The Same Structural Challenge
Every Gulf economy confronts the same labour market paradox: economic growth depends on imported labour, but social stability depends on employing nationals. Both Abu Dhabi and Bahrain have built their modern economies on expatriate workforces — engineers, construction workers, financial professionals, domestic staff, and service workers drawn from South Asia, Southeast Asia, Europe, and the broader Arab world. Both visions mandate increasing national participation in the private sector. Both face deep structural resistance.
The challenge is identical. The approaches differ in scale, institutional design, and results.
Workforce Composition
| Metric | Abu Dhabi | Bahrain |
|---|---|---|
| Total Population | ~3.8 million | ~1.5 million |
| National Citizens | ~19% (~720,000) | ~45% (~675,000) |
| Expatriate Share | ~81% | ~55% |
| National Workforce Participation | Low in private sector | Moderate, improving |
| Key Programme | Emiratisation Council, NAFIS | Tamkeen |
| Sector Quotas | Banking 4%, Insurance 5% | Sector-specific targets |
| Private Sector National Employment Growth | Increasing under NAFIS | ~1,100 high-wage jobs/year |
Emiratisation: Scale of the Problem
Abu Dhabi’s Emiratisation challenge is defined by the 81 percent expatriate share. The private sector employs millions of non-nationals across every industry. Emirati nationals — approximately 720,000 people, of whom only a fraction are of working age — represent a small minority of the labour force. Many Emiratis have historically preferred government employment, which offers higher salaries, shorter working hours, generous benefits, and greater job security than private sector alternatives.
The Emiratisation Council oversees quota implementation. Sector-specific targets require minimum national representation — 4 percent in banking, 5 percent in insurance, with additional quotas across other regulated industries. The NAFIS programme, launched in 2021 as a federal initiative, provides salary subsidies, training programmes, and employment incentives designed to make private sector employment more attractive to Emirati citizens.
The quotas are modest by design. Requiring 4 percent national representation in banking within an economy that is 81 percent expatriate reflects the practical reality that rapid nationalisation would disrupt private sector operations. The banking sector alone employs tens of thousands of people; finding qualified Emirati candidates for even 4 percent of positions requires sustained investment in education, training, and career development.
Abu Dhabi’s fiscal capacity provides an advantage in funding these programmes. Salary subsidies, training scholarships, and entrepreneurship grants can be scaled using sovereign wealth returns. The constraint is not money. It is the supply of qualified nationals willing to work in private sector roles at competitive wages.
Bahrainisation: Urgency Without Resources
Bahrain’s nationalisation challenge is structurally different. The kingdom’s expatriate share is lower — approximately 55 percent — which means nationals constitute a larger proportion of the workforce and the working-age population. But Bahrain’s economy generates fewer high-quality private sector jobs, and the competition for those jobs is intense.
Tamkeen — the Labour Fund — is the institutional vehicle for Bahrainisation. Established in 2006, Tamkeen provides training subsidies, wage support, enterprise development grants, and career services designed to increase Bahraini participation in the private sector. The fund is financed through a levy on work permits issued to expatriate employees — effectively taxing foreign labour to fund national employment programmes.
The results are meaningful but insufficient. Tamkeen reports facilitating approximately 1,100 new high-wage jobs for Bahraini nationals annually. In a kingdom of 675,000 nationals, where thousands of young Bahrainis enter the labour market each year, this pace of job creation falls short of absorption requirements. Youth unemployment among Bahrainis remains a persistent concern, and the mismatch between educational output and private sector demand is a recognised structural weakness.
Different Approaches to the Same Problem
Abu Dhabi approaches nationalisation as a quota compliance exercise backed by fiscal transfers. The government sets targets, subsidises compliance, and monitors results. The scale of sovereign wealth means that the fiscal cost of Emiratisation programmes is manageable relative to total government spending. The risk is that subsidy-dependent employment is not sustainable — if subsidies are withdrawn, private sector employers may revert to lower-cost expatriate hiring.
Bahrain approaches nationalisation as a labour market reform challenge. Tamkeen’s levy on expatriate work permits creates a price signal that makes foreign labour relatively more expensive, incentivising employers to hire nationals. This is economically sounder than direct subsidies but generates friction with private sector employers who argue that the levy increases operating costs without solving the skills gap.
Educational Pipeline
Both economies recognise that nationalisation ultimately depends on educational quality. Abu Dhabi has invested heavily in higher education — attracting branch campuses of the Sorbonne, New York University, and other international institutions — and in technical training through the Abu Dhabi Polytechnic and vocational programmes. The investment is substantial but the pipeline between education and private sector employment remains underdeveloped.
Bahrain’s educational institutions — the University of Bahrain, Bahrain Polytechnic, and several private universities — produce graduates whose skills do not always align with private sector requirements. The EDB’s quarterly reports consistently identify the education-employment mismatch as a constraint on vision delivery.
The Underlying Tension
Both visions describe a future in which nationals play a greater role in the private sector. Both governments understand that achieving this goal requires not only training and incentives but also a cultural shift in attitudes toward private sector employment. In both economies, government jobs remain more attractive to nationals than private sector alternatives.
The structural difference is fiscal. Abu Dhabi can afford to sustain Emiratisation subsidies indefinitely. Bahrain cannot afford to sustain Bahrainisation levies at levels that make the kingdom uncompetitive for foreign investment. Both approaches carry risks. Abu Dhabi risks creating a permanently subsidised national workforce. Bahrain risks pricing itself out of the market for the expatriate talent its economy still requires.
Neither economy has solved the Gulf nationalisation puzzle. Both are running out of time to do so before 2030.