UAE’s weekend change to boost economic competitiveness

The step will also lead to better integration of the local economy with global financial markets, analysts say

Traders at the Dubai Financial Market. The banking and financial sector will gain a full working day in line with global standards due to the recent move. Sarah Dea / The National

The UAE’s move to shift its weekend to Saturday and Sunday could result in greater integration of the local economy with global markets and boost its competitiveness by attracting more foreign direct investment into the country, analysts say.

The Gulf country relies extensively on foreign trade, tourism and logistics to fuel its economic engine, making the recent move to align the weekend to global standards an important economic milestone.

“It will help boost the UAE’s competitiveness with its external-focused economy and to have the same weekend days as the rest of the world,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

“It will also be more attractive for companies, particularly with the visa reforms the government has undertaken. It will boost sectors including tourism, trade and financial flows.”

It will help boost the UAE’s competitiveness with its external-focused economy and to have the same weekend days as the rest of the world.

Monica Malik,
chief economist at Abu Dhabi Commercial Bank

On Tuesday, the UAE announced that federal government departments would shift to a four-and-a-half day working week, with the official weekend now being Saturday and Sunday, instead of Friday and Saturday.

The move will create a "great alignment between the UAE's securities markets and world markets", Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, told Bloomberg TV on Wednesday.

The banking and financial sector will also benefit because the UAE is eliminating the previously existing weekend gap to align with world economies, he said.

"Our models show there will be enhancement in the volume of trade and there will be a positive GDP growth relative to this decision," Mr Al Awar said during the interview.

"The central bank and markets will operate Monday to Friday and Friday will be a full business day for the stock markets. The stock markets securities authorities will issue details to the Dubai and Abu Dhabi markets and the details will be publicly available to explain the operating hours," Mr Al Awar said.

The Abu Dhabi Securities Exchange and the Dubai Financial Market said on Wednesday that they will operate from Monday to Friday from January 3, 2022 in line with the country's official weekend shift.

The move will help the Dubai bourse to expand "the presence of international participants on DFM, as they currently contribute 50 per cent of the market’s trading activities and represent one third of the investor base", the stock exchange said.

For companies, particularly those dealing with global markets, the move will lead to a greater economic integration, according to Nasser Saidi, founder and president of Nasser Saidi & Associates

“The reform will mean that the UAE's banking and financial markets will gain a full working day in common with international financial markets, leading to greater efficiency and increased productivity, since the banking and financial sector will likely open all of Friday,” Mr Saidi said.

“This supports banking and financial deals/transactions and flows, with banks and equity markets being able to undertake operations/transactions on the same days as most of the world, increasing the UAE's financial integration with global markets and reducing the current overnight risk of deals and operations, including for the all-important oil markets.”

Aligning the work week with global standards would mean fund transfers would also be smooth, particularly within the banking sector, experts said.

“Previously since Friday was not functional, fund transfers from and to the UAE had to suffer a lag of three days,” said Bal Krishen, chairman and chief executive of Century Financial, a UAE financial consultancy.

“The additional day or the lag can be an issue in the working capital management and cash cycle of companies operating with a narrow margin. The new working week will also bring the UAE’s financial sector into closer alignment with global real-time trading.”

The UAE, the second-largest Arab economy, is currently the top financial centre within the Gulf. Its two international financial centres host the regional offices of international banks, insurance companies, asset managers and many others.

The country also has a more advanced physical and social infrastructure, and is ranked as the most business-friendly location in the region. This is set to be cemented with the latest move, according to Dean Kemble, managing partner at GSB Capital, a DIFC-based wealth management company.

“While this will support economic development, the changes will also elevate the UAE further as a country focused on the social benefits of its citizens and residents. This will likely lead to further inward investment and a greater number of people wanting to move to the UAE to live and work.”

Finance House, an Abu Dhabi-listed finance company, said it would move to a four-and-a-half day working week, becoming the first non-government entity to do so.

The move is subject to UAE Central Bank regulations, the company said on Wednesday.

However, more private companies will have to follow the government’s lead in shifting to a Saturday-Sunday weekend for the full effects of the change to be realised, said M R Raghu, chief executive of Marmore Mena Intelligence.

Currently, the private sector is not required to shift to the new weekend, Mr Al Awar told The National, emphasising that private companies will decide “based on what they feel that will improve their position".

"The move to a Saturday-Sunday weekend for the federal government needs to be mirrored in the private sector, building on the cohesive strategy of attracting businesses and investments into the region through a variety of legal and regulatory reforms and ease of establishment [visas and residency liberalisation] and related measures that were introduced during 2020 and 2021,” Mr Saidi said.

Considering the various economic and market benefits, the companies should be willing to make this move, Mr Raghu said.

“Large private-sector companies with a global footprint are expected to follow [the government's lead]. On the other hand, small companies and start-ups, which mostly operate locally, might take some time to adapt.”

At Century Financial, Mr Krishen said he would opt for a Saturday-Sunday weekend to better align his employees. Many of his colleagues currently follow a Monday-Friday work week since they deal with global markets.

“If all employees have the same work schedule, it is bound to increase the company's overall productivity. Moreover, it will help reduce the stress of some employees who have to work a different schedule,” Mr Krishen said.

The UAE became the first country in the region in 2006 to shift its weekend to Friday and Saturday from the previously followed days of Thursday and Friday – a move that was mirrored by the rest of the Gulf countries later.

Having taken the lead yet again, the Gulf country could strive ahead in economic competitiveness once more.

“Among its GCC peers, it would definitely make the UAE more competitive, since it is better aligned with the global working norms,” Mr Raghu said.