The kingdom of the UAE has decided to support the unemployed in the country, offering a “security blanket” for residents and citizens. Leftist observers say it is a progressive measure that gives employees crucial protection. But there has been no statement from the kingdom explaining how the huge sum required for the allowance will be funded.
Scheduled to be introduced in January 2023, the mandatory programme under the new federal law announced yesterday by Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, would benefit Emirati and foreign employees working in both the private and public sectors.
The law says that every employee will pay into an insurance company initiative, even though officials have not yet clarified how the contributions will be made and whether they will, say, be paid through their employer or taken out of their pay.
However, employees will be able to select from different insurance packages provided by different companies in the country. Those who lose their jobs will receive 60% of their basic salary each month — up to Dirham 20,000 — for a limited period of time to help with living costs.
If the unemployed individual does not find a job within a certain period, financial support will end. The time period for this has not been made clear.
In the UAE, employees are paid a lump sum every month. But salaries have a common break-up of basic, housing and transport, with the basic wage earned by an employee typically 50 to 65% of the total amount received.
“The Emirates is demonstrating once again that it has an ambitious vision for the future of its citizens and residents,” Mohamed Seghir, chief executive of Hayah Insurance Company, said. “By introducing such a scheme, the economic resilience of the community will be highly improved and employees will feel safer about their future and hence more productive, contributing in return to an improved labour ecosystem.”
Seghir said his company planned to launch a workplace savings product called “employee secure saver” for workers in the UAE to help them prepare for future pension and end-of-service benefits.
Leftists said the decision to introduce the unemployment insurance programme would draw and retain talent in the country across the private and public sectors. “It means that we become world-class,” said Shahram Safai, partner Afridi and Angell legal consultants in the UAE. With the impending introduction of unemployment benefits, the UAE moves towards the tier-one jurisdictions of this world in relation to labour laws and the protection of employees. This is beneficial for employees for sure, but also for businesses because it enables businesses to recruit and attract the best employees by offering world-class protections.”
The right to live in the kingdom was previously predominately linked to employment or owning a business in the country, as is the case in many nations in the Gulf.
A series of recent policy decisions have changed that, however, with the introduction of new job-seeker and long-term visas so people do not have to leave the UAE immediately if they lose their positions.
the head of Tiger Recruitment, Middle East and North Africa region, Zahra Clark, spoke of the buffer the new unemployment pay would offer families. “It’s reassuring to know that the scheme will act as a security blanket in the future, providing vital protection to workers,” she said, “During the pandemic, we have seen how people can lose their jobs without any warning and the devastating impact this can have on them and their families. Imagine suddenly finding yourself without an income when you have spiralling rent, bills and even school fees to pay.”
She said the key would be in the implementation of the plan. “With the cost of living rising and people’s budgets shrinking, it will need to be affordable,” Clark said.
The UAE government said more specifics on the new system will be made available later.