The Impact of Emiratisation in the United Arab Emirates has certain nuances that positively affect the labor market in the region. These initiatives seek to shape the economy and labor market of the United Arab Emirates. In addition, it seeks to promote employment in the private economic sector of the country.
In this article, you will learn in-depth what is Emiratisation and all about and its importance for the economic development. Also, you will see what the Emiratisation impact in private sector of the UAE is and much more.
Understanding the Main Concept of Emiratisation
With the Emiratisation in the United Arab Emirates, the government seeks the inclusion of more national labor. Likewise, with the implementation of Emiratisation, this sector must employ a certain number of Emirati citizens. Also, they do more important jobs in national companies.
However, the rules established for Emiratisation are different depending on the size of the company where they apply it. Therefore, MOHRE established that companies with less than 20 workers will have to reach the quota by hiring 1 Emirati citizen annually. Thus, business organizations of all kinds must apply this rule to comply with the established in the country.
Likewise, with the impact of Emiratisation, the government wants to develop professionally Emirati population and gain new skills. Similarly, they have significant experience and understand business so that they can be on par with foreigners in specific jobs.
In the same way, the Emirati government encourages competition among young people to challenge themselves and for talent to emerge. With this, they hope that their talents will make them stand out in the entire world. Another objective is that the Emiratis themselves are what contribute to national income and social support.
Key Points Of the Impact of Emiratisation
In the Emirates, the Cabinet increased the number of Emiratis for private sector companies that have more than 50 employees. For the continental private sector with a workforce of more than 50 workers, they must employ at least 2% annually. This is in terms of qualified tasks, to reach 10% inclusion of nationals by 2026.
At free zones, with preferential tax and customs rates, they are exempt from the obligation to hire Emirati citizens. However, there are certain particularities for companies that do have to comply with this quota, as you will see below. Hence, the Emiratisation impact in private sector applies for certain circumstances and has its own characteristics.
Fines
From January 2023, the government will impose monthly fines of AED 6,000 on companies belonging to the private sector. This is for those companies that do not comply with the quota established the emiratisation laws for private sector. Likewise, the fine will be for each Emirati citizen who has not been employed that month as established by MOHRE.
Incentives
Another government initiative is to offer incentives to private sector companies to support the hiring and training of Emiratis. They are also providing an 80% reduction in service fees from the MOHRE ministry.
Likewise, all employers who hire Emirati personnel may take this reduction under the rates established by Emiratisation.
The NAFIS
In 2021, the government launched the federal NAFIS program that supports the training and hiring of nationals in the private sector. In the same way, this regulation is a key point of the federal program.
Similarly, as part of NAFIS, the government will continue to join efforts to increase the number of Emirati people in the private sector workforce.
Positive Impacts of Emiratisation
The Emiratisation impacts on the private sector is positive as it boosts local talent and therefore the economy of the country. Equally, the initiatives to further develop Emiratisation are increasing thanks to the politics of the authorities in the country.
Moreover, this initiative of the government has long-term benefits such as the ones we will detail in the next sections:
Economy Benefits
Emiratisation seeks to reduce dependence on expatriates to occupy important job positions and empower nationals. Likewise, they need new forms of economic sustainability for a long time and not to depend only on oil.
Therefore, with a committed and well-prepared local force, the country can achieve economic diversity as well as innovation in the industry.
Social Stability
Inside the impact of Emiratisation on companies is the creation of inclusive work environments that promote Emirati values and traditions. In this way, by integrating national employees, employers will be able to benefit from the views of nationals.
Consequently, work environments can have more solid relationships between all those who work in this company.
Human Capital Development
With the impact of Emiratisation in Dubai and the other emirates, companies are allowed to train. Subsequently, many of them establish initiatives with internship and apprenticeship programs for Emiratis. With this training, nationals will have the skills required to cover their functions more efficiently.
Likewise, the workforce in general will be better qualified and on track for better business growth in the future.
Innovation and Entrepreneurship
The main aim is for the Emirati working population to develop their position and be able to enter the labor market.
In this way, the authorities promote innovation and business entrepreneurship of Emirati nationals.
Importance of Emiratisation on the UAE’s economy
The impact of Emiratisation in UAE allowed many nationals to take jobs in expatriate companies. This is because many expatriates came to the Emirates and founded companies where the same expatriates who occupied all the positions.
Therefore, Emirati citizens did not have the opportunity to work in foreign consortia established in the country. In general, the expatriate thinking was that Emiratis were not resourceful or innovative. Thus, many of the youngest population of the country did not have job opportunities, while many of the companies have too many employees belonging to a specific ethnic group.
In response to this, the national government implemented Emiratisation so that private companies must hire national workers. Furthermore, with the impact of Emiratisation, nationals could occupy important positions. In general, with Emiratisation, nationals will obtain talents and other skills that will allow them to have professional success and international recognition.
Likewise, the government guarantees through Emiratisation that nationals will contribute to the national income and thus reduce dependency.
What Are The Challenges and Solutions?
With the impact of Emiratisation, the government wants to address certain challenges and situations. Thus, by applying emiratisation, all these situations will have a solution, which will lead to the systematic development of the country. Next, you will find out what the challenges and solutions are:
Cultural Barriers and Stereotypes
Many of the national citizens have difficulty with the English language so they need to learn it to facilitate communication worldwide. Additionally, there is a cultural monopoly where some company prefers to work with employees of the same ethnicity. Consequently, a national may not feel comfortable working in a work environment where a particular ethnicity predominates.
Likewise, with the impact of Emiratisation, the government wants to reduce the gender gaps between the public and private sectors. In this regard, the hope is that UAE companies will prioritize ethnic and gender diversity within their workforces. On the other hand, many companies are beginning to empower the female workforce by improving the professional environment to facilitate gender equality.
Despite the great impact of this process and other emirates, the culture is still archaic within the region. In particular, when it comes to gender in the workplace, only 7% of women held management positions. However, with Emiratisation, this panorama will change since there will be more inclusion of women within different regional companies.
Due to the impact of Emiratisation UAE, almost 53% of Emirati ladies work in professional positions, which is higher than the world level. Also, this amount is higher than the world average, which is 48%. In 2012 the government required that companies in the public and private sectors had to have at least 1 woman on their board of directors.
Therefore, with this measure not only did more opportunities open up for women but it also challenged what was the patriarchal status. Also, the government enacted the Gender Balance Council, to allow a comprehensive solution to the gender difference and expand the female presence by 30% for leadership.
Work-Life Balance
In studies carried out in the GCC countries, talent management showed that one of the problems was a lack of performance. That is to say, there was a negative disposition on the part of workers to work in positions with greater work demands. Thus, they preferred to work for the government because they worked less and earned more.
Due to the great impact of Emiratisation, it was created by MOHRE, some Emiratisation Association centers to provide managerial, technical, and administrative positions for the natives of the country. Likewise, the secretary of national human resources said that nationals rejected positions because they did not like the salary.
However, recently, Emiratis have left the work positions of private companies after working for 3 years in them. On the other hand, companies that hired national citizens said that 65.6% did not have communication or linguistic skills. Consequently, a large demand for investment was created for the linguistic training of the natives of the emirates.
Skills Mismatch
The Emirati territory is small and of its population of 11 million people, 12% are native citizens of the region. This way, it is often difficult for companies to find national talent with the necessary skills to cover certain work positions. However, thanks to this that possible to prepare and qualify new talents for the workforce of companies.
Economic Challenges of the Impact of Emiratisation
Emiratisation presents certain economic challenges, especially for the private sector. Hence, with Emiratisation recruitment agency, the government guaranteed the inclusion of Emiratis but not all companies have been able to face it easily. An example of this is that the majority of Emiratis aspire to hold high positions or be leaders and do not have the necessary experience or skills.
Likewise, giving a leadership position to an Emirati meant giving him a much higher salary than that offered to a foreigner for the same position. Similarly, the cost of training to improve the skills of the national would lead to a monetary expense for the company.
In addition, an Emirati employee may be sought out by competitors who offer him a more fruitful monetary offer. Therefore, a small or medium-sized company would have difficulties competing with the monetary offers that other larger companies offer.
Similarly, when a private company is forced to hire a national, it must guarantee the return of the investment by improving its skills. You will achieve this through training so that you can perform effectively.
However, this can hinder the growth of the company since a large part of the capital for human resources would be invested in Emiratisation.
Key insights about the impact of Emiratisation
The Emiratisation has challenges in several aspects but it is the safest path to empower nationals. Furthermore, this year in the emirates the number of nationals who joined the private sector of the country has increased by 11%. Also, the national government strategically promoted benefits of Emiratisation for both foreigners and nationals.
On the other hand, companies must face the challenges of Emiratisation so that the natives collaborate with the social development of the country. Additionally, you can see this as a way of giving back to the country that has served as a boost for many expatriate entrepreneurs. Likewise, they are installed in the country with prosperous companies, being as if it were in their homeland.
Emiratisation is future-oriented in terms of creating a balance between foreigners and Emiratis alike. Thus, this process has a big importance in the culture and economy of the UAE. Nevertheless, companies and authorities must work together to get the best of the Emiratisation impact UAE.
If you want to have a better understanding of this process, contact us at any time.
