The total labor force in the UAE is 7.384 million, with 7.219 million being employed. The unemployment rate is approximately 3% in the current pandemic status quo. Therefore, it can be considered a tight labor market. Emiratis make up approximately 10% of the workforce, with the rest being made up of expatriates. Nationals are largely employed in the public sector and face growing unemployment pressures because there are few suitable jobs in the private sector despite significant government pressure for “Emiratisation” of the private workforce.
However, most nationals are employed in steady, relatively high-paying positions due to the importance and size of the centralized government in the UAE. Meanwhile, the private sector is diverse in terms of industries and job opportunities encompassing major economic sectors such as oil and gas, finance, technological hubs, and hospitality/tourism. Labor governance in the UAE is strong and continues to increase as frameworks are being introduced to guarantee worker protection, wage protection systems, and occupational safety. Despite nationals receiving preferential conditions, expatriates are highly valued and usually protected by local regulations, even for temporary foreign workers, making the UAE a highly attractive labor market.
The labor market in the US took a significant hit as a result of the COVID-19 pandemic. The current unemployment rate is at 5.8%. Additionally, approximately 2 million people left the labor force altogether due to a combination of factors. By all accounts, as the economy is recovering, the labor market is growing, and there is an overwhelming demand for workers in the country in all types of work – manual labor, customer-oriented work (service, hospitality, retail), and high-skilled jobs. The country is struggling to meet the supply of workers despite a record rate of job openings since early 2000, and wage growth has been matching this deficit. The labor market conditions in the US can be described as both tight and loose.
The COVID-19 pandemic has created a unique circumstance where there is both a high rate of vacancies as well as a higher than usual unemployment rate. At the same time, there is a challenge to find workers. It is a paradox since it is highly unusual for a market to be tight at a 6% unemployment rate, with a real unemployment rate close to 10%. However, the unemployed are not available to fill jobs for reasons ranging from safety to lacking the skills for open positions.
A tight labor market is one where demand is at least as strong as supply, with employers competing for workers and employee bargaining power being stronger. A loose labor market is one where supply exceeds demand, typically in recessions when the number of available jobs decreases while unemployment increases. This gives employers more bargaining power, typically leading to lower wages. One major indicator of labor market conditions is the rate of unemployment, but there are more complex factors at hand depending on region, industry, and contextual factors. Analyzing labor market conditions is important, most often for driving labor and monetary policy in a country. Furthermore, it serves as an indicator for employers on how to approach hiring and long-term workforce planning.
As mentioned, employers and employees gain bargaining power depending on conditions. To be successful, organizations have to develop a resourcing strategy that fits with the current market conditions and can attract talent by differentiating from the competition. In a tight market, there will be greater competition for high-specialty candidates, which will affect both methods and strategies employed by an organization as well as the general approach to wages, benefits, and work environment, attempting to make it as attractive as possible. Meanwhile, in loose market conditions, organizations may take a step back and dictate terms while interviewing multiple candidates for a single position, putting the burden on the candidates to prove that they should work at the respective company.