How the UAE is preparing its workforce and workplaces for the future

The Dubai International Financial Centre. Key UAE government policies are aimed at providing workers with long-term stability. Bloomberg

Many of us are fascinated by the pace of change in the UAE. By some measures, change is constant in the country.

We have an enduring interest in both long-lost landmarks, such as, say, the Volcano Fountain in Abu Dhabi, and new developments, like yesterday’s announcement of a new 1.4 kilometre bridge that will connect Bur Dubai with Dubai Islands – but it is not just the cityscapes that are shifting. The infrastructure of employment has been rapidly and positively overhauled since the start of last year.

Amendments to visa regulations, the introduction of an unemployment benefit scheme, recent amendments to the gratuity system, new limited-term employment contracts and, even, the change to the “new” weekend are recalibrating how residents and citizens live their lives.

The UAE switched weekends to Saturday and Sunday at the beginning of last year, which also ushered in a four-and-a-half day week for public sector workers.

Anecdotally, the nation has adapted well. The sudden novelty for school children of being in class on a Friday morning soon became a regular reality and, for office workers, the hybrid working practices adopted by so many companies over the pandemic mean that workplaces may not be much busier on a Friday than they were in the days of the old weekend of Friday and Saturday.

New visa rules were adopted in October last year, providing more certainty and longevity for many. The golden visa scheme was opened up to a wider range of people, allowing more residents to put down deeper roots, invest in the country and build long-term lives here. The green visa provides greater security for skilled workers and freelancers. At the same time, changes and improvements were made to the visit visa system and family sponsorship regulations.

The UAE has a growing reputation as somewhere people believe they can shape a prosperous future. Silvia Razgova / The National

Companies will have to work strategically to manage end-of-service provision

Taken together, they provide greater certainty and stability. They also underscore the UAE’s growing reputation as a regional talent hub and the place where, as the Arab Youth Survey regularly finds, more and more people believe they can shape a prosperous future for themselves.

The unemployment benefit scheme, which will pay citizens and residents a monthly sum for three months in the event of job loss, has also been a recent addition to our lives.

Workers have until the end of this month to register for the scheme – which provides a decent level of cover and payment based on an employee’s basic salary for a relatively low premium. This measure installs a safety net and provides more space for jobseekers to find new opportunities, while also alleviating some of the pressures that arrive with unexpected job loss. In tandem with the visa changes that also allow for a longer stay after a period of employment ends, it radically changes the conversation for jobseekers.

This month, amendments to the gratuity scheme were issued following a UAE Cabinet meeting in Abu Dhabi. The end-of-service payment becomes due to any worker upon resignation, retirement or job loss so long as they have been at a company in continuous service for more than 12 months. It is calculated by a combination of length of service and a worker’s basic salary.

Crucially, until now, the only way the sum grew was either by the month-to-month accumulation of that fraction of basic salary multiplied by length of service – online calculators, including The National’s own engine, provide a helpful guide in this regard – or by an employee receiving an uplift to their basic salary. There was no growth through investment or interest.

Now, the voluntary scheme will become a form of personal pension pot rather than a one-off payment at the end of service, in which employees can choose to put those funds in a range of regulated funds to broadly match their appetite for risk and personal preferences.

The changes to the gratuity system are particularly interesting.

It is something I have advocated for in the past – I should note here that columnists only remind readers of their good ideas and quickly forget their bad ones – but more than that, the underreported element of the scheme is how the delinking of gratuity payments to the personal banking system will, in all likelihood, change how banks manage accounts and loans.

Companies will also have to work strategically to manage end-of-service provision in the future, given that gratuity payments are often viewed as ghost liabilities until the point of resignation, termination or retirement, at which point the payment is triggered and funds are found from day-to-day cash flow.

The new labour law regarding the introduction of limited-term contracts, for which the deadline for compliance is now the end of the year, may help in that regard.

Given that many workers will move to fixed-term contracts, it may be prudent for end-of-service payments to be transferred to savings pots on a monthly basis from the start of that new contract, assuming 12 months of service have already been completed.

For the outstanding sum that fell due before the introduction of the new scheme, it could either revert to a traditional payment triggered at the end of service or for that balance to be drip-fed over time into the new savings pot.

Either way, change and compromise are often close relations and both company and employee needs will have to be addressed.

All told, the UAE is preparing its workforce and workplaces for the future.