“Having high public sector salaries damages the economy in two main ways. First, it shrinks the talent pool available to the private sector, by giving nationals a highly lucrative alternative to the kinds of jobs that 90 percent of the world’s population must do daily. This makes it very difficult for businesses to operate competitive commercial models where the primary labor input is local citizens. It is also a major reason for the low productivity levels that Gulf companies typically possess. Second, seeking an alternative to nationals, the private sector develops a fixation on low-wage migrant workers. The whole business model is skewed further away from investing in local human resources, toward exploiting an inexhaustible supply of expatriates. This reinforces the low productivity and contributes to anemic levels of innovation much seen in Gulf businesses.”

Omar Al-Ubaydli, Inflation is an opportunity to recalibrate Gulf public sector salaries [Al-Arabiya]