a two-speed
education system within the Middle East, the private sector souped up and ready to go and the state Lubna talked about getting retrained in time to
serve the greater population? I think first of all, this situation of
having two tracks for education exist in many, many countries in the region is not only specific to Morocco. If you look at it from a spending perspective, the spending on physical infrastructure when it comes to schools, universities, it is there in
most places. The key change that needs to happen is, and I think it’s been commented on by the panelists, is the focus now on the qualitative side of the education system, better spending on teachers,
retraining, performance evaluations. I mean we are seeing some very interesting experiments in Qatar and in
Abu Dhabi and Dubai for instance of evaluating the performance of teachers,
something totally unheard of in our part of the world. So now, most of the attention needs to be really spent on the quality side of
education, not just on buildings and infrastructure. Good.
We have some hands up. If I can get a microphone to this gentleman and then the person back
there afterwards. Yes? My name is Fernando Reimers. I’m a Professor of Education at Harvard
University. My question is for Minister Khalifa and for Mrs. Olayan. All of the panelists have talked about
the importance of substantial education reform to create this middle class. And the ambitions for education reform
are of a very different order than the targets of the past.
We are talking about serious improvements of quality,
serious enhancement of the relevance of education, training a very different
kind of teacher. It seems to me that it’s not likely
that those challenges will be met by the current institutions of education.
For example, to produce a very different kind of teacher, it would
seem to me that this is not a task that the existing schools of education are
up to, that we would need to create new collaboratives, maybe collaborative
efforts between schools of education, business, engineering, combining universities and the private sector
back to the leveraging effect of universities, which can be terrific in
terms of improving K-12. That is going to require a different kind of leadership on the part of university leaders to get the universities seriously to engage in
developing curriculum and teacher training.
Is there the right kind of leadership in this sector, both public and private, to bring about these kinds of very transformative changes? Brazil, which was mentioned,
for example, mobilized a coalition of business leaders who decided to achieve
synergies by leaving aside a small and an integrated project and really come
nationally into coalition of business leaders working with government to produce those changes.
Is there that leadership available in this sector in the region? And if not, what would it take to produce it? Well, I think there is a commitment from the private sector to tackle this
problem and it is essential for the survival of the private sector and for the thriving of the private sector.
And by doing so, we are tackling the thriving of the middle class and the
middle income, so that definitely there is.
So this pressure now from business leaders, such as yourself, within the
country to say, “This is not meeting our requirements or skill sets needed?”
I think this is an area where definitely, it’s a public/private
section collaboration, as you have said.
And the private sector is recognizing that there is tremendous need for this
to happen. Now, the question is the government and the role of the government in this?
I have to say there has been tremendous change in the government
view and mentality of tackling this problem.
Are we most doing what we should be doing to perfection?
Definitely not. We are improving.
We are learning and we are trying to learn from what other countries are
trying to do. Good. Sheikh Ahmed?
I think the most important thing is not just the industry getting
committed. I think politically, we got to be
committed. So in Bahrain, His Royal Highness, the Crown Prince has personally committed on education.
We have our most senior deputy prime minister chairing a committee that
looks at education. So whether it’s teacher pay,
training, setting up the standards body, making sure that we build quality and what we
teach the students, it’s all being done.
Can we have harmonization in all the schools and make them all set
a standard? I think that’s very difficult. What we can do is make sure that they
reach certain minimums and then leave room for individual schools because
I’ve seen reports on government schools, I think even within government
schools, there are differences in the quality of education because it’s how the school is actually managing its own affairs.
So can you standardize? It’s very difficult.
But can you maintain certain minimums? I think that’s very important. Even in the United States, not all
universities are alike. There is a huge, huge difference
between different universities. But is there political will, commitment?
Yes. Is the money being put forward?
Yes. Are the standards and education bodies
and teachers being looked at very closely and being helped to achieve the targets? Yes. I am being very brief because of time. No, it’s okay. We do have a question there. Please. My name is Jamal Binta .
I’m from Newspaper. My question is to you, Mr. Defterios and to the panel. Don’t you think it is ironic where we
are discussing the prospect of the middle class in the MENA region that we
are actually witnessing the slow death, if I may say so, the slow death of the middle class in the advanced countries?
U.S.A., for example, the income of the middle class has almost stagnated since 1980. U.K. is almost the same. Sure.
What is your take? Well, I can provide my sense of analysis, and I’m sure Joe would agree with me on this because I’m sure he has
his head in this sort of space. Sheikh Ahmed talked about the shift
from the G7 in a very rapid time frame in the last two to three years to
quickly to the G20. And I don’t think it was insignificant at the last IMF board meeting that the shareholder rights have been divided to represent the growth that we’ve been talking about and the tilt to the East to include China, India, Southeast Asia, and I may add the Middle East and North Africa, with Saudi Arabia and Turkey at the table.
I personally think, and I’m an American speaking, that the next 25
years are going to belong to the East. And that’s why it is extremely important for the Middle East and North
Africa to address this issue of development of the middle class so it can harness that growth not so much
coming from Europe or the United States anymore but the growth that’s going to
be coming from this triangle of growth, if I can put it that way, China,
India, Southeast Asia, as a huge opportunity for the Middle East going forward.
Joe, I think you would agree with that because the opportunity for the Middle
East now is not necessarily to look at its traditional trade partners,
which have been in the West, but to look at new trade partners which would be in that triangle of growth for the future. We had a question in the back corner, if I may. FeWe have already the mics.
Let’s get to you right after. I didn’t see you.
But I’ll make sure I get you. Terry Tamminen: Terry Tamminen from Pegasus Capital Advisors. I wanted to ask the panel what their thoughts were about sustainability,
the topic of our opening plenary yesterday. The region has been known here for some time for resource extraction.
And as one thinks about developing industries and the middle class, there would certainly be a temptation to just provide more jobs for the service industry and the various industries
that are serving more resource extraction in this region.
But at some point, the music stops and that’s not sustainable. Sheikh Khalifa mentioned a sustainability vision for Bahrain, but I wondered what some of the other panelists feel about this notion of the possible tension between taking sort of short-term growth opportunities around
resource extraction versus long-term economic development of industries that
are likely to be here for the next 50 to 100 years. Okay.
That’s a phenomenal question on the diversification. Minister Baraka?
Yes. About diversification, I would like to
say, and about sustainable development, that Morocco decides to invest in renewable energy. As you know, in 2020, we will have 2,000 Megawatts of solar energy
and 2,000 Megawatts of wind energy. That means that in 2020, we will have
42% of our needs will be product renewable energy. Second thing, we invest in alimentary
security because it’s very important for our region, and we have a plan of what we — its name is Morocco,
Green Morocco, and to have a better rentability in foods, food security. And the third thing is we are working about, of course, environment
and water, preserving water, because it’s one of big problems we have to face in
the future, in the future years in the region.
That’s why we are trying, first of all, to have modern, modernizing,
using water in Morocco, saving water, and to have better productivity of our water.
And at the end, about our diversification, we are investing in
add value sectors, higher add value sectors like electronics,
like automotive but like nanotechnology. We just begin here in Morocco and that
gave us with and other areas more possibility to have better
competitivity and to be more involved into a dual economy.
Lubna, do you want to add? I’ve seen the diversification in Saudi
Arabia linked very much so to natural resources and into petrochemicals
and down the food chain. But is this the right strategy, do you
feel, for diversification? Yes.
I mean it is a strategy the government has been taking.
There also has been recent discussion into solar energy, into other forms of
energy. One of our biggest challenge is also
our dependence on water, which is another, other than the energy, is one
of our challenges looking forward. But there has been a focus by the
government to diversify and look into sustaining the economy other than
purely oil. Sure.
We launched our show three years ago and I would say I know that the
creation of the middle class is a huge issue and the youth unemployment,
but nobody can really argue with the efforts that are underway to diversify
at a pretty rapid pace. I mean Abu Dhabi took an investment in
a very large chip operation and they benchmarked to have their own plant on
the ground in Abu Dhabi by 2014 or 2015, only 12 months after the initial
investment, so it is a sign. You had the microphone here.
Thanks. We’ll take two more questions.
We had one on the center. Perfect.
Please. FeMy name is Yasmin.
I’m from Egypt and I’m here with the Global Changemakers Network from the
British Council. I have two things to say.
The first thing is to answer your question about the security.
As a young person, not having access to funds and not having access to
proper education creates frustration and creates a lot of time that I don’t
know what to do with. So what do you turn for is whether
drugs or extremism, which then affects your point, Minister, about stability.
So it is a very pressing security issue, I agree with that.
The second thing I wanted to say about gender equality, because I work at the
Women Rights Organization, numbers of improvement can be misleading so let’s
not fall into this trap. Because things — it’s always easy to
say things are improving but they’re not reaching equality yet.
And I think as an indicator in the business sector, we can see the WEF
panels here. How many women and how many men are
talking on the panels? The ratio of men and women is not
equal. It’s not even close to equal.
And it’s always like the same women talking in the same panels.
So let’s really — don’t you think it’s an issue?
How many men in the hall and how many women is important, and this is the
World Economic Forum. So I think it’s a great indicator
and representative of how the business world is.
It’s not about that women have entered the field.
It’s about how many women and what are they doing.
What are the obstacles they are facing compared to men I think is an important
thing to look at. Thank you.
Great. Thanks for the input.
We had a microphone here. Thanks.
Thank you very much. private equity in Dubai.
I didn’t hear anything about the scale or the size of the talent pool in the
GCC states in particular. And the question is to Sheikh Ahmed.
Given the size of the populations in the Gulf and the reliance on foreign
talent, despite the small, despite youth unemployment, isn’t there a need
to change laws to attract and retain foreign talent in the Gulf states
and is there any — are there any plans to do so in Bahrain?
Interesting. You have Bahrainization, which has been
an effort to increase the employment at the high end of the market in Bahrain
recently. Do you think you need to retain foreign
talent and at the same time train your workforce, your domestic workforce?
Can you get the balance? We believe, and I’ll speak
specifically first about financial services, that foreign talent is an
important ingredient in the success of financial services because it helps you
understand the world, what are the challenges, what’s going on.
In every new sector, you would definitely see at the beginning a huge
number of foreign workers at every level, from CEO all the way down to
technical expert staff. As time goes on, we train more
and more Bahrainis and that’s ultimately the goal.
Do we believe that a healthy percentage of foreign expertise in
every sector is important? Yes, because it increases the
challenge within that sector and it increases the capacity within each
sector to understand what the needs are for Bahrain and what the needs are to
export our products, whether they’re financial services or others to other
regions of the world. But retaining foreign workforce
is actually done by what jobs you offer them, and what jobs you offer them
is what the industry needs to attract them at a certain point in time because of
what the economic competition or what is available to them as opportunities
in other parts of the world. Will we have a government policy to
attract foreign workers? I don’t see that as something
necessary. But within every industry or sector,
they will do what is necessary to create that mix of competitiveness in
the workforce that they see fit. Okay.
Can I follow up quickly? This effort for Bahrainization, is it
a clear effort to nudge out the foreign worker in time?
This question has been brought up time and time again.
It is a clear effort to make sure that Bahrainis’ capacities
and capabilities are enhanced and actually developed and that they can get better
and better opportunities as time goes on.
If the economy is continuing to grow, then the need for foreign workforce
will always be there. Are we looking at specific jobs
and saying, “This job, we need to have Bahrainis instead of foreigners?”
That’s not ultimately the goal. The goal is what is the maximum
potential that I can take an individual man and woman in Bahrain?
How can I help them reach that potential?
That’s the challenge that I see for Bahrainization.
Perfect. The gentleman in the back had his —
we’ll take that as the last question. Sorry.
Thanks for your patience back there. I did see you.
Thanks. Thanks, John, for giving me the chance.
My name is Elliott Tamimi . I work for Hewlett-Packard in Saudi
Arabia. My question is about IT and information
technology. I didn’t hear any of the panelists
discussing how can information technology help the cause of middle
class grow and nurture it? So I would like to hear from the
panelists . Thank you.
It’s been a huge job creator in Silicon Valley and it’s spread into
different clusters around the world. Is it being maximized in the kingdom?
I think it has been and we see women’s involvement in the workforce in
information technology and the access of technology because a lot of women
can work from the home, given the cultural differences.
You can have them being involved in that so yes, technology has been
working. Also, it’s an enhancement to the
improvement of efficiency, and what you need to a thriving middle class is to
have more efficient resources available.
So yes, technology, and you’re right, we did not cover it here.
Minister? Yes, of course —
The big issue here, I know you’re trying to create the sort of clusters
in Morocco. Yes.
We have a plan for clusters here in Morocco, and at the same time, we have
a plan whose name is Numeric 2013 to have, to be more involved into
technology and new technology. And I would like to say that when we
talk about productivity, when we talk about efficiency, of course, we talk
about information technologies and we think that it’s the future.
We are investing a lot into these kinds of technologies because we think
that thanks to that, we give the opportunity first to be more
competitive and to give the opportunity to our people to have better life.
Good. Thanks.
On that note, I want to give a nice round of applause to the panel for
taking on everything we threw at them. And many thanks for the cooperation
and participation from the floor. We apologize for the late start.
There was just a technical issue. But I appreciate your patience.
Thank you.

1 comment on “Middle East 2010 – Building the Future Middle Class

  1. Talking heads…There is no future for the middle class in the Middle East. For example, 90% of high skilled employees in Saudi Arabia, the country with largest GDP, spend 60-70% of their yearly USD 25,000 average income on rent, food and basic utilities. There is an erosion of the middle class which will intensify going forward

Leave a Reply

Your email address will not be published. Required fields are marked *