Labor Market Dynamics in the UAE: Challenges in Transitioning to a Knowledge Economy

Abstract

In this report, we describe the UAE labor market and analyze its ability to support the country’s growth agenda. The growth of the economy is closely related to its labor market. Hence, understanding it is even important to operationalize the country’s objective to increase productivity and expand its growth engines.

Over the past two decades, the UAE has proven able to build the labor force needed to support its fast-growing economy. The open migration policy allowed employers to swiftly source the skills needed in sectors like construction and trade, and gradually source talent across a broader range of sectors. Going forward, as the growth agenda includes objectives such as deepening diversification and transitioning towards a knowledge economy, the adequate supply of human capital will be an important determinant in the successful pursuit of the growth agenda. Understanding the trends of the country’s labor market, and the threats that could constrain its ability to support growth are thus important. The first section of this chapter describes salient characteristics of the UAE’s labor market. The second section explores the mechanisms that have led to such characteristics. The last section describes threats that may hamper the ability of the UAE’s labor market to support the country’s growth agenda.

Growth Lab Working Paper Series No.

255