UAE’s push to attract talent to get boost with new unemployment insurance

Last month, the UAE announced it will introduce a new mandatory unemployment insurance scheme effective January 2023, as part of a larger mandate to attract talent and investment.

Insured workers in both the public and private sectors will receive some money for a limited time period if made unemployed, UAE Prime Minister and Vice-President Sheikh Mohammed bin Rashid al-Maktoum, who is also the ruler of trade hub Dubai, had said at the time.

“The intention is to strengthen labour market competitiveness, provide a social umbrella for workers and establish a stable working environment for all.”

What is the package?

The insurance packages will cost employees between Dh40 to Dh100 annually.

In the event of termination, they will become eligible to receive 60% of their basic salary - up to a maximum of AED 20,000 monthly - to assist with living costs during unemployment, for up to six months. This financial support will discontinue once they find a new job.

However, employees on temporary contracts, investors, domestic workers, retirees who receive a pension and those under the age of 18 years are ineligible for this scheme.

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Dr Abdulmannan Al Awar, Minister of Human Resources and Emiratisation, earlier stressed that the programme, offered to all workers in the country, will not only provide stable living standards for families in case of unemployment, but also reduce business risks and attract talent that can contribute to building a competitive knowledge-based economy in the UAE.

He said that the ministry will develop a mechanism for creating and operating the scheme, its application and subscription fees, and any necessary requirements or procedures to ensure its success and governance.

It will also monitor the work of insurance service providers to ensure the best results are achieved for both employees and companies.

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While we await more details, Business Recorder spoke to some experts on what this all means.

What do the experts say?

“The new job loss insurance offering in UAE is an exciting new benefit for the residents of UAE to safeguard them against redundancies and downsizing,” said Syed Hassan Abbas, CEO of Conformity Compliance Solution, a fintech firm he established out of the Dubai International Financial Centre.

It means “residents have fantastic protection” and “reduces the volatility and uncertainty for the working class in UAE”.

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“The most comforting part is that the government is taking some concrete steps to safeguard the future of expat residents.”

Meanwhile, Madalina Rotaru, CEO of CAPEX.com MENA, believes the move could help the UAE “maintain a more stable pool of talent”.

She said the country “is already a beacon for individuals looking for new opportunities thanks to its thriving economy and alluring environment.

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“In such a dynamic work space and fast-paced country, job opportunities quickly shift to adapt to the changing economic conditions and to the development of individual firms. Such changes could prove to be a challenge for some without a social safety net.

“By adding a layer of social security, the UAE could boost its capacity to attract and retain talent.”

The UAE is working hard to attract more visitors as well as expats and strengthen its position as an ideal destination to live, work, and invest.

Earlier this year, it introduced new categories of visas with simplified requirements, and relaxed rules of its famous ‘golden visa’.

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For instance, golden residence holder can sponsor their family members regardless of their age, and to sponsor any number of domestic staff. Family members can stay in the UAE in the event of the death of the original holder of the golden residence until the end of their permit duration.

It has also overhauled its labour laws: the most significant changes include employees no longer having to exit the country upon losing their job, as well as more generous maternity leave.

“UAE has always been a coveted destination for expats on account of the modern infrastructure, security, no income tax for individuals, health care and education and now induction of these insurance policies at low cost would further boost the mobility of talented workers,” Abbas added.

Copyright Business Recorder, 2022