Qatar banks’ contribution to economic diversification, employment

In my last article for Gulf Times, I examined how Qatar’s financial sector contributes to economic diversification by facilitating private sector expansion through the provision of credit and stimulating entrepreneurship among the local population. Asides from overall contribution to GDP (which is still relatively limited) another important measure of financial services we can use to assess its impact on diversification is the provision of employment.
As with GDP, the financial sector accounts for only a small proportion of the total workforce. According to the Ministry of Planning and Statistics, the number of paid employment workers in the financial and insurance sector stood at 12,280 in 2013, representing 0.8% of the total paid workforce. The construction sector by comparison employs over a third of the total paid workforce. But these statistics are misleading in terms of the financial sector’s impact on the policy of diversification via employment.
Salaries paid in the financial services employees are among the highest on average within the private sector. The monthly average salary in financial and insurance services stood at QAR 20,957 in 2013, second to only mining and quarrying within the private sector. Higher real wages increase disposable income and encourages consumer spending, stimulating economic diversification, especially through retail and services.
Financial services also employ a high proportion of Qataris compared to other sectors, with expatriates continuing to make up 99% of the total private sector workforce. The National Development Strategy set a target of increasing the proportion of Qataris in the private sector to 15% by 2016, yet as far back as 2008 about 26% of Qatari banks’ employees were drawn from the local population.
This percentage is lower for non-Qatari banks (international banks with a branch office in Qatar) but still higher than the national average. The proportion of Qataris employed in financial services (as it is with other industries) is also set to rise with the policy of Qatarisation and government’s determination to develop a vibrant private sector labour workforce. The key challenge of Qatarisation is to formulate policies and reforms that will help develop a domestic workforce with the skills and incentives needed to work in the economy’s most important and competitive positions, as extraordinary economic growth over recent years has created a high level of demand for skilled labour which continues to exceed the supply available among Qataris and is creating shortages for qualified Qataris to lead the nation’s industries. Banks and other financial institutions are again taking the lead in this respect by nurturing local talent, improving the employability and skills of Qataris through training and development programmes. This has contributed to an increase in productivity of the local population, which in turn has improved their earning capacity.
A final noteworthy socio-economic role played by the financial sector is that of employer of a female workforce. About 31% of Qatari banks’ employees are female (with an even greater percentage for non-Qatari banks). This is again higher than the national average and another reason why financial services - despite its relatively small workforce - does more than its fair share in terms of contributing to economic diversification.