Situation Analysis:

A national government in the Middle East sought to develop a program that would provide incentives for employers to enhance the rate of job creation for its citizens. With a large foreign workforce comprising much of its private sector, the unemployment rate of the country’s citizens was exceptionally high, and job growth was stagnant. Meanwhile, due to their heavy reliance on foreign laborers, companies in the private sector were unorganized and not incentivized in their efforts to attract and retain nationals.

Discovery & Solutions:

To ameliorate these circumstances, the government looked to completely overhaul its approach to market-based incentives for job creation. With Strategic Decision Group’s guidance, an innovative program was developed, based on a set of principles and design criteria:

  1. Market-based: The program was to take into account the current situation in the market with the different challenges facing companies of various sizes and in different economic sectors.
  2. Balanced: It was to use a balanced combination of incentives and penalties to nudge companies to hire nationals.
  3. Transparent: It was to ensure transparency in that every employer could determine where they ranked, as well as on what basis they were ranked.
  4. Fair: It was to ensure fairness, insofar that a company’s achieved nationalization of its workforce was compared to those of its immediate peers in the same economic sector or sub-sector.
  5. Dynamic: It was to be dynamic and flexible in order to enable the government to introduce new features and improvements based on—and in anticipation to—the market’s response.

With these criteria in place, SDG utilized Decision Quality (DQ) principles and large data set analysis to analyze the national economy’s various economic sectors. Using this process which combined top-down policy design and bottom-up data analytics, the team helped subdivided the economy into 50+ economic activities and each economic activity was further into four size cohorts to create 200+ peer groups. This enabled a transparent and balanced approach in comparing each company to its immediate peer group across a set of measures. The incentives were then distributed across the distribution of performance within each peer group.  Protocols were also established to make sure that the overall program structure was highly flexible and could be constantly enhanced and revised moving forward.

Results & Impact:

Since its launch, the program has been judged by experts to be one of the most innovative labor market policy programs to ever be introduced in the region. The launch of the program led to major improvements in company employment records in the private sector, which greatly improved the quality and availability of national labor market data. Overall, hundreds of thousands of private-sector jobs were created, and number of nationals in the private sector has doubled within less than three years since the introduction of the program. More specifically, the employment of female nationals grew 250 percent over the course of three years. As the program has progressed, its dynamic nature has enabled the government to quickly and effectively respond to new market realities and labor-specific challenges, while continuing to achieve an impressive rate of workforce nationalization.