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Fourth Industrial Revolution: How Technology is Changing the face of the workforce

Submitted By Firm: Clyde & Co

Contact(s): David Salt, Emma Higham, Rebecca Ford, Sara Khoja

Author(s):

Sara Khoja

Date Published: 11/9/2016

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Fourth Industrial Revolution: How Technology is Changing the face of the workforce

written by Sara Khoja

Earlier this year, the World Economic Forum predicted that by 2020, five million net jobs would have been lost as a result of technological advances, automation and robotics. The majority of job losses will be administrative and office based roles with some areas such as computing, mathematical based roles, architecture and engineering creating job opportunities. What does this mean for employers in the Middle East?

The Middle East's demographic is characterised by an overwhelmingly young population and workforce with the need for job creation toping the social agenda. A World Bank report in January 2015 assessed that 60 million jobs need to be created in the region within the next twenty years. Within the GCC, job creation for nationals has seen various obligations being placed on employers in the private sector including the application of quotas for specific sectors and reserved roles such as Government Liaison Officers, HR Manager, and most recently Data Entry Clerk and Health and Safety Officer.

Against this backdrop, an employer planning its human capital policy will need to consider the following:

  1. Succession Planning: greater consideration will need to be given to whether roles should be eliminated through natural attrition, and what roles have a short, medium or long term future.  This exercise can be particularly important with regard to planning workforce nationalisation; and for example the use of fixed term or unlimited term contracts. The KSA labour law takes this approach, requiring all non KSA nationals to be engaged on fixed term contracts which then facilitates employee exits on expiry of the fixed term.  Where roles need to be eliminated, care should be exercised as redundancy is a new concept in the GCC (see previous article here);
  2. Employee Upskilling and Training: much has been made of the skills gap in the GCC region, and the need for vocational training. The need for employer programmes will only increase and the amended KSA labour law increases an employer's obligation to train its KSA nationals (see previous article here). Elsewhere in the GCC, specific levies are placed on employers (or funds set aside from foreign employee visa costs) which are then invested in training programmes for nationals. An employer providing training will also need to consider employee lock in periods following completion of the training and law back of training costs;
  3. Recruitment and Retention of Women: many of the roles which are predicted to be eliminated are those often occupied by women.  However, a key aim in the region is increasing the participation of women in the workforce; KSA's Vision 2030 aims to increase participation from the current 22% to 40%.  The UAE has sought to encourage female participation through various Government initiatives. Equal pay is a protection under each GCC country's labour code. In addition, Bahrain and Kuwait provide that an employment termination based on sex would be unlawful discrimination. The DIFC and ADGM employment laws also prohibit discrimination on the basis of sex with regard to an employee's terms and conditions of employment and, the decision to terminate employment.
  4. Managing multiple generations in the workplace: whilst the focus is often on the young nature of the workforce (across the GCC 70% of the population is under 25), average life expectancy is increasing across the region (having increased over the past twenty years from 60 to over 70) and GCC nationals are entitled to state pension schemes providing for retirement at 60 (or 55 for women) with comparatively generous pension payments linked to final salary levels. Against this background, it is possible that state retirement ages will increase and employees will wish to postpone retirement; making upskilling and succession planning even more key;
  5. Growth of Atypical work patterns and the Gig economy: the pace of technology and its ability to deconstruct every aspect of our lives has put us in the realm of what has been called 'infinite creativity' and one of the biggest effects has been on the way we work. Employers now operate policies relating to remote working, flexible working and, bring your own device and the like. The ability to work wherever you happen to be means greater individual autonomy and a radical overhaul in physical workspaces and office premises. The changes potentially create a loosening of the employer-employee relationship and employer's need to take steps to ensure employment contracts, policies and practices ensure protection of confidential information, intellectual property and client relationships. Younger employees place less value on job security and we have yet to see whether the 'uber' model of resourcing is a model that can be adapted across industries. Technological advances make it more likely that individuals will wish to be self-employed and potentially free to take up multiple engagements with multiple companies. By way of example, the OECD states that the whole of net job growth in the UK since 2015 has been in non-standard jobs which are temporary, part time or freelance. It can only be a matter of time before these models are increasingly used in the GCC.

These changes represent a significant challenge for employers but also an opportunity where businesses now have a platform for the rapid exchange of goods, services, and labour. Employers need to consider now how to best plan for these developments including practical steps such as considering what office space is needed technology and software purchasing such as automated document creation and recruitment.

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