The economy is booming in the UAE, which is great news for companies based here and for their employees. Recently, economic growth forecasts were revised upwards to 6.5% for this year and 2023.
However, while conditions are set fair overall, private sector companies are addressing two recent developments as the year draws to an end. First, they are working to fulfil quotas required by the Emiratisation rules introduced by the government earlier this year.
Specifically, as part of a government drive to encourage more citizens to enter the private sector, companies with more than 50 employees must ensure that 2% of their staff are Emiratis in skilled roles by 1 January 2023. Any employer that fails to reach the target will be fined an average of AED6,000 per month (US$1,633) for each Emirati worker they fail to hire.
Private sector companies are working hard to fulfil Emiratisation quotas
Companies are therefore working in a changing local recruitment environment. They need to compete for Emirati talent against the public sector, which still holds great appeal, as it not only pays well but provides an opportunity to make a real difference to an emirate or even the UAE as a whole.
With the deadline looming, there have been concerns that some companies might create fake jobs to meet targets, or recruit Emiratis into unskilled roles.
To tackle these fears, the UAE’s Ministry of Human Resources and Emiratisation has passed a supporting resolution, clarifying the hiring process and remuneration issues, and prohibiting misleading advertisements, for example those not representing ‘available and real job opportunities’.
Regular monitoring will take place to make sure rules are followed and the ministry has warned companies that they could face stiff penalties for non-compliance.
Pressure on salaries
The other headwind for employers is that of rising salaries. The UAE has avoided the sky-high inflation plaguing many developed economies, but it still faces pressure to increase salaries amid rising consumer prices.
And with salaries lagging behind the rate of inflation, employers are becoming worried about their expat workforce, according to recruitment consultants Robert Half.
Three in 10 workers have received a pay rise to help with the rising cost of living
Its 2023 salary guide shows that more than half (52%) of employees say that it is becoming harder to afford their monthly living expenses. These difficulties are driving movement in the recruitment market, with 74% considering a new role in 2023. The majority of these (56%) say their primary reason is to secure a higher salary so that they can meet their financial obligations.
Based on its research, Robert Half says employers should be most concerned about their expat workforce. Nearly half (47%) of expats say that if they were to leave the UAE it would most likely be down to the rising cost of living. With people feeling the financial strain, businesses should prepare for an exodus or take measures to support their workers, it advises.
Financial support
Many employers have already taken steps to help their employees by increasing the financial support available. Three in 10 workers have received a pay rise to help with the rising cost of living, and the same number have been offered bonuses and increases in their regular allowances.
Robert Half concludes that in order to look after their existing employees many business leaders are choosing to make cuts when it comes to hiring new talent, which is affecting their competitiveness both within the UAE and worldwide.
So while the UAE’s economic train is steaming ahead, there is always the potential not so much for a derailment, but for some delays.
