Abu Dhabi is rolling out an old trick to create jobs for Emiratis – laying off expats. While this is so-far believed to be confined to the public sector, financial services could soon be affected.

A new Emiratisation drive in Abu Dhabi is, according to a report on Reuters, being sanctioned by the Executive Council, which is chaired by Sheikh Mohammed bin Zayed al Nahayan, and accelerated by his brother Sheikh Hazza bin Zayed al Nahayan.

The suggestion is that it’s a pre-emptive move to prevent the Arab Spring spreading to the UAE. Though this is seen as unlikely in the relative safe havens of Dubai and Abu Dhabi, we’ve mentioned previously the bubbling presence of Emirati angst, which could eventually lead to unrest.

So far, the ousting of expats in Abu Dhabi seems largely focused on the public sector, but the Reuters report also suggests that First Gulf Bank has also laid off ‘scores’ of expats in the last few months.

The question is how widespread this is, or is likely to become. According to financial recruitment sources in Abu Dhabi, the expat “dead wood” is already being shown the door.

“A lot of the banks here are state-owned, and there’s a real pressure to ‘Emiratise’ the workforce,” says one financial services headhunter. “A lot of expat dead wood is being cut, but this has happened over the last year or so. The more sophisticated and profitable front office areas, which are heavily reliant on expats, are unlikely to be cut.”

Let’s not forget that the Emirati population is still the minority, at around 20%, and the local banks already have well-developed localisation programmes in place. Emiratis comprise 44.5% of the workforce at Abu Dhabi Islamic Bank, for instance, and National Bank of Abu Dhabi is aiming to increase Emiratisation to 40% by the end of 2011.

“There’s undoubtedly pressure to increase Emiratisation, but not at the expense of our expatriate workforce,” says one head of HR at an Abu Dhabi bank, who declined to be named. “The fact remains that Emiratis do not yet possess the skills for more sophisticated areas of finance, such as investment banking.”

There’s another thing holding banks back from the wholesale hiring of Emiratis; cost.

“Emiratis demand higher salaries than their expat counterparts, and therefore most banks will hire only the absolute minimum required of them,” says another financial services headhunter. “It’s a tricky situation, and there’s no easy solution.”