Securing employment has become an even more crucial objective in recent years around the world, under the impact of the Covid-19 pandemic.
In May, the United Arab Emirates announced the establishment of a compulsory unemployment insurance scheme which will provide financial support to workers in the public and private sectors. It will come into force at the beginning of 2023.
“The benefits will be open to the entire Emirati workforce – whether Emirati citizens or foreign residents – and of varying skill levels,” explains Abdulrahman Al Awar, Emirati Minister in charge of Human Resources and Emiratisation.
“It matches the nature of the UAE labor market in that it is very open, very dynamic and very attractive,” he believes before adding: “We are implementing reforms and policies that will allow people who participate in this labor market to benefit from social security policies that provide them with safety nets against the difficulties they may encounter in their employment here.”
This legislation aims to bring greater financial stability to workers and their families. “This new labor law is a positive change,” judge Aaron Portero, managing director of Connect Resources. “This change will give us more work because we will have to adapt to also manage the pension scheme and comply with the legislation,” he said. “But our highest priority,” he continues, “It is, as always, to manage several thousand employees and we try to take care of all of them. These changes will be positive for us, the customers and the employees,” he assures.
For workers, unemployment insurance contributions should be between 10 and 25 euros per year for basic coverage. The system provides for the payment of 60% of the base salary – with a maximum of 5,000 euros per month – in the event of job loss for a determined period. Investors, domestic workers, people on temporary contracts, employees under 18 and retirees are exempt from this scheme.
“We will have a system that will not be a burden on participants,” says Minister Abdulrahman Al Awar. “It will be accessible digitally and it will be very simple: participation will be through a digital process that does not require any steps,” he specifies.
To stay and live in Dubai, you must have a valid residence visa linked to your professional status. Under current rules, expats who lose their jobs have a few months to find a new position. Otherwise, they risk having to return to their country.
Andrew Wingrove has lived in Dubai for 18 years. This Group Director at Motivate Media Group explains that he has generally been lucky in his career there, even if his dismissal a few years ago was a stressful time for him.
“Here the cost of living is higher than in the UK: education is completely private and if you don’t have a salary you can’t maintain that, you can’t pay your rent, your villa, family expenses,” he points out.
“So anything that can bridge the gap between one job and the next is ideal, it’s reassuring; when you know you have that security in case things go wrong, it saves us from panicking and wondering if you have to leave the country,” he adds.
“Attracting and retaining the best talent”
This new legislation, along with recent reforms to immigration and labor laws, will introduce fundamental changes to the labor market.
“The UAE clearly sees the value in bringing in foreign talent who continue to contribute to the development of the country,” recalls Ludmila Yamalova, Managing Partner at HPL Yamalova & Plewka. “So even outside of the pandemic, I think every country wants to make sure that they can attract the best talent – and for that matter, not just attract them, but retain them -: for that, it’s obvious that ‘you have to put in place protections and benefits for those who work, so that they want to stay,’ she points out.
The unemployment insurance scheme aims to provide greater long-term security for workers and employers, but also to strengthen the competitiveness of the local labor market.