New Oliver Wyman report focuses on rebalancing the workforce between public and private sectors

A new report, ‘Is Money All That Matters: The Three Lenses of Value to Drive a Workforce Transformation’, from Oliver Wyman indicates that a nation’s human-capital policies must account for extrinsic, intrinsic and cultural factors to drive successful national-scale transformation and recommends a holistic five-step framework to achieve this. The framework is designed to address labour market barriers and allow GCC countries to attract talent from the national pool towards the private sector or plug employment gaps.

Commenting on the insights, Abhishek Sharma, Partner in the Public Sector and Policy Practice at Oliver Wyman, said, “The Gulf countries have a relatively young economy where historically, the public sector provided jobs for citizens while the private sector was still under development. Now, with a rapidly maturing private sector, policymakers and firms are looking to re-balance the workforce and bolster the region’s national agendas to diversify the economy.”

According to the report, there remains a significant imbalance between the private and public sectors workforce shares in the GCC region. Workforce transformation is essential to encouraging citizens to take up private-sector roles in countries where the public sector is particularly attractive, such as in parts of the Middle East. The framework will also enhance the regions’ ability to incubate a productive private or non-oil economy, as skilled labour is a key production factor.

For example, the largest economy, Saudi Arabia, sees 67 percent of Saudi nationals working in the public sector, compared to an average of just 18 percent for OECD countries. The report suggests that this imbalance is often attributed to extrinsic rewards. Recent data shows average monthly compensation of SAR 11,198 (around $3,000) for Saudis in the public sector but just SAR 7,339 ($2,000) in the private sector. Similar imbalances exist in non-wage financial benefits and ancillary benefits such as working hours and holidays, although the differences vary according to factors such as type of work and seniority. But there are other lenses to consider as well – the intrinsic motivation and the cultural context.

Sharma added, “By combining traditional policy and programme management tools, it will be possible to design more attractive, efficient, and effective systems for drawing talent into different sectors of the economy and to firms that have particular needs. Through this approach, governments can break down their most complex labour market challenges, re-examine them through a new set of lenses, and discover solutions that they may not have explored before.”

The repost showcased that a cross-sectoral collaboration between private industry, government and other key labour market stakeholders is essential to ensuring the long-term sustainability of the framework and with the cohesive and politically streamlined polities such as the GCC states, this type of collaboration may be relatively feasible.