Productivity lags in Middle East, auditing giant warns

LONDON: Countries in the Middle East are falling behind global peers in boosting productivity, although many are waking up to the challenges and investing in technology, education and leadership, according to the latest economic bulletin from PricewaterhouseCoopers (PwC).
The accounting and consultancy firm’s latest Middle East Economy Watch reports that productivity has been falling for many years across the region, with Oman and Lebanon among a number of countries that continued to decline in 2017.
Some Gulf states showed signs of growth, including the UAE, which exceeded the global average of 10 percent growth in real productivity between 2010 and 2017.
“Gulf economies have weak labor productivity levels compared with peers as they rely on low- skilled expatriates in many sectors. Meanwhile, public sectors across the region are heavily overstaffed,” said Richard Boxshall, senior economist at PwC Middle East.
Heavy investment in artificial intelligence and robotics will have a huge impact on workforces across the region as expats rendered redundant by technology return home, creating a less dense but more productive population.
“The combination of investment, leadership and improving education could lead to substantial productivity gains,” Boxshall said.
Business environments across the region fared better, with the UAE and Saudi Arabia highlighted in the World Bank’s report Doing Business and the World Economic Forum’s Global Competitiveness indices.
“The Gulf countries have largely led the other Middle East and North African (MENA) countries since the inception of both indices, although methodological changes in Doing Business contributed to sharp declines for some of these countries a few years ago,” Boxshall said.
Saudi Arabia, which aims to be in the top 20 for Doing Business and Global Competitiveness by 2020, was recognized as the country with the most business environment related reforms last year.
In 2017, measures were introduced to update the country’s business infrastructure, including a new online system for property registration and a reduction in the number of documents needed for customs clearance.
Productivity has been falling for many years across the region, PricewaterhouseCooper said.