By Irfan Ahmed Nazir
On 11 July 2023, the United Arab Emirates (UAE) government announced significant changes to the rules on the nationalisation (Emiratisation) of the workforce, aiming at employing UAE citizens in the vast majority of companies in the country. Under the new rules, private companies with 20 to 49 employees must hire one UAE citizen by the end of 2024 and two by the end of 2025. The new rules will allow fresh Emirati graduates to explore options in start-ups and small-and-medium enterprises (SMEs) to start their careers.
In recent years, the UAE, like other Gulf countries, has been prioritising the employment of its citizens in the private sector through its Emiratisation drive. Traditionally, UAE citizens prefer employment in the public sector, which ensures job security and high wages. As the country moves towards a post-oil era, the UAE government needs its citizens to acquire skills and expertise to diversify its economy. Besides, the public sector cannot accommodate the growing number of fresh Emirati graduates every year. The only option for the government is to encourage UAE citizens to look for opportunities in the private sector.
In 2022, the UAE Ministry of Human Resources and Emiratisation (MHRE), for the first time, set quotas for private companies with over 50 employees to hire UAE citizens annually and gave a deadline to achieve them. As per this Emiratisation rate, companies must increase their Emirati employees by two per cent annually, with an anticipated target of 10 per cent by the end of 2026. However, it applies only to high-skilled jobs and exempts free-zone companies. In February 2023, MHRE fixed the rates to a one per cent increase every six months to attain the desired target. MHRE gave a deadline of 30 June 2023 to reach three per cent, further extended by a week due to Eid ul-Adha holidays.
The three per cent target deadline ended on 7 July 2023. Those companies that failed to comply with the target must pay a fine of AED 42,000 (INR 940,000) per UAE citizen not employed. Besides, MHRE will impose a hefty penalty of up to AED 500,000 (INR 11,000,000) on companies evading the target or manipulating the data. According to official sources, the number of UAE citizens employed in the private sector touched 80,000 this month, an increase of 30,000 since the beginning of the year – it also surpassed the initial target set by the UAE leadership in 2021 to employ 75,000 citizens within the next five years.
The government took a massive step by extending the Emiratisation targets to start-ups and SMEs.The SMEs constitute 94 per cent of the companies operating in the UAE and contribute more than 50 per cent to the country’s non-oil GDP.For the government, start-ups and SMEs are crucial to building “the best and most dynamic economy in the world,” as envisioned in the Principles of the 50 document. The UAE leadership wants its citizens to play a cardinal role in these companies. MHRE focuses on start-ups and SMEs in 14 sectors, including education and healthcare. Companies failing to meet the targets will be fined AED 96,000 (INR 2,000,000) in 2024 and AED 108,000 (INR 2,500,000) in 2025.
Through the Nafis scheme, the government has already addressed the concern of the UAE citizens about whether the salaries offered by the private sector would meet their expectations.Launched in 2021 as part of the ‘Projects of the 50’, the scheme would make a monthly top-up payment of AED 5,000 (INR 111,000)to UAE citizens employed in the private sector and further increased to AED 7,000(INR 156,000) in September 2022. For example, if the private firm paysAED 13,000 to a UAE citizen, the latter could take home AED 20,000 under this scheme. It would also incentivise private companies to hire UAE citizens. There are several other benefits for both the employer and the employee, including support to the employer to upskill and reskill the Emirati employee to meet the industrial needs.
There is no doubt that the recent changes to the Emiratisation rules would provide a competitive advantage to the UAE citizens in the country’s job market, especially in its rapidly growing start-ups and SMEs. Hence, it would be a concern for the high-skilled expatriate workers in the country. The UAE has provisions to attract and retain foreign talents. The expatriate workers would need to explore those options and make the best use of the opportunities available in the country. The migrant-sending countries should also support their nationals working in the UAE by providing requisite training through their missions/posts and giving them an edge over other foreign nationals.
The author is a doctoral candidate at the Centre for West Asian Studies, Jawaharlal Nehru University, New Delhi. He tweets at @irfannazir_in.
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